Tolerance band variation under Section 92C:
ANo tolerance (per relevant Section)
B5%
C10%
D1% wholesale traders, 3% others
Answer & Solution
Correct answer: D. 1% wholesale traders, 3% others
1. Section 92C(2): tolerance band — if variation between price and arithmetic mean of ALP within prescribed %, actual price accepted.
2. From AY 2020-21: 1% wholesale traders, 3% others (notified annually).
3. If exceeds band, adjustment to arithmetic mean ALP.
_Source: ICAI BoS CA Final Paper 7, Ch 24 "Transfer Pricing"_
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