The Finance Act, 2017 with effect from April 1, 2018, provided for secondary adjustment by attributing income to the excess money lying in the hands of the associated enterprise, in order to make the actual allocation of funds consistent with that of the primary transfer pricing adjustment.
The provision will apply to primary adjustments exceeding Rs 1 crore made in respect of the assessment year 2017-18 onwards.
"Rule 10CB for operationalising the provisions of secondary adjustment has been notified by CBDT on June 15. It prescribes the time limit for repatriation of excess money and the rate of interest to be applied for computing the income in case of failure to repatriate the excess money within the prescribed time limit," CBDT said in a statement here.
"Separate rates of interest have been provided for international transactions denominated in Indian currency and in foreign currency. The rates of interest are applicable on an annual basis," it said.
The time limit of 90 days for repatriation of excess money will begin only when the primary adjustments exceeding Rs 1 crore made in respect of the assessment year 2017-18 or later, attains finality.
"Where the transfer pricing order is appealed against by the taxpayer, the time limit for repatriation shall commence only after the appeal is finalised by the appellate authority," it said.