Income Tax Rules (Eleventh Amendment) notified

Central Board of Direct Taxes has amended the Income Tax Rules by a Income Tax Rules (Eleventh Amendment) dated 30th September, 2019. Rule 10CB which deal with the process for Computation of interest income pursuant to secondary adjustments, has been amended. Alteration is made to the time limit for repatriation of excess money. 

Following amendments have been made:

A. Rule 10CB (1) (iii)- The Rule deals with time limit for repatriation of excess money in the case of agreement for advance pricing entered into by the assessee. The Rule has been amended so as to deal with the case where primary adjustment to transfer price is determined by an advance pricing agreement entered into by the assessee. The time limit has also been amended and it has to be decided on the basis of whether the advance pricing agreement was entered before the due date of filing of return for the relevant previous year or not.

B. Rule 10CB (1) (v)– The sub-rule 1(v) deal with time limit for repatriation of excess money in case of an agreement made under the mutual agreement procedure under a Double Taxation Avoidance Agreement(DTAA). The provision is amended so as to apply only to a case where the primary adjustment to transfer price is determined by such resolution under a Double Taxation Avoidance Agreement.

The rules also provide for the date from which interest income on excess money which is not repatriated within the time limit shall be calculated. This adds clarity to levying interest for default in repatriation of excess money within given time limit and avoids ambiguity.

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