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Date: 19-Dec-2023 Category: Extra Ordinary State: Union Government Country: India

Notification under 92CB of the Income tax Act, 1961

Issued by Ministry of Finance · Department of Revenue

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Executive Summary & Key Takeaways

What it means

  • The notification introduces the Income-tax (Twenty-Ninth Amendment) Rules, 2023, which amends the Income-tax Rules, 1962.
  • These amendments pertain to the determination of arm's length interest rates for intra-group loans and the definition of 'intra-group loan' itself.

Key Changes

  • The definition of 'intra-group loan' is modified to exclude loans advanced by financial companies (including banks and financial institutions) or enterprises engaged in lending or borrowing in the normal course of business. It also excludes credit lines or loan facilities without a fixed repayment term.
  • Rule 10TD is amended to revise the benchmark interest rate calculation for intra-group loans. The reference to 'CRISIL' is removed.
  • A new table is introduced in Rule 10TD(2A) specifying the applicable basis points to be added to the reference rate based on the credit rating of the associated enterprise and the total amount of loans advanced to all associated enterprises.
  • If the loan amount is less than or equal to INR 250 crore, the markup ranges from 150 to 400 basis points depending on the credit rating.
  • If the loan amount exceeds INR 250 crore, the markup ranges from 150 to 600 basis points depending on the credit rating.
  • An 'Explanation' is added to define 'reference rate' for various currencies, including USD (SOFR + 45 bps), Euro (EURIBOR), GBP (SONIA + 30 bps), JPY (TORF + 10 bps), AUD (BBSW), and SGD (SORA + 45 bps).
  • The definition of 'credit rating' is clarified to mean the rating assigned by a SEBI registered and RBI accredited credit rating agency. If multiple ratings are available, the lowest rating is to be considered.

Impact Analysis

Impact on Multinational Corporations

  • Companies should document the process of determining the arm's length interest rate, including the reference rate used, the credit rating of the associated enterprise, and the total amount of loans outstanding.

Impact on Credit Rating Agencies

  • The notification reinforces the importance of accurate and reliable credit ratings for associated enterprises.

Impact on Tax Authorities

  • The clear definition of 'reference rate' and the reliance on credit ratings should provide a more objective basis for assessing the arm's length nature of interest rates on intra-group loans.

Suggested Action Items

  • Consult with tax advisors to ensure compliance and mitigate potential transfer pricing risks.

