Income Tax Dept Expands Safe Harbour Rules for Auto Components

New Delhi, Mar 25 (PTI) The Income Tax department on Tuesday expanded the scope of safe harbour rules by including lithium-ion batteries for use in electric or hybrid electric vehicles in the definition of core auto components.

Through a notification, the finance ministry amended income tax rules to also increase the threshold for availing safe harbour to Rs 300 crore from Rs 200 crore.

According to the notification, the amendments are applicable for two assessment years --? 2025-26 and 2026-27.

Under the income tax law, safe harbour is used in transfer pricing parlance.

Transfer pricing refers to the prices at which various overseas divisions of a company transact with each other. Generally, safe harbour is defined as circumstances in which the tax authority shall accept the transfer price declared by the taxpayer to be at arm's length.