# Specified Domestic Transactions (SDT)

> Specified domestic transactions are certain transactions between related domestic parties — mainly those involving entities claiming profit-linked tax holidays, or companies under the concessional tax regimes dealing with close connections — that must be priced at arm's length when their aggregate value exceeds ₹20 crore in a year. They need documentation and reporting in the accountant's report like international transactions.

Practice: Transfer Pricing — https://www.industax.com/services/transfer-pricing/

SDT rules exist to stop profits being shifted into tax-exempt or low-taxed units within a group. Groups with eligible units, power plants, or special regime companies are most affected.

We identify transactions within scope, benchmark them and include them in documentation and Form 48.

## Key facts

| Item | Detail |
| --- | --- |
| Threshold | Aggregate above ₹20 crore |
| Scope | Tax-holiday units and other notified related-party dealings |
| Requirement | Arm's length pricing and documentation |
| Reporting | Form 48 (formerly 3CEB) |

## Who needs this

- Groups with tax-holiday or special-regime units
- Large domestic groups
- Companies with significant related-party dealings

## What's included

- Scoping
- Benchmarking
- Documentation and reporting

## Documents

- Group structure
- Related-party ledger
- Tax holiday claims

## Process

1. **Scope** — SDTs identified.
2. **Benchmark** — Arm's length tested.
3. **Report** — Documented and certified.

## FAQs

### Are payments to directors' relatives covered?

Payments to related persons were removed from the SDT list in 2017; the current scope focuses on tax-holiday units and specified regimes. They may still be examined under other provisions.

### Is the ₹20 crore threshold per transaction?

No. It is the aggregate value of specified domestic transactions in the year.

### Do SDTs need the same documentation as international transactions?

Yes. The documentation and reporting requirements are broadly the same.

## Official sources

- Income Tax Department — Transfer Pricing: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/services/transfer-pricing/specified-domestic-transactions
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.