Rule 81 sets how arm's length price is fixed when the most appropriate method gives more than one price: build an ascending dataset, use a 35th-to-65th percentile range where there are six or more entries, and otherwise the mean, with a notified tolerance of up to 3%.
81
Rules 2026 · Rule 81
Determination of arm's length price in certain cases
Rules 77-130
The dataset (sub-rule 2). Place the prices in ascending order and determine the arm's length price from that dataset.
Multi-year data (sub-rules 3 to 5). For the resale price, cost plus and transactional net margin methods, where a comparable was identified using current-year data and the same enterprise did the same or a similar transaction in either or both of the two preceding years, the weighted average of its prices over those years goes into the dataset in place of the single price. A similar rule applies where the preceding year's data was used because current-year data was not available when the return was filed. If current-year data shows the enterprise did not undertake the same or a similar transaction, or the transaction is not comparable, neither the price nor the weighted average is included. The weights are: for resale price, the quantum of sales; for cost plus, the quantum of costs; for transactional net margin, costs, sales, assets or another base.
Arm's length range (sub-rule 6). For the comparable uncontrolled price, resale price, cost plus and transactional net margin methods, where the dataset has six or more entries, the arm's length range runs from the 35th percentile to the 65th percentile. If the actual price is within the range, it is deemed to be the arm's length price. If it is outside, the median of the dataset is used.
Where sub-rule 6 does not apply (sub-rule 7). The arm's length price is the arithmetical mean of all values in the dataset, or the actual price if the variation from that mean does not exceed a percentage of the actual price, not exceeding 3%, that the Central Government notifies.
Definitions (sub-rule 8) give the median and the 35th and 65th percentiles of a dataset in ascending order, including what to do when the data place falls on a whole number. The Rules also set out three worked illustrations (a transactional net margin case with weighted-average margins, the same case with partial current-year data, and a comparable uncontrolled price case with twenty prices), which are best read in the bare text.