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

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.

Central Board of Direct Taxes, CBDT, safe harbour rules, lithium ion batteries, lithium ion batteries for EVs, electric vehicles, Indian express news, current affairsAs 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.

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 a Senior Assistant Editor with The Indian Express, serving as a leading voice on the macroeconomy and fiscal policy. With over 13 years of newsroom experience, she is recognized for her ability to decode complex economic data and government policy for a wider audience. Expertise & Focus Areas: Magazine’s reporting is rooted in "fiscal arithmetic" and economic science. Her work provides critical insights into the financial health of the nation, focusing on: Macroeconomic Policy: Detailed tracking of GDP growth, inflation trends, and central bank policy actions. Fiscal Metrics: Analysis of taxation, revenue collection, and government spending. Labour & Society: Reporting on labour trends and the intersection of economic policy with employment. Her expertise lies in interpreting high-frequency economic indicators to explain the broader trajectory of the Indian economy. Personal Interests: Beyond the world of finance and statistics, Aanchal maintains a deep personal interest in the history of her homeland, Kashmir. In her spare time, she reads extensively about the region's culture and traditions and works to map the complex journeys of displacement associated with it. Find all stories by Aanchal Magazine here ... Read More

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