My primary adjustment stands and the money is still with my overseas associated enterprise. When exactly do my ninety days start, and at what rate is the deemed advance to be charged interest?
Rule 10CB(1) gives the repatriation window as "on or before ninety days" from a starting point that differs with the source of the primary adjustment: from the s.139(1) due date where the adjustment was made suo motu in the return; from the date of the order of the Assessing Officer or the appellate authority where the adjustment in that order was accepted; where the adjustment is determined by an APA, from the date of filing the s.139(1) return if the APA was entered into on or before the due date, and from the END OF THE MONTH in which the APA was entered into if it came later; from the s.139(1) due date where the safe harbour option was exercised; and from the date the Assessing Officer gives effect under rule 44H to a mutual agreement procedure resolution. Rule 10CB(2) then fixes two different rate bases, and they are not interchangeable: for a transaction denominated in INDIAN RUPEES the imputed per annum interest is "at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points"; for a transaction denominated in FOREIGN CURRENCY it is "at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points". Clause (ii) still names LIBOR. LIBOR settings have been permanently discontinued and no replacement benchmark has been substituted into this rule, so for recent previous years the foreign-currency limb prescribes a rate that may not exist for 30 September of the relevant year.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2017-06-15, reported as Rule 10CB of the Income-tax Rules, 1962, transcribed in full from incometaxindia.gov.in/w/rule-10cb (Income-tax Rules, 1962; heading "Computation of interest income pursuant to secondary adjustments"; no "Year:" stamp), with the footnotes transcribed verbatim on a second fetch of the same page. It bears on section 92CE, section 92CE(2), section 139(1), section 92CC, section 92CB, section 90, section 90A, section 92B, section Rule 10CB, section Rule 44H, section Rule 26 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Two things go wrong in practice. The first is the starting point. Practitioners assume the clock always runs from the return due date; it does not. Where the adjustment was made by the officer and accepted, it runs from the date of the ORDER, which can be much earlier than the next return due date; where an APA is signed after the return due date, it runs from the END OF THE MONTH of signature. Rule 10CB(3) then separately fixes the date from which interest is CHARGEABLE, matching the same four starting points, so the ninety-day window is not itself interest-free time added on — the interest under sub-rule (3) runs from the sub-rule (1) starting point. The second is the rate. Using the MCLR base on a dollar-denominated receivable, or LIBOR on a rupee one, produces a number the Revenue will not accept and a number that is often materially different: the two bases are drawn on different dates (1 April versus 30 September of the relevant previous year) and carry different spreads (325 versus 300 basis points). AND THE FOREIGN-CURRENCY BASE IS A DEAD RATE. Rule 10CB(2)(ii) has not been amended: the departmental rule page still prints "six month London Interbank Offered Rate as on 30th September of the relevant previous year", and I found no notification substituting another benchmark. LIBOR settings have ceased, so for a previous year in which no six-month LIBOR setting exists on 30 September the rule names a rate that cannot be read. That is a gap in the rule, not a licence to substitute SOFR or any other benchmark of your own; the entry states the rule as it stands and the reader should put the difficulty on record rather than pick a rate. Note that the currency test is the currency in which the INTERNATIONAL TRANSACTION is denominated, not the currency in which the money happens to be held; and the Explanation supplies the conversion rule — the telegraphic transfer buying rate on the last day of the previous year in which the transaction was undertaken, with "telegraphic transfer buying rate" carrying the meaning given in the Explanation to rule 26.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Rule 10CB(1) provides that for the purposes of s.92CE(2) "the time limit for repatriation of excess money or part thereof shall be on or before ninety days,— (i) from the due date of filing of return under sub-section (1) of section 139 of the Act where primary adjustments to transfer price has been made suo motu by the assessee in his return of income; (ii) from the date of the order of Assessing Officer or the appellate authority, as the case may be, if the primary adjustments to transfer price as determined in the aforesaid order has been accepted by the assessee; (iii) in a case where primary adjustment to transfer price is determined by an advance pricing agreement entered into by the assessee under section 92CC of the Act in respect of a previous year,— (a) from the date of filing of return under sub-section (1) of section 139 of the Act if the advance pricing agreement has been entered into on or before the due date of filing of return for the relevant previous year; (b) from the end of the month in which the advance pricing agreement has been entered into if the said agreement has been entered into after the due date of filing of return for the relevant previous year; (iv) from the due date of filing of return under sub-section (1) of section 139 of the Act in the case of option exercised by the assessee as per the safe harbour rules under section 92CB; or (v) from the date of giving effect by the Assessing Officer under rule 44H to the resolution arrived at under mutual agreement procedure, where the primary adjustment to transfer price is determined by such resolution under a Double Taxation Avoidance Agreement entered into under section 90 or section 90A of the Act". Sub-rule (3) fixes the date from which interest is chargeable on the unrepatriated excess money: from the s.139(1) due date in the cases in clause (i), sub-clause (a) of clause (iii) and clause (iv); from the date of the order of the Assessing Officer or appellate authority in the case in clause (ii); from the end of the month in which the APA was entered into in the case in sub-clause (b) of clause (iii); and from the date of giving effect under rule 44H in the case in clause (v). The Explanation provides that "International transaction" has the meaning in s.92B and that the rate of exchange for valuing a foreign-currency transaction in rupees is the telegraphic transfer buying rate of that currency on the last day of the previous year in which the transaction was undertaken, "telegraphic transfer buying rate" carrying the meaning assigned in the Explanation to rule 26.
