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India Tax Administration amends the transfer pricing safe harbour rules
A “safe harbour” is defined in the Indian Income Tax Law (ITL) as circumstances in which the tax authorities shall accept the transfer price declared by the taxpayer. India’s Central Board of Direct Taxes (CBDT), the apex Indian tax administration body, first issued transfer pricing (TP) safe harbour rules (SHR) on 18 September 2013, applicable for five years from financial year (FY) 2012-13 to FY 2016-17.
Further the CBDT, vide yearly notifications extended the scope of SHR for various financial years upto FY 2023-24.
The CBDT issued a notification on 25 March 2025[1] amending the SHR as follows:
- Extended the application of provisions of SHR to FY 2024-25 and FY 2025-26
- Expanded the definition of “core auto components” under Rule 10TA(b) to include lithium-ion batteries for use in electric or hybrid electric vehicles
- Increasing the upper limit threshold of eligible international transactions for provision of certain services from INR 2 billion to INR 3 billion
[1] Notification No. 21/2025 dated 25 March 2025