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Notification - The Central Board of Direct Taxes (CBDT), vide notification 46/2017 dated 7 thJune 2017
Amendment Applicability of SHR has been extended to an additional category of international transaction and revision has
been made in applicable price/margins that would be accepted as arms length.
Applicability - Safe harbour provisions are now applicable from AY 2017-18 up to AY 2019-20
Option to the taxpayer Option has been provided to opt for OLD provisions of Safe harbour or new provisions which ever
more beneficial for FY 2016-17
Some of the key highlights of amended safe harbour rules are presented as below:
1
Prescribed minimum margin is not applicable in case of Receipt of low value-adding intra-group services.
(i) 175 basis points, where the AE has CRISIL credit rating
Advancing of between AAA to A or its equivalent;
intra-group
loans (ii) 325 basis points, where the AE has CRISIL credit rating of
where the BBB-, BBB or BBB+ or its equivalent;
amount of loan - -
is denominated (iii) 475 basis points, where the AE has CRISIL credit rating
in Indian between BB to B or its equivalent;
Rupees (INR).
(iv) 625 basis points, where the AE has CRISIL credit rating
between C to D or its equivalent; or
(v) 425 basis points, where credit rating of the AE is not available
and the amount of loan advanced to the AE including loans to all
AE in INR does not exceed a sum of 100 crore rupees in the
aggregate as on 31st March of the relevant previous year.
(iii) 450 basis points, where the AE has CRISIL credit rating
between BB to B or its equivalent;
JGarg Economic Advisors Private Limited
707, Pearl Best Heights II, C-9 Netaji Subhash Place, PitamPura, New Delhi 110034
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From FY 2016-17 to 2018-19 Upto FY 2016-17
Threshold value
Eligible Prescribed Threshold value of Any other Prescribed
of eligible
International minimum eligible international respective minimum
international
Transaction margin1 transaction condition margin
transaction
(iv) 600 basis points, where the AE has CRISIL credit rating
between C to D or its equivalent; or
In Rule 10TA of Income Tax Rules definition of low value-adding intra group services & employee cost has been
provided.
Under the amended rules, eligible assessee upon its own discretion can choose old safe harbor rules if they are more
beneficial to assessee.
Rule 10TA has been amended in relation to definition of contract R&D services wholly or partly relating to software
development which exclude services which involves making available source code to carry out routine functions like
debugging of the software.
JGarg does not assume any responsibility for the information given under the document. While every effort has made to
avoid errors or omissions in this publication, it is suggested that to avoid any doubt the reader should cross-check all
the facts, law and contents of the publication with original Government publication or notification or judgment. JGarg
neither accepts nor assumes any responsibility or liability for any act undertaken by any reader of this publication in
whatsoever manner.