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 harbor 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 up to 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
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