The Central Board of Direct Taxes released a revised version of the safe harbour rules through a notification on 7 June. As per section 92CB of the Income Tax Act, safe harbour is defined as circumstances in which the income tax authorities shall accept the transfer price declared by the taxpayer. The revised safe harbour rules will apply for financial year 2016-17 and the two financial years which follow. Some of the key changes are (1) the safe harbour rates for contract services have been adjusted, (2) an upper threshold of ₹2 billion (US$31 million) has been introduced for the safe harbour rules to apply, and (3) a safe harbour has been introduced for receipt of low value adding intra-group service.
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