Not a judgment. The statutory position is that the ninety-day repatriation window under Rule 10CB(1) runs from five different starting points depending on how the primary adjustment arose, and that the imputed per annum interest on excess money not repatriated within that window is computed under Rule 10CB(2) on two distinct bases — SBI's one-year marginal cost of fund lending rate as on 1 April of the relevant previous year plus 325 basis points where the international transaction is denominated in Indian rupees, and the six-month London Interbank Offered Rate as on 30 September of the relevant previous year plus 300 basis points where it is denominated in foreign currency.
Not a judgment; no judicial reasoning is stated for the rule itself. On its operation the ITAT Mumbai recorded at paragraph 10 of its order of 14 February 2025 in VVF (India) Limited that "as per rule 10CB computation of interest commences from the due date of filing the return of income", the assessment year there being one in which the primary adjustment had been made in the return.
(i) at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points in the cases where the international transaction is denominated in Indian rupee; or (ii) at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points in the cases where the international transaction is denominated in foreign currency.
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Handle my notice → Ask a CA on WhatsAppRule 10CB(1) gives the repatriation window as "on or before ninety days" from a starting point that differs with the source of the primary adjustment: from the s.139(1) due date where the adjustment was made suo motu in the return; from the date of the order of the Assessing Officer or the appellate authority where the adjustment in that order was accepted; where the adjustment is determined by an APA, from the date of filing the s.139(1) return if the APA was entered into on or before the due date, and from the END OF THE MONTH in which the APA was entered into if it came later; from the s.139(1) due date where the safe harbour option was exercised; and from the date the Assessing Officer gives effect under rule 44H to a mutual agreement procedure resolution. Rule 10CB(2) then fixes two different rate bases, and they are not interchangeable: for a transaction denominated in INDIAN RUPEES the imputed per annum interest is "at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points"; for a transaction denominated in FOREIGN CURRENCY it is "at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points". Clause (ii) still names LIBOR. LIBOR settings have been permanently discontinued and no replacement benchmark has been substituted into this rule, so for recent previous years the foreign-currency limb prescribes a rate that may not exist for 30 September of the relevant year. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 92CE, section 92CE(2), section 139(1), section 92CC, section 92CB, section 90, section 90A, section 92B, section Rule 10CB, section Rule 44H, section Rule 26 of the Income Tax Act 1961. It is reported as Rule 10CB of the Income-tax Rules, 1962, transcribed in full from incometaxindia.gov.in/w/rule-10cb (Income-tax Rules, 1962; heading "Computation of interest income pursuant to secondary adjustments"; no "Year:" stamp), with the footnotes transcribed verbatim on a second fetch of the same page. Two things go wrong in practice. The first is the starting point. Practitioners assume the clock always runs from the return due date; it does not. Where the adjustment was made by the officer and accepted, it runs from the date of the ORDER, which can be much earlier than the next return due date; where an APA is signed after the return due date, it runs from the END OF THE MONTH of signature. Rule 10CB(3) then separately fixes the date from which interest is CHARGEABLE, matching the same four starting points, so the ninety-day window is not itself interest-free time added on — the interest under sub-rule (3) runs from the sub-rule (1) starting point. The second is the rate. Using the MCLR base on a dollar-denominated receivable, or LIBOR on a rupee one, produces a number the Revenue will not accept and a number that is often materially different: the two bases are drawn on different dates (1 April versus 30 September of the relevant previous year) and carry different spreads (325 versus 300 basis points). AND THE FOREIGN-CURRENCY BASE IS A DEAD RATE. Rule 10CB(2)(ii) has not been amended: the departmental rule page still prints "six month London Interbank Offered Rate as on 30th September of the relevant previous year", and I found no notification substituting another benchmark. LIBOR settings have ceased, so for a previous year in which no six-month LIBOR setting exists on 30 September the rule names a rate that cannot be read. That is a gap in the rule, not a licence to substitute SOFR or any other benchmark of your own; the entry states the rule as it stands and the reader should put the difficulty on record rather than pick a rate. Note that the currency test is the currency in which the INTERNATIONAL TRANSACTION is denominated, not the currency in which the money happens to be held; and the Explanation supplies the conversion rule — the telegraphic transfer buying rate on the last day of the previous year in which the transaction was undertaken, with "telegraphic transfer buying rate" carrying the meaning given in the Explanation to rule 26. If it applies to you, the first step is this: Identify which of the five clauses of Rule 10CB(1) your primary adjustment falls under BEFORE counting ninety days. The starting points are different and one of them — the APA entered into after the return due date — runs from the end of a month, not from a date.
