Transfer Pricing

Safe Harbour Rules for FY 2019-20 Notified

In a welcome move, the Central Board of Direct Taxes (‘CBDT‘) has notified changes to Rule 10TD and 10TE of the Income-tax Rules relating to Safe Harbour. As per the notification, safe harbour rates applicable for assessment year 2017-18 shall continue to apply for assessment year 2020-21 i.e. financial year 19-20.
Further, the government has prudently extended the Safe Harbour rates to current financial year 19-20 only, considering the fact that financial year 2020-21 will be impacted by unprecedented economic conditions caused by Covid-19.

Based on the above amendment, taxpayers who wish to opt for Safe Harbour for financial year 19-20 need to file Form 3CEFA with the Assessing Officer on or before the due date of furnishing return of income for FY 2019-20. As per recent notification dated 24 June 2020 issued by CBDT, the due date for filing the return of income for financial year 19-20 is 30 November 2020. The taxpayer must file the return of income either before or along with Form 3CEFA.

Further relaxation of statutory timelines due to covid-19

In order to provide further relief to the taxpayers, the government issued a notification dated 24 June 2020 to further relax the time limits mentioned in The Taxation And Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (‘Ordinance’).

The Ordinance primarily extended the time limits applicable for filing of income-tax returns, completion of proceedings under the specified acts, filing of any appeal, reply, application, report, payment of taxes or completion of any action under the specified acts etc.

From a transfer pricing perspective, the timeline for completion of Transfer Pricing Assessments for AY 17-18 is now revised from 31 October 2020 to 29 January 2021.

Further in case of an Indian parent entity resident in India which was required to file CbCR for accounting year ended on 31 March 2019, the timeline stands revised to 31 March 2021.

The due dates  of the following annual compliances under Transfer Pricing remain unchanged by the aforesaid notification.