Operationalising the provisions of secondary adjustment in the arena of transfer pricing for actual allocation of profits between a company and its arm, the Central Board of Direct Taxes (CBDT) has notified Rule 10CB. In order to give effect to the secondary adjustment norms, the Finance Act 2017 has inserted Section 92CE in the I-T Act, 1961, which is based on the transfer pricing guidelines of the Organization for Economic Cooperation and Development (OECD) for multinational enterprises and tax administrations.
The tax department has notified 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. The time limit of 90 days for repatriation of excess money shall begin only when the primary adjustments exceeding Rs 1 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 finalized by the appellate authority.
Rule 10CB prescribes 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.