Rule 10CB(1) provides that for the purposes of s.92CE(2) "the time limit for repatriation of excess money or part thereof shall be on or before ninety days,— (i) from the due date of filing of return under sub-section (1) of section 139 of the Act where primary adjustments to transfer price has been made suo motu by the assessee in his return of income; (ii) from the date of the order of Assessing Officer or the appellate authority, as the case may be, if the primary adjustments to transfer price as determined in the aforesaid order has been accepted by the assessee; (iii) in a case where primary adjustment to transfer price is determined by an advance pricing agreement entered into by the assessee under section 92CC of the Act in respect of a previous year,— (a) from the date of filing of return under sub-section (1) of section 139 of the Act if the advance pricing agreement has been entered into on or before the due date of filing of return for the relevant previous year; (b) from the end of the month in which the advance pricing agreement has been entered into if the said agreement has been entered into after the due date of filing of return for the relevant previous year; (iv) from the due date of filing of return under sub-section (1) of section 139 of the Act in the case of option exercised by the assessee as per the safe harbour rules under section 92CB; or (v) from the date of giving effect by the Assessing Officer under rule 44H to the resolution arrived at under mutual agreement procedure, where the primary adjustment to transfer price is determined by such resolution under a Double Taxation Avoidance Agreement entered into under section 90 or section 90A of the Act". Sub-rule (3) fixes the date from which interest is chargeable on the unrepatriated excess money: from the s.139(1) due date in the cases in clause (i), sub-clause (a) of clause (iii) and clause (iv); from the date of the order of the Assessing Officer or appellate authority in the case in clause (ii); from the end of the month in which the APA was entered into in the case in sub-clause (b) of clause (iii); and from the date of giving effect under rule 44H in the case in clause (v). The Explanation provides that "International transaction" has the meaning in s.92B and that the rate of exchange for valuing a foreign-currency transaction in rupees is the telegraphic transfer buying rate of that currency on the last day of the previous year in which the transaction was undertaken, "telegraphic transfer buying rate" carrying the meaning assigned in the Explanation to rule 26. The matter was decided on 2017-06-15 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that the ninety-day repatriation window under Rule 10CB(1) runs from five different starting points depending on how the primary adjustment arose, and that the imputed per annum interest on excess money not repatriated within that window is computed under Rule 10CB(2) on two distinct bases — SBI's one-year marginal cost of fund lending rate as on 1 April of the relevant previous year plus 325 basis points where the international transaction is denominated in Indian rupees, and the six-month London Interbank Offered Rate as on 30 September of the relevant previous year plus 300 basis points where it is denominated in foreign currency.
Not a judgment; no judicial reasoning is stated for the rule itself. On its operation the ITAT Mumbai recorded at paragraph 10 of its order of 14 February 2025 in VVF (India) Limited that "as per rule 10CB computation of interest commences from the due date of filing the return of income", the assessment year there being one in which the primary adjustment had been made in the return. In the words reproduced by the source cited on this page: "(i) at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points in the cases where the international transaction is denominated in Indian rupee; or (ii) at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points in the cases where the international transaction is denominated in foreign currency."
