Friday, September 13, 2013

Transfer Pricing : Draft Safe harbour rules

The Central Board of Direct Taxes (CBDT) has notified the draft safe harbour rules. The rules are applicable for the following: -

  • Two AYs beginning from 2013-14
  • IT, IT-enabled & KPO services up to Rs 100 cr.
  • Operating Profit margin of at least 20% for IT, IT-enabled and 30% for KPO.
  • Intra group loans on which interest rate is more than a certain limit over SBI base rate
  • Corporate guarantee of up to Rs 100 crores where commission is at least 2%
  • Contract research relating to software development with margin of at least 30%
  • Contract research relating to software development with margin of at least 29%
  • Core auto components with operating margin of 12% or more
  • Non-core auto components of operating margin of 8.5% or more.
  • For Intra-group loan upto Rs 50 crores, SBI base rate plus 150 bps
  • For Intra-group loan above Rs 50 crores, SBI base rate plus 300 bps.

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