Safe harbour rules threshold raised; to include lithium ion batteries for EVs | India News

The Central Board of Direct Taxes (CBDT) notified amendments to Income-tax Rules on Tuesday to expand the scope of safe harbour rules by including lithium-ion batteries for use in electric or hybrid electric vehicles and increasing the threshold for availing safe harbour to Rs 300 crore.

Experts said this will help reduce transfer pricing disputes for imported EV components. The CBDT said it will provide tax certainty to the assessees opting for safe harbour and the amendments will apply for two assessment years 2025-26 and 2026-27.

As per the CBDT statement, the threshold for safe harbour has been raised to Rs 300 crore from Rs 200 crore. Also, ‘Lithium ion batteries for use in electric or hybrid electric vehicles’ have been included in the definition of core auto components.

Safe harbour rules are defined under Section 92CB of the Income-tax Act, 1961 for the determination of arm’s length price under section 92C or section 92CA. Safe harbour means circumstances in which the 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.

Aanchal Magazine is Senior Assistant Editor with The Indian Express and reports on the macro economy and fiscal policy, with a special focus on economic science, labour trends, taxation and revenue metrics. With over 13 years of newsroom experience, she has also reported in detail on macroeconomic data such as trends and policy actions related to inflation, GDP growth and fiscal arithmetic. Interested in the history of her homeland, Kashmir, she likes to read about its culture and tradition in her spare time, along with trying to map the journeys of displacement from there.

… Read More