It was decided by the CBDT Circulars & Instructions on 2017-06-15 and is reported as Rule 10CB of the Income-tax Rules, 1962, transcribed in full from incometaxindia.gov.in/w/rule-10cb (Income-tax Rules, 1962; heading "Computation of interest income pursuant to secondary adjustments"; no "Year:" stamp), with the footnotes transcribed verbatim on a second fetch of the same page. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 92CE, section 92CE(2), section 139(1), section 92CC, section 92CB, section 90, section 90A, section 92B, section Rule 10CB, section Rule 44H, section Rule 26, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that the ninety-day repatriation window under Rule 10CB(1) runs from five different starting points depending on how the primary adjustment arose, and that the imputed per annum interest on excess money not repatriated within that window is computed under Rule 10CB(2) on two distinct bases — SBI's one-year marginal cost of fund lending rate as on 1 April of the relevant previous year plus 325 basis points where the international transaction is denominated in Indian rupees, and the six-month London Interbank Offered Rate as on 30 September of the relevant previous year plus 300 basis points where it is denominated in foreign currency. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92CE, section 92CE(2), section 139(1), section 92CC, section 92CB, section 90, section 90A, section 92B, section Rule 10CB, section Rule 44H, section Rule 26 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Test the currency in which the international transaction is denominated, then pick the correct base: SBI one-year MCLR as on 1 April of the relevant previous year plus 325 basis points for rupees; six-month LIBOR as on 30 September of the relevant previous year plus 300 basis points for foreign currency. Read sub-rule (3) alongside sub-rule (1) to fix the date from which interest is chargeable, and note that for a MAP case both run from the date the Assessing Officer gives effect under rule 44H, not from the date of the competent authority resolution. Convert a foreign-currency transaction using the telegraphic transfer buying rate on the last day of the previous year in which the transaction was undertaken, as the Explanation to the rule requires. If the transaction is denominated in a currency for which no six-month LIBOR setting is published for the relevant date, put the difficulty on record in your computation and in correspondence with the officer rather than substituting a rate of your own — the rule as it stands names LIBOR and nothing else.
Validity check could not be completed. Validity check could not be completed. The rule text is verified — it was transcribed twice from the departmental page, and the distinctive phrase "three hundred twenty five basis points" was independently located on indiankanoon's page for rule 10CB — but departmental rule pages carry no "Year:" stamp, so I cannot confirm from the page that no later amendment exists beyond the IT (Eleventh Amdt.) Rules, 2019 recorded in its footnotes. I did not check judicial treatment of the rule beyond the ITAT Mumbai order of 14 February 2025 noted in this entry. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Rule 10CB was transcribed from incometaxindia.gov.in/w/rule-10cb, which prints "Income-tax Rules, 1962" and the rule heading "Computation of interest income pursuant to secondary adjustments". DEPARTMENTAL RULE PAGES CARRY NO "Year:" STAMP, so this rule cannot be dated the way a section can, and I have not dated it from the page. The footnotes at the foot of the page were transcribed verbatim on a second fetch and read: "84. Inserted by the IT (Fifteenth Amdt.) Rules, 2017, w.e.f. 15-6-2017.", "85. Substituted for \"excess money\" by the IT (Eleventh Amdt.) Rules, 2019, w.e.f. 30-9-2019.", "86.", "87." and "90. Substituted by the IT (Eleventh Amdt.) Rules, 2019, w.e.f. 30-9-2019.", "88. Substituted for \"excess money\" by the IT (Eleventh Amdt.) Rules, 2019, w.e.f. 30-9-2019." and "89. Inserted by the IT (Eleventh Amdt.) Rules, 2019, w.e.f. 30-9-2019." I could NOT map each footnote marker to the clause it belongs to, so I cannot say which particular words of sub-rules (2) and (3) date from 2017 and which from 2019; the `decided_on` value 2017-06-15 is the commencement of the rule as a whole, taken from footnote 84, and the reader should treat 30 September 2019 as the date the rule reached its present shape. A LIVE HAZARD: clause (ii) of sub-rule (2) still refers to the "six month London Interbank Offered Rate", and I asked the page expressly whether that reference had been substituted by another benchmark; it had not. LIBOR settings have been discontinued, so for recent previous years the rule names a rate that may not exist for the relevant date. That is a gap in the rule, not in this entry, and it is flagged so the reader does not silently substitute a replacement benchmark. A departmental /w/rule-NN URL has more than once served SEBI ICDR Regulations 2018 material instead of the Income-tax Rules; this page was checked on both fetches and returned the Income-tax Rules, 1962 and the correct rule heading. The phrase "three hundred twenty five basis points" was independently found on indiankanoon's page for rule 10CB, which is a check that the words are genuine and not a fetch-layer invention. The rule's foreign-currency limb is corroborated in operation at paragraph 2.6 of the ITAT Mumbai's order of 14 February 2025 in VVF (India) Limited: "The Ld.TPO also made secondary adjustment on account of corporate guarantee based on the period of the delay of payment of 1133 days by charging interest at the rate of 5.06% using 6 months LIBOR up to 30th September of the relevant financial year under consideration." This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that the ninety-day repatriation window under Rule 10CB(1) runs from five different starting points depending on how the primary adjustment arose, and that the imputed per annum interest on excess money not repatriated within that window is computed under Rule 10CB(2) on two distinct bases — SBI's one-year marginal cost of fund lending rate as on 1 April of the relevant previous year plus 325 basis points where the international transaction is denominated in Indian rupees, and the six-month London Interbank Offered Rate as on 30 September of the relevant previous year plus 300 basis points where it is denominated in foreign currency.
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