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
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