CBDT Extends Applicability of Safe Harbour Rules to AY 2023-24
The Central Board of Direct Taxes (CBDT) has issued a notification dated August 09, 2023, to extend the applicability of Safe Harbour rules to Assessment Year (AY) 2023-24. The Safe Harbour rules are a set of guidelines that taxpayers can follow to determine the arm’s length price (ALP) of transactions between related parties.
The extension of the Safe Harbour rules is a welcome move for taxpayers as it provides them with certainty on the ALP of transactions. This is especially important for taxpayers who engage in complex transactions with related parties. The Safe Harbour rules can help taxpayers to avoid lengthy and costly transfer pricing audits.
The Safe Harbour rules are available for a variety of transactions, including:
- Cost sharing arrangements
- Services
- Royalties
- Interest
- Sale and purchase of goods
The rules are based on a number of factors, including the type of transaction, the functions performed by the related parties, and the risks assumed by the related parties.
The extension of the Safe Harbour rules to AY 2023-24 is a positive development for taxpayers. It provides them with certainty on the ALP of transactions and helps to reduce the risk of transfer pricing audits.
Key Takeaways
- The CBDT has extended the applicability of Safe Harbour rules to AY 2023-24.
- The Safe Harbour rules are a set of guidelines that taxpayers can follow to determine the ALP of transactions between related parties.
- The extension of the Safe Harbour rules is a welcome move for taxpayers as it provides them with certainty on the ALP of transactions.
- The Safe Harbour rules are available for a variety of transactions, including cost sharing arrangements, services, royalties, interest, and sale and purchase of goods.
- The rules are based on a number of factors, including the type of transaction, the functions performed by the related parties, and the risks assumed by the related parties.
