Rule 100 of the Draft Income-tax Rules, 2026 provides a safe harbour regime for income attribution in cases of income from business and profession for specified eligible businesses. Where an eligible assessee exercises the safe harbour option under Rule 101 and the option is not declared invalid, the income-tax authorities shall accept the declared income if it meets prescribed profit thresholds. For the business of selling raw diamonds, profits chargeable under the head “Profits and gains of business or profession” must be at least 4% of gross receipts. For the business of storing components in a custom bonded warehouse for sale to a contract manufacturer, profits must be at least 2% of gross receipts. Once the safe harbour is accepted, deductions under sections 28 to 34, 44 to 49, 51, 52, Schedule IX and Schedule X are deemed fully allowed, and no further deductions are permitted. Depreciation is deemed allowed, and no set-off of unabsorbed depreciation, carried forward losses, or losses from other businesses or heads is permitted against such income. Sections 171 and 172 apply where international transactions are undertaken, and “international transaction” carries the meaning assigned under section 163.
Extract of Rule No. 100 of Draft Income-tax Rules, 2026
Rule 100
Safe Harbour for income attribution in case of income from business and profession.
(1) The income-tax authorities shall accept the option for safe harbour exercised by an eligible assessee in any relevant tax year under rule 101, where the income declared by such assessee from an eligible business is in accordance with the circumstances as specified under sub-rule (2), unless such safe harbour is declared invalid under the provisions of rule 101(3).
(2) In respect of the eligible business mentioned in column B of the Table below, the circumstances referred to in sub-rule (1) shall be as specified in column C thereof.
TABLE
| Sl. No. |
Eligible business | Circumstances |
| A | B | C |
| 1. | Selling of raw diamonds. | The profits and gains of the eligible business chargeable to tax under the head “Profits and gains of business or profession” shall be 4 per cent or more of the gross receipts from such business. |
| 2. | The business activity of storage of components in a warehouse in a custom bonded area for sale to a contract manufacturer. | The profits and gains of the eligible business chargeable to tax under the head “Profits and gains of business or profession” shall be 2 per cent or more of the gross receipts from such business. |
(3) Where the eligible assessee has exercised the option for safe harbour under rule 101 in respect of the eligible business in any relevant tax year and such option is not declared invalid under the said rule,—
(a) any deduction allowable under the provisions of sections 28 to 34, 44 to 49, 51, 52, Schedule IX and Schedule X shall be deemed to have been already given full effect to and no further deduction under those sections shall be allowed;
(b) the written down value of any asset of such business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for such tax year;
(c) no set off of unabsorbed depreciation under section 33(11) or carried forward loss under section 112(1) shall be allowed to such assessee; and
(d) no set off of loss from other business under section 108(1) or other head under section 109 shall be allowed to such assessee for income chargeable to tax under the head “Profits and gains of business or profession” in respect of such business.
(4) The provisions of sections 171 and 172 shall apply in respect of an international transaction, if the eligible assessee enters into such transaction while carrying on the eligible business.
(5) For the purposes of this rule, “international transaction” shall have the same meaning as assigned to under section 163.
