Central Government vide Notification No. 83/2020 dated 19.10.2020 has notified the tolerance limit of 1% for wholesale trading and 3% for others for computation of arm’s length prices for Assessment Year 2020-21
If the arm’s length price determined under section 92C of Income Tax Act, 1961 does not exceed the tolerance level (%) of actual value of international transaction, then the actual value shall be deemed to be the arm’s length price.
For qualification of an international transaction as “Wholesale trading”, it must fulfil the following conditions:
Source: Notification No. 83/2020/F. No. 500/1/2014-APA-II