The Central Board of Direct Taxes (CBDT) has issued the notification on tolerance range for wholesale trading for the assessment year 2020-21.
Let’s summarise the notification in detail –
Tolerance range for wholesale trading for AY 2020-21
The Central Board of Direct Taxes (CBDT) has declared that the tolerance range of 1 per cent for wholesale trading and 3 per cent in all other cases for the assessment year 2019-20.
Notification by CBDT
In a notification issued by Finance Ministry said that where the variation between the arm’s length prices defined under section 92C of the said Act and the price at which the international transaction or particularised domestic transaction has inducted does not exceed one per cent of the latter in respect of wholesale trading and three per cent.
Also, in all other cases, the price at which the international transaction or specified domestic transaction has been undertaken shall be deemed to be the arm’s length price for the assessment year 2019-2020.
Purpose of CBDT Notification
The wholesale trading signifies an international transaction or defined domestic transaction of trading in goods, which performs the following conditions, namely:-
- The purchase cost of consumed goods is eighty per cent. or more of the total cost of such trading activities
- Average monthly closing record of such goods is ten per cent. Or less of sales about such trading activities.
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