Key Entities Referenced

Central Board of Direct Taxes (CBDT): The issuing authority of the notification, responsible for making rules under the Income-tax Act, 1961. Income-tax Act, 1961: The primary legislation governing income tax in India. Section 92CB and 295 are specifically referenced as the source of power for issuing the notification. Income-tax Rules, 1962: The detailed rules framed under the Income-tax Act, 1961, which are being amended by this notification. Securities and Exchange Board of India (SEBI): The regulator for the securities market in India. Credit rating agencies must be registered with SEBI to be considered for the purposes of this notification. Reserve Bank of India (RBI): The central bank of India. Credit rating agencies must be accredited by RBI to be considered for the purposes of this notification. Chicago Mercantile Exchange (CME): Administers the Secured Overnight Financing Rate (SOFR) for US dollars. European Money Markets Institute: Administers the Euro Inter Bank Offered Rate (EURIBOR) for Euro. ICE Benchmark Administration/Refinitiv: Administers the Sterling Overnight Index Average (SONIA) for UK Pound Sterling. QUICK Benchmarks Inc: Benchmarks the Tokyo Term Risk Free Rate (TORF) for Japanese Yen. Australian Securities Exchange: Administers the Bank Bill Swap Rates (BBSW) for Australian dollar. Monetary Authority of Singapore: Administers the Compounded Singapore Overnight Rate Average (SORA) for Singapore dollar.
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रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99 सी.जी.-डी.एल.-अ.-19122023-250755 CG-DxLx-xEG-I1D9H1x2x2x0 23-250755 xxxGIDExxx असाधारण EXTRAORDINARY भाग II—खण् ड 3—उप-खण्ड (i) PART II—Section 3—Sub-section (i) प्राजधकार स ेप्रकाजित PUBLISHED BY AUTHORITY स.ं 716] नई दिल्ली, मगं लिार, दिसम्ब र 19, 2023/अग्रहायण 28, 1945 No. 716] NEW DELHI, TUESDAY, DECEMBER 19, 2023/AGRAHAYANA 28, 1945 जित्त मत्रं ालय (रािस्ट्ि जिभाग) (केंद्रीय प्रत्यक्ष कर बोडड) अजधसचू ना नई दिल्ली, 19 दिसम् बर, 2023 (आय-कर) सा.का.जन. 900(अ).—केंद्रीय प्रत्यक्ष कर बोड,ड आय-कर अजधजनयम, 1961 (1961 का 43) की धारा 295 के साथ पठित धारा 92गख की उपधारा (2) द्वारा प्रित्त िजियों का प्रयोग करत े हुए, आय-कर जनयम, 1962 का और संिोधन करने के जलए जनम्नजलजखत जनयम बनाता ह,ै अथाडत् :-- 1. संजक्ष प्त नाम और प्रारंभ– (1) इन जनयमों का संजक्षप्त नाम आय-कर (उन्नतीसिा संिोधन) जनयम, 2023 ह ै। (2) इन जनयमों में अन्यथा उपबजं धत के जसिाय ये 1 अप्रलै , 2024 को प्रिृत्त होंगे । 2. आय-कर जनयम, 1962 म,ें-- (क) रािपत्र म ेंइस अजधसूचना के प्रकािन की तारीख से जनयम 10नक म,ें -- 7803 GI/2023 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] (i) खडं (च) के स्ट्थान पर जनम्नजलजखत खडं रखा िाएगा, अथातड ् :-- ‘(च) “अंत:-समूह ऋण” से दकसी सहबद्ध उद्यम, िो गैर-जनिासी है, को दिया गया ऋण अजभप्रेत ह,ै िहां ऋण— (i) दकसी ऐसे उद्यम द्वारा नहीं दिया गया ह,ै िो एक जित्तीय कंपनी ह,ै जिसके अंतगडत बैंक या जित्तीय संस्ट्था या कोई उद्यम सजम्मजलत ह,ै िो कारबार के साधारण प्रक्रम म ें उधार िेने या उधार लेन े में लगा हुआ ह ै ; और (ii) जिसके अंतगडत कोई िमा रेखा या कोई अन्य उधार सुजिधा नहीं ह,ै जिसकी पुन: संिाय के जलए कोई जनयत अिजध नहीं ह ै;’; (ii) खंड (ञ) के उपखंड (vi) के स्ट्थान पर जनम्नजलजखत उपखडं रखा िाएगा, अथाडत ् :-- “(vi) ऐसी आजस्ट्तयों, जिन पर प्रचालन व्यय म ें अिक्षयण को सजम्मजलत दकया िाता ह,ै से जभन्न आजस्ट्तयों या जिजनधान के अंतरण पर हाजन ;”; (iii) खडं (ट) के उपखडं (iii) के स्ट्थान पर जनम्नजलजखत उपखडं रखा िाएगा, अथाडत् :-- “(iii) ऐसी आजस्ट्तयों, जिन पर प्रचालन व्यय में अिक्षयण को सजम्मजलत दकया िाता ह,ै से जभन्न आजस्ट्तयों या जिजनधान के अंतरण पर आय ;”; (ख) जनयम 10नघ म,ें-- (i) उपजनयम (2क) म,ें सारणी में— (अ) क्रम स.