Rapid Fire
CBDT Expands Safe Harbour Rules
- 26 Mar 2025
- 2 min read
The Central Board of Direct Taxes (CBDT) has amended the Income-Tax Rules, 1962 to broaden the safe harbour provisions, aiming to enhance tax certainty and reduce disputes related to transfer pricing in the EV sector.
- Amendments: The threshold for availing safe harbour has been increased from Rs 200 crore to Rs 300 crore, applicable for Assessment Years 2025-26 and 2026-27.
- Lithium-ion batteries used in electric or hybrid vehicles are now part of the core auto components eligible under safe harbour rules.
- Industry Impact: For large companies, higher thresholds provide a broader safety net against transfer pricing disputes.
- For the EV industry, the changes incentivize investment and manufacturing in the Indian clean mobility ecosystem.
- Safe Harbour: Refers to circumstances in which income-tax authorities accept the transfer price as declared by the assessee.
- Transfer Price is the actual price charged in a transaction between related entities which are part of the same multi national enterprises (MNE) group.
- Safe harbour rules are defined under Section 92CB of the Income-tax Act, 1961, and Under Sections 92C and 92CA companies can declare Arm’s Length Price (price at which unrelated parties would trade in an open market) without disputes if within safe harbour limits.
| Read more: CBDT to Overhaul Income Tax Act 1961 |
