Specified Domestic Transaction (SDT)

In India, a Specified Domestic Transaction (SDT) denotes certain transactions undertaken between related or associated entities within the country that cross a specified monetary limit as outlined in the Income Tax Act, 1961. These transactions fall under the scope of domestic transfer pricing provisions, which require them to be conducted at arm’s length terms—that is, as if the parties were independent and dealing in the open market.

Example: When a company supplies goods or renders services valued at ₹25 crore or more to a related Indian entity, it must maintain detailed transfer pricing records and submit a Form 3CEB, duly certified by a Chartered Accountant, to confirm compliance with SDT regulations.