CBDT notifies tolerance range for transfer pricing

The Central Board of Direct Taxes (CBDT) has notified the tolerance range for transfer pricing for the assessment year 2024-25. The tolerance range is set at 1% for wholesale trading and 3% for all other transactions. Transfer pricing regulations require multinational companies to conduct transactions with related parties at arm’s length prices to prevent profit shifting and tax avoidance. The notified tolerance range provides a margin within which the transfer prices can vary without attracting penalties. This measure aims to provide clarity and reduce litigation related to transfer pricing adjustments. The CBDT’s notification is part of its ongoing efforts to streamline transfer pricing regulations and ensure compliance with international tax standards.