ं 4 म,ें स्ट्तंभ सं. (3) म,ें -- (I) खंड (i) “सीआरआईएसआईएल” िब्ि का लोप दकया िाएगा ; (II) खंड (ii) “सीआरआईएसआईएल” िब्ि का लोप दकया िाएगा ; (III) खंड (iii) “सीआरआईएसआईएल” िब्ि का लोप दकया िाएगा ; (IV) खंड (iv) “सीआरआईएसआईएल” िब्ि का लोप दकया िाएगा ; (आ) क्रम स.ं 5 और उससे सबं ंजधत प्रजिजियों के स्ट्थान पर जनम्नजलजखत क्रम सं. और प्रजिजियां रखी िाएगी, अथाडत ् :-- “5. जनयम 10नग के खडं (iv) म ें जनर्ििड पात्र अंतराष्ट्रड ीय संव्यिहार के संबंध में घोजित ब्याि िर सुसगं त पूिड ििड के 30 जसतंबर की जस्ट्थजत के अनसु ार सुसंगत जििेिी मुद्रा में सिं भड िर से कम अंतरा-समूह ऋणों को िेना, िहां नहीं ह,ै धन,-- ऋण की रकम का अिधारण जििेिी मुद्रा में ह ै । (क) यदि सहबद्ध उद्यम को दिए गए ऋण की रकम, जिसके अंतगतड सभी सहबद्ध उद्यमों को दिया गया ऋण सजम्मजलत ह,ै सुसंगत पिू ड ििड के 31 माच ड की जस्ट्थजत के अनुसार समग्र रूप से 250 करोड़ भारतीय रुपए की राजि के समतल्ु य स ेअनजधक नहीं होती ह ै : (i) 150 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग एएए, एए+, एए, एए-, ए+, ए, ए- या समतुल्य ह ै;[भाग II—खण् ड 3(i)] भारत का रािपत्र : असाधारण 3 (ii) 300 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग बीबीबी+, बीबीबी, बीबीबी- या समतुल्य ह ै ; (iii) 400 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग बीबी+, बीबी, बीबी-, बी+, बी, बी-, सी+, सी, सी-, डी या समतुल्य ह ै या िहां सहबद्ध उद्यमों की क्रेजडट रेटटंग उपलब्ध नहीं ह ै; (ख) यदि सहबद्ध उद्यम को दिए गए ऋण की रकम, जिसके अंतगतड सभी सहबद्ध उद्यमों को दिया गया ऋण सजम्मजलत ह,ै सुसंगत पिू ड ििड के 31 माच ड की जस्ट्थजत के अनुसार समग्र रूप से 250 करोड़ भारतीय रुपए की राजि के समतल्ु य स ेअजधक होती ह ै: (i) 150 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग एएए, एए+, एए, एए-, ए+, ए, ए- या समतुल्य ह ै; (ii) 300 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग बीबीबी+, बीबीबी, बीबीबी- या समतुल्य ह ै ; (iii) 450 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग बीबी+, बीबी, बीबी-, बी+, बी, बी- या समतुल्य ह ै; (iv) 600 आधाठरक जबन्ि,ु िहां सहबद्ध उद्यम की क्रेजडट रेटटंग सी+, सी, सी-, डी या समतुल्य या िहां सहबद्ध उद्यमों की क्रेजडट रेटटंग उपलब्ध नहीं ह ै।”; (ii) उपजनयम (2क) के पश्चात ्जनम्नजलजखत स्ट्पिीकरण अंत:स्ट्थाजपत दकया िाएगा, अथाडत ् :-- ‘स्ट्पिीकरण—इस उपजनयम के प्रयोिनों के जलए,-- (क) “संिभड िर” से जनम्नजलजखत अजभप्रेत ह,ै-- (i) अमेठरकी डालर के जलए छह मास की आिजधक प्रत्याभूत ओिरनाइट जित्तीय िर (एसओएफआर), इस समय जिकागो मकडन्टाइल एक्सचेंि (सीएमई) द्वारा प्रिाजसत ह,ै 45 आधार जबन्िओंु की िृजद्ध के साथ ; (ii) यूरो के जलए छह मास की यूरो इंटर बैंक प्रस्ट्थाजपत िर (ईयूआरआईबीओआर), इस समय यूरोजपयन मनी मार्कडट्स इंस्ट्टीट्यूट द्वारा प्रिाजसत ह ै; (iii) यूके पाउंड स्ट्रर्लगिं के जलए छह मास का आिजधक स्ट्रर्लिंग ओिरनाइट इंडेक्स औसत (एसओएनआईए), इस समय आईसीई बैंचमाकड एडजमजनस्ट्रेिन/ ठरदफजनठटि द्वारा प्रिाजसत ह,ै 30 आधार जबन्िओंु की िृजद्ध के साथ ; (iv) िापानी येन के जलए, छह मास की टोदकयो आिजधक िोजखम मुि िर (टीओआरएफ), इस समय क्यूयूआईसीके बैंचमाकडस इनकारपोरेटड द्वारा बैंचमाकडड ह,ै 10 आधार जबन्िओंु की िृजद्ध के साथ ;4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] (v) आस्ट्रेजलयन डालर के जलए छह मास की बैंक जबल स्ट्िेप िर (बीबीएसडब्ल्यू) इस समय आस्ट्रेजलयन जसक्योठरठटि एक्सचेंि द्वारा प्रिाजसत ह;ै और (vi) ससंगापुर डालर के जलए, छह मास की कंपाउडड ससंगापरु ओिरनाइट िर औसत (एसओआरए), इस समय ससंगापुर मानीटरी आथाठरटी द्वारा प्रिाजसत ह,ै 45 आधार जबन्िओंु की िृजद्ध के साथ ; (ख) “क्रेजडट रेटटंग” से सहबद्ध उद्यम को क्रेजडट रेटटंग अजभप्रेत ह ै िो भारतीय प्रजतभूजत और जिजनमय बोडड के पास रजिस्ट्रीकृत एि ं भारतीय ठरििड बैंक प्रत्यजयत क्रेजडट रेटटंग अजभकरण द्वारा समनुिेजित की ह,ै िो सुसंगत पूिड ििड के जलए लाग ूहोती ह,ै यद्यजप-- (i) िहां सहबद्ध उद्यम के पास केिल एक क्रेजडट रेटटंग ह,ै तब ऐसी रेटटंग को उसकी क्रेजडट रेटटंग माना िाएगा ; और (ii) िहां सहबद्ध उद्यम के पास एक से अजधक अजभकरण से क्रेजडट रेटटंग ह ै तब इन रेटटंग में से सबसे कम रेटटंग को उसकी क्रेजडट रेटटंग माना िाएगा ।’