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CA Final · Direct Tax Laws & International Taxation · Profits and Gains of Business or Profession

Under Rule 100(4) of the Income-tax Rules, 2026, what is the position where an eligible assessee with a valid safe harbour option enters into an international transaction while carrying on the eligible business?

Sections 171 and 172 continue to apply. Rule 100(4) says these provisions apply to an international transaction or specified domestic transaction entered into by the eligible assessee while carrying on the eligible business, so the safe harbour option does not exempt such transactions.

  1. ATransfer pricing provisions in sections 171 and 172 apply to that transactionCorrect
  2. BTransfer pricing provisions are wholly excluded because of the safe harbour
  3. COnly the specified domestic transaction provisions apply, not international transactions
  4. DTransfer pricing applies only if profit is below the safe harbour threshold

Explanation

Rule 100(4) states that sections 171 and 172 apply in respect of an international transaction or specified domestic transaction entered into by the eligible assessee while carrying on the eligible business. The safe harbour therefore does not exclude them. The terms are defined by reference to sections 163 and 164.

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