CBDT expands Safe Harbour Rules: Adds EV Batteries, Raises Threshold to ₹300 Crore [Read Notification]

The Ministry of Finance issued Notification No. 21/2025 dated March 25, 2025, announcing key amendments to the Income-tax Rules, 1962, through the Income-tax (Sixth Amendment) Rules, 2025.

The changes notified by the Central Board of Direct Taxes (CBDT) are aimed at expanding the scope and applicability of safe harbour provisions under India’s transfer pricing regulations, with a particular focus on supporting the electric vehicle (EV) ecosystem and reducing tax litigation.

According to an official press release, the amendments are designed to enhance tax certainty and ease compliance by:

Read More: Income Tax Rules Changing from April 1, 2025: Full Breakdown of New Slabs, 87A Rebate, and TDS Changes

• Raising the monetary threshold for availing safe harbour benefits from Rs. 200 crore to Rs. 300 crore, and
• Including "lithium ion batteries for use in electric or hybrid electric vehicles" in the definition of core auto components, thereby making them eligible for safe harbour treatment.

These amendments will apply for two assessment years – 2025–26 and 2026–27, providing extended clarity for taxpayers involved in eligible international transactions.

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Key Amendments to the Income-tax Rules:

1. Rule 10TA – Expansion of Eligible International Transactions

Rule 10TA(b), which outlines transactions eligible for safe harbour, has been amended to insert a new sub-clause (iv) under clause (b)(iii), adding:

"lithium ion batteries for use in electric or hybrid electric vehicles"

This move directly supports India’s growing EV industry by offering tax predictability for related cross-border transactions.

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2. Rule 10TD – Revisions to Presumptive Profit Margins and Applicable Years

Rule 10TD prescribes the presumptive profit margins under safe harbour for specified transactions. The amendments include:

• Sub-rule (2A): For serial numbers 1, 2, 3, 7, and 8 in the relevant table, the word “two” has been replaced with “three”, indicating an upward revision of the applicable margin rates.
• Sub-rule (3B): The range of assessment years eligible for safe harbour has been extended:
  • Earlier: AY 2020–21 to 2024–25
  • Now: AY 2020–21 to 2026–27

This extension provides longer-term certainty to taxpayers opting for the safe harbour.

3. Rule 10TE – Clarification on Applicability

In Rule 10TE(2), under the fourth proviso, the words “for one assessment year” have been inserted after the reference to Rule 10TD. This ensures clarity that the safe harbour option applies to one year at a time.

To Read the full text of the Order CLICK HERE

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