। [अजधसूचना स.ं 104/2023/फा. स.ं 370142/26/2023-टीपीएल] सौरभ िैन, अिर सजचि ठटप्पण : मलू जनयम, भारत के रािपत्र, असाधारण, भाग II, खंड 3, उपखंड (ii) में स.ं का.आ. 969(अ) तारीख 26 माच,ड 1962 द्वारा प्रकाजित दकए गए थे और उनका अंजतम सिं ोधन अजधसूचना सं. सा.का.जन. 898(अ) तारीख 18 दिसंबर, 2023 द्वारा दकया गया । MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 19th December, 2023 (INCOME-TAX) G.S.R. 900(E).—In exercise of the powers conferred by sub-section (2) of section 92CB read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:___ 1. Short title and commencement.—(1) These rules may be called the Income-tax (Twenty-Ninth Amendment) Rules, 2023. (2) Save as otherwise provided in these rules, they shall come into force from the 1st day of April, 2024. 2. In the Income-tax Rules, 1962,– (a) in rule 10TA, with effect from the date of publication of this notification in the Official Gazette,— (i) for clause (f), the following clause shall be substituted, namely:- ‘(f) “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[भाग II—खण् ड 3(i)] भारत का रािपत्र : असाधारण 5 (ii) does not include credit line or any other loan facility which has no fixed term for repayment;’; (ii) in clause (j), for sub-clause (vi), the following sub-clause shall be substituted, namely:- “(vi) loss on transfer of assets or investments other than assets, on which depreciation is included in the operating expense;”; (iii) in clause (k), for sub-clause (iii), the following sub-clause shall be substituted, namely:- “(iii) income on transfer of assets or investments other than assets, on which depreciation is included in the operating expense;”; (b) in rule 10TD,— (i) in sub-rule (2A), in the Table— (A) in Sl.No. 4, in column number (3),– (I) in clause (i), the word “CRISIL” shall be omitted; (II) in clause (ii), the word “CRISIL” shall be omitted; (III) in clause (iii), the word “CRISIL” shall be omitted; (IV) in clause (iv), the word “CRISIL” shall be omitted; (B) for Sl.No. 5 and the entries relating thereto, the following serial number and entries shall be substituted, namely:- “5. Advancing of intra-group loans The interest rate declared in relation to the eligible international referred to in clause (iv) of rule transaction is not less than the reference rate of the relevant foreign 10TC where the amount of loan is currency as on 30th September of the relevant previous year plus, - denominated in foreign currency. (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,— (a) “reference rate” means,–6 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] (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.’. [Notification No. 104/2023/ F. No. 370142/26/2023-TPL] SOURABH JAIN, Under Secy. Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, section-3, sub-section (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and were last amended vide notification number G.S.R. 898(E) dated the 18th December, 2023. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

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