What is meant by ‘Safe Harbour’?
"Safe Harbour" means circumstances in which the income-tax authorities shall accept the transfer price declared by the assessee. Thus, 'safe harbour rules' means binding rules laid down under law which obliges income-tax authorities to accept the transfer price declared by the assessee.
Rule 10TA
· Effective from 19 December 2023
· Intra Group Loans means loan advanced to an associated enterprise being a non-resident
· Intra Group Loans does not include;
o Loans by Financial Company
o Loans by business engaged in business of borrowing or lending
o Loans which have no fixed term for repayment
Rule 10TD
(i) in sub-rule (2A), in the Table—
(A) in Sl.No. 4, in column number (3),–
· in clause (i), the word “CRISIL” shall be omitted;
· in clause (ii), the word “CRISIL” shall be omitted;
· in clause (iii), the word “CRISIL” shall be omitted;
· in clause (iv), the word “CRISIL” shall be omitted;
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.”;
(ii) after sub-rule (2A), the following Explanation shall be inserted, namely:-
‘Explanation.– For the purposes of this sub-rule,—
“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.’.
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