Rule 10TA Safe Harbour Rules for International Transactions Definitions.

Definitions.

10TA. For the purposes of this rule and rule 10TB to rule 10TG,—

(a) “contract research and development services wholly or partly relating to software development” means the following, namely:—

(i)  research and development producing new theorems and algorithms in the field of theoretical computer science;

(ii)  development of information technology at the level of operating systems, programming languages, data management, communications software and software development tools;

(iii)  development of Internet technology;

(iv)  research into methods of designing, developing, deploying or maintaining software;

(v)  software development that produces advances in generic approaches for capturing, transmitting, storing, retrieving, manipulating or displaying information;

(vi)  experimental development aimed at filling technology knowledge gaps as necessary to develop a software programme or system;

(vii) research and development on software tools or technologies in specialised areas of computing (image processing, geographic data presentation, character recognition, artificial intelligence and such other areas);or

(viii) upgradation of existing products where source code has been made available by the principal;

(b)  “core auto components” means,—

(i)  engine and engine parts, including piston and piston rings, engine valves and parts cooling systems and parts and power train components;

(ii)  transmission and steering parts, including gears, wheels, steering systems, axles and clutches;

(iii)  suspension and braking parts, including brake and brake assemblies, brake linings, shock absorbers and leaf springs;

(c) “corporate guarantee” means explicit corporate guarantee extended by a company to its wholly owned subsidiary being a non-resident in respect of any short-term or long-term borrowing.

Explanation.—For the purposes of this clause, explicit corporate guarantee does not include letter of comfort, implicit corporate guarantee, performance guarantee or any other guarantee of similar nature;

(d) “generic pharmaceutical drug” means a drug that is comparable to a drug already approved by the regulatory authority in dosage form, strength, route of administration, quality and performance characteristics, and intended use;

(e) “information technology enabled services” means the following business process outsourcing services provided mainly with the assistance or use of information technology, namely:—

(i)  back office operations;

(ii)  call centres or contact centre services;

(iii) data processing and data mining;

(iv) insurance claim processing;

(v)  legal databases;

(vi) creation and maintenance of medical transcription excluding medical advice;

(vii) translation services;

(viii) payroll;

(ix)  remote maintenance;

(x)  revenue accounting;

(xi)  support centres;

(xii) website services;

(xiii) data search integration and analysis;

(xiv) remote education excluding education content development; or

(xv) clinical database management services excluding clinical trials,

but does not include any research and development services whether or not in the nature of contract research and development services;

(f)  “intra-group loan” means loan advanced to wholly owned subsidiary being a non-resident, where the loan—

  (i)  is sourced in Indian rupees;

(ii)  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

(iii)  does not include credit line or any other loan facility which has no fixed term for repayment;

(g) “knowledge process outsourcing services” means the following business process outsourcing services provided mainly with the assistance or use of information technology requiring application of knowledge and advanced analytical and technical skills, namely:—

(i)  geographic information system;

(ii)  human resources services;

(iii) engineering and design services;

(iv) animation or content development and management;

(v)  business analytics;

(vi) financial analytics; or

(vii) market research,

but does not include any research and development services whether or not in the nature of contract research and development services;

(h) “non-core auto components” mean auto components other than core auto components;

(i)  “no tax or low tax country or territory” means a country or territory in which the maximum rate of income-tax is less than fifteen per cent;

(j)  “operating expense” means the costs incurred in the previous year by the assessee in relation to the international transaction during the course of its normal operations including depreciation and amortisation expenses relating to the assets used by the assessee, but not including the following, namely:—

(i)  interest expense;

(ii)  provision for unascertained liabilities;

(iii) pre-operating expenses;

(iv) loss arising on account of foreign currency fluctuations;

(v)  extraordinary expenses;

(vi) loss on transfer of assets or investments;

(vii) expense on account of income-tax; and

(viii) other expenses not relating to normal operations of the assessee;

(k)  “operating revenue” means the revenue earned by the assessee in the previous year in relation to the international transaction during the course of its normal operations but not including the following, namely:—

(i)  interest income;

(ii)  income arising on account of foreign currency fluctuations;

(iii) income on transfer of assets or investments;

(iv) refunds relating to income-tax;

(v)  provisions written back;

(vi) extraordinary incomes; and

(vii) other incomes not relating to normal operations of the assessee.

(l)  “operating profit margin” in relation to operating expense means the ratio of operating profit, being the operating revenue in excess of operating expense, to the operating expense expressed in terms of percentage;

(m) “software development services” means,—

(i)  business application software and information system development using known methods and existing software tools;

(ii)  support for existing systems;

(iii) converting or translating computer languages;

(iv) adding user functionality to application programmes;

(v)  debugging of systems;

(vi) adaptation of existing software; or

(vii) preparation of user documentation,

but does not include any research and development services whether or not in the nature of contract research and development services.]