MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 6th November, 2025
Income Tax

S.O. 5053(E).— In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961)(hereafter referred to as the said Act) read with the proviso to sub-rule (7) ofrule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm’slength price determined undersection 92Cofthe said Act and the
price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed, (i) one per cent. of the latter in respect of wholesale trading; and (ii) three per cent. of the latter in all other cases — the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for the assessmentyear 2025-2026.

Explanation.- For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfilsthe following conditions, namely:-

a. purchase cost of finished goods is eighty per cent. or more of the total cost pertaining to such trading activities; and

b. averagemonthly closing inventory ofsuch goodsisten per cent. orless of sales pertaining to such trading activities.

[No.157/2025/F. No. 500/1/2014-APA-II]
KARTHIK CHEBOLI, Deputy Commissioner of Income Tax (OSD)(APA-I)FT&TR -I, CBDT

Explanatory Memorandum
The notification provides for tolerance range of one per cent. for wholesale trading and three per cent. in all other casesfor the assessment year 2025-2026. It is certified that none will be adversely affected by the retrospective effect being given to the notification.