India’s Central Board of Direct Taxes (CBDT) issued Notification No. 21/2025 on 25 March 2025, introducing the Income-tax (Sixth Amendment) Rules, 2025. This encompasses three key modifications to the safe harbour rules for international transactions outlined in the Income Tax Rules, 1962.
This announcement was made by CBDT on 25 March 2025.
Key amendments to safe harbour rules
Higher threshold limit: The eligibility threshold for safe harbour benefits has been raised from INR 2 billion to INR 3 billion.
Inclusion of lithium-Ion batteries: The definition of core automobile components under the safe harbour framework has been expanded to include lithium-ion batteries used in electric and hybrid vehicles.
Extended applicability: The third amendment to Rule 10TD extends the safe harbour to assessment years 2025-26 and 2026-27, covering financial years 2024-25 and 2025-26.
The term “Safe Harbour” refers to specific conditions where tax authorities will accept a business’s declared transfer pricing without extensive examination.
The Safe Harbour Rules offer a clear and structured approach for simplifying transfer pricing in international transactions. By adhering to these rules, companies can avoid conflicts with tax authorities, as they allow businesses to declare transfer prices within predefined acceptable ranges.
These rules are part of Section 92CB of the Income Tax Act, 1961, and are designed to reduce the complexity of transfer pricing regulations.
