CBDT Revises Definition of ‘Intra-group Loan’ & Outlines its ‘Safe Harbour’ Conditions Under Rule 10TD
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- Last Updated on 21 December, 2023
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Notification No. 104/2023, dated 19-12-2023
Rule 10TA of the Income Tax Rules, 1962 outlines several definitions pertaining to Safe Harbour Rules, while additional provisions related to these rules are specified in rules ranging from Rule 10TB to Rule 10TG.
The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Twenty-Ninth Amendment) Rules, 2023, to amend Rules 10TA and 10TD. Rules have been amended to revise the definition of intra-group loans and circumstances in which they are treated as Safe Harbour.
The intra-group loan definition has been revised to include loans extended to “Associate Enterprise” rather than wholly owned subsidiaries. Further, the condition for the loans to be advanced must be sourced in Indian Rupees has been omitted. The updated definition of intra-group loan is now stated as follows:
“Intra-group loan” means a 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
(ii) does not include credit line or any other loan facility which has no fixed term for repayment;
Rule 10TD has been amended to replace the conditions for safe harbor in the event of the advancement of intra-group loans denominated in a foreign currency. The reference to “CRISIL” credit rating has been omitted from Rule 10TD. Thus, the credit rating of any other entities can be used while determining Safe Harbour.
The amended Rules are effective from 01-04-2024.
Click Here To Read The Full Notification
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