NOTIFIED JURISDICTIONAL AREA UNDER SECTION 94A OF INCOME TAX ACT 1961

Notified jurisdiction means those countries which do not help India in tax information exchange u/s 94A. The purpose of this section to discourage the assessee to enter into transactions with the persons located in these notified jurisdictions. The Central Government has the power to notify any such country or territory outside India as Notified Jurisdictional Area. Earlier, Govt has notified “Cyprus” as a Notified Jurisdictional Area under section 94A but subsequently, Govt removes the name of “Cyprus” as a Notified Jurisdictional Area. Any transaction with a person located in NJA would be deemed to be an International transaction and accordingly all the provisions of transfer pricing to be attracted in case of such transaction. Few examples of such transactions: · Purchase or sale of tangible or intangible property or· Provision of services· Lending or borrowing of money or· Any other transaction having bearing on the profits, income, losses or assets of the assessee.The following shall be the effect if a person enters into a  transaction with a person located in Notified Jurisdictional Area under section 94A: 

Payments made to any financial institution located in NJA shall not be allowed as a deduction unless assessee authorizes CBDT to seek relevant information from the financial institution on behalf of the assessee. 

The assessee has to maintain the relevant documents and furnishes the prescribed information to claim the deduction in respect of any expenditure or allowance, arising from such a transaction. Any sum received or credited from a person located in NJA deemed to be income of the recipient-assessee if he does not explain satisfactorily the source of such money. The TDS in respect of the payment made to a person located in the NJA will be higher of the followings:a) The rates specified in the Income Tax Act, 1961; orb) Rate or rates in force; orc) 30%. 

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