Income Tax Expansion: Safe Harbour Rules Now Cover Lithium-Ion Batteries

The Indian Income Tax department has broadened its safe harbour rules to encompass lithium-ion batteries used in electric and hybrid vehicles. A finance ministry notification further raised the threshold for availing safe harbour from Rs 200 crore to Rs 300 crore, applicable for assessment years 2025-26 and 2026-27.

The Indian Income Tax department has taken a significant step forward by expanding the scope of its safe harbour rules. These amendments now include lithium-ion batteries used in electric and hybrid vehicles, a move expected to bring clarity to the automotive sector.

Announced through a finance ministry notification, the new rules also raise the safe harbour threshold from Rs 200 crore to Rs 300 crore. This change is set to impact companies dealing in these high-demand batteries, offering more leeway in their financial dealings.

The revised rules will be in effect for two assessment years, namely 2025-26 and 2026-27. By adjusting these terms, the government seeks to simplify the process of transfer pricing, which involves transactions between a company's overseas divisions.

(With inputs from agencies.)