Related Party Transaction (RPT)

Tax Glossary Definition

Related Party Transaction (RPT)

A related party transaction is any transfer of resources, services, or obligations between a taxpayer and a person or entity with which they have a close relationship, such as family members, subsidiaries, or key managerial personnel. Such transactions are subject to scrutiny to ensure they are conducted at arm’s length, and mandatory disclosure is required under the Income Tax Act and Companies Act.

Example: Sale of an asset to a relative must be reported and scrutinized under § 40A(2) to ensure the transaction is not at a non-arm’s-length price

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