Rule regarding Secondary Adjustments: Time limit of 90 days begin only When Primary Adjustment attains Finality, says CBDT

Recently, Finance Act, 2017 inserted a new section 92CE, which permits secondary adjustments in situations enumerated there under, with effect from April 1, 2018.

In connection with this, the Central Board of Direct Taxes (CBDT) had recently amended the Income Tax Rules, 1962 and inserted Rule 10CB for computing interest income for secondary adjustments under Transfer Pricing prescribing the time limit for repatriation of excess money and the rate of interest to be applied for computing the income in case of failure to repatriate the excess money within the prescribed time limit. Separate rates of interest have been provided for international transactions denominated in Indian currency and in foreign currency. The rates of interest are applicable on an annual basis.

A recent Press release clarified that the time limit of 90 days for repatriation of excess money shall begin only when the primary adjustments exceeding Rupees One Crore made in respect of Assessment Year 2017-18 or later, attains finality. Where the transfer pricing order is appealed against by the taxpayer, the time limit for repatriation shall commence only after the appeal is finalised by the appellate authority.

Read the full text of the Notification below.