Safe harbour rules for intra-group transactions prescribe the minimum price or return for specific categories of transactions which, if opted by the taxpayer, is accepted by the tax authorities.
The amended definition will not include credit line or any other loan facility which has no fixed term for repayment.
The Central Board of Direct Taxes (CBDT) also raised the minimum rates of interest applicable for such transactions and introduced international benchmark rates as the reference rates instead of the domestic rates, since the transactions involve foreign currencies. This means transactions in different currencies will attract different rates.
The rates have been raised by 45 basis points for transactions in the US dollar and 30 basis points in the UK pound sterling. Experts say these rules will make international transactions with group concerns at par with global transactions, with more realistic and rule-based transfer pricing.