Quick Summary
CBDT Notifies Sixth Amendment to Income-Tax Rules, 2025
Key Highlights of Notification No. 21/2025
The Central Board of Direct Taxes (CBDT) has issued Notification No. 21/2025 on March 25, 2025, amending the Income-tax Rules, 1962. The Income-tax (Sixth Amendment) Rules, 2025 introduce key changes impacting transfer pricing, electric vehicles, and assessment years.
Major Amendments Introduced
- Lithium-Ion Batteries for EVs: A significant inclusion in Rule 10TA now recognizes lithium-ion batteries used in electric and hybrid vehicles under safe harbor provisions. This move aligns with India's push for sustainable mobility.
- Revised Safe Harbor Margins: Under Rule 10TD, safe harbor margins for multiple international transactions have been revised, increasing the prescribed profit margins from 2% to 3% in several cases.
- Extended Safe Harbor Period: Assessment years covered under Rule 10TD(3B) have been extended up to 2026-27, ensuring continued benefits for eligible taxpayers.
- Clarity on Assessment Year Validity: A provision in Rule 10TE(2) now specifies that certain safe harbor benefits apply for one assessment year only, eliminating ambiguity.
Implications for Taxpayers & Businesses
- Boost for EV Industry - Lithium-ion battery inclusion encourages investment in clean energy.
- Increased Certainty for MNCs - Revised margins provide clarity in transfer pricing disputes.
- Longer Tax Planning Horizon - Extension of safe harbor rules benefits IT, ITeS, and R&D service providers.
This notification is a crucial step toward enhancing tax compliance while supporting India's green energy and business-friendly policies.
Official copy of the notification has also been attached
FAQ :
The CBDT's notification aims to amend the Income-Tax Rules, 1962, to broaden the scope of safe harbour provisions, impacting transfer pricing, electric vehicles, and assessment years.
Lithium-ion batteries used in electric and hybrid vehicles have now been included under the safe harbour provisions, encouraging investment in sustainable mobility.
Yes, the safe harbour margins for several international transactions have been revised, with prescribed profit margins increasing from 2% to 3% in some instances.
The assessment years covered under Rule 10TD(3B) have been extended up to 2026-27, providing continued benefits for eligible taxpayers.
Yes, a new provision specifies that certain safe harbour benefits are applicable for one assessment year only, thereby removing any ambiguity.
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