CBDT Notifies Amendment in Safe Harbour Rules for International Transactions – Notification No. 104/2023 Dated 19th December 2023
The Central Board of Direct Taxes (CBDT) vide its Notification No.104/2023 Dated. 19th December 2023 has notified some amendment in Rule 10TA and 10TD of Income Tax Rules 1962 pertaining to Safe harbour rules for International transactions. These Rules may be called the Income Tax (Twenty Ninth Amendment) Rules 2023 and they shall come into force from the 1st April, 2024.
Rule 10TA of the Income Tax outlines several definitions pertaining to Safe Harbour Rules, while some additional provisions related to these rules are specified under rules ranging from Rule 10TB to 10TG. CBDT has brought this amendment to change the definition of ‘intra-group loan’, ‘Operating Expense’ and ‘Operating Revenue’ which are prescribed under rule 10TA , and the circumstances in which they are treated as Safe Harbour prescribed under rule 10TD.
Let us now delve into the specific amendments brought under these rules through this CBDT Notification No. 104/2023.
1.Amendment under Rule 10TA by CBDT:
I. As per this Notification of CBDT, under clause (f), the definition of intragroup loan will be substituted as follows:
“Intra-group loan means loan advanced to an associated enterprise being a non-resident, where the loan— (i) is not advanced by an enterprise, being a financial company including a bank or a financial institution or an enterprise engaged in lending or borrowing in the normal course of business; and (ii) does not include credit line or any other loan facility which has no fixed term for repayment”;
II. Under clause (j), for sub-clause (vi), the following entries shall be substituted:
“Loss on transfer of assets or investments other than assets, on which depreciation is included in the operating expense”;
III. Un clause (k), for sub-clause (iii), the following entries shall be substituted:
“Income on transfer of assets or investments other than assets, on which depreciation is included in the operating expense”.
2. Amendment under Sub-rule 2A of Rule 10TD by CBDT:
I. The word “CRISIL” shall be omitted from clause (i), (ii), (iii) and (iv) under column (3) of Sl. No. 4.
II. The following entries shall be substituted under Sl. No. 5:
| Eligible International Transaction |
Circumstances |
|
Advancing of intra-group loans referred to in clause (iv) of rule 10TC where the amount of loan is denominated in foreign currency.
|
The interest rate declared in relation to the eligible international transaction is not less than the reference rate of the relevant foreign currency as on 30th September of the relevant previous year plus, – (a) If amount of loan advanced to the associated enterprise including loans to all associated enterprises does not exceed a sum equivalent to two hundred and fifty crore Indian rupees in the aggregate as on 31st March of the relevant previous year: (i) 150 basis points, where the associated enterprise has a credit rating of AAA, AA+, AA, AA-, A+, A, A- or equivalent; (ii) 300 basis points, where the associated enterprise has credit rating of BBB+, BBB, BBB- or equivalent; (iii) 400 basis points, where the associated enterprise has a credit rating of BB+, BB, BB-, B+, B, B-, C+, C, C-, D or equivalent or where the credit rating of the associated enterprise is not available; (b) If amount of loan advanced to the associated enterprise including loans to all associated enterprises exceeds a sum equivalent to two hundred and fifty crore Indian rupees in the aggregate as on 31st March of the relevant previous year: (i) 150 basis points, where the associated enterprise has a credit rating of AAA, AA+, AA, AA-, A+, A, A- or equivalent; (ii) 300 basis points, where the associated enterprise has credit rating of BBB+, BBB, BBB- or equivalent; (iii) 450 basis points, where the associated enterprise has a credit rating of BB+, BB, BB-, B+, B, B- or equivalent; (iv) 600 basis points, where the associated enterprise has credit rating of C+, C, C-, D or equivalent or where the credit rating of the associated enterprise is not available.”; |
III. As per this notification of CBDT, after sub-rule (2A), the following Explanation shall be inserted:
‘Explanation for the purposes of this sub-rule:
(a) “Reference rate” means:
(i) for US dollar, 6-month Term Secured Overnight Financing rate (SOFR), currently administered by Chicago Mercantile Exchange (CME), as increased by 45 basis points;
(ii) for Euro, 6-month Euro Inter Bank Offered Rate (EURIBOR), currently administered by European Money Markets Institute;
(iii) for UK Pound Sterling, 6-month Term Sterling Overnight Index Average (SONIA), currently administered by ICE Benchmark Administration/Refinitiv, as increased by 30 basis points;
(iv) for Japanese Yen, 6-month Tokyo Term Risk Free Rate (TORF), currently benchmarked by QUICK Benchmarks Inc, as increased by 10 basis points;
(v) for Australian dollar, 6-month Bank Bill Swap Rates (BBSW) currently administered by Australian Securities Exchange; and
(vi) for Singapore dollar, 6-month Compounded Singapore Overnight Rate Average (SORA), currently administered by Monetary Authority of Singapore, as increased by 45 basis points;
(b) “Credit rating” means the credit rating assigned to the associated enterprise by a Securities and Exchange Board of India registered and Reserve Bank of India accredited credit rating agency which is applicable for the relevant previous year, so however that-
(i) where the associated enterprise has only one credit rating, then such rating shall be taken as its credit rating; and
(ii) where the associated enterprise has a credit rating from more than one such credit rating agency, then the least of such ratings shall be taken as its credit rating.’.
To Access the Recent Ruling of Delhi HC on Criteria for Invocation of Sec.69A CLICK HERE
To Download the CBDT Notification No. 104/2023 CLICK HERE
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