The CBDT has issued Notification No. 25 of 2020 dated 20 May 2020, wherein it has notified the year of applicability of the ‘Safe Harbour Rules for International Transactions’ (SHR) for Assessment Year (AY) 2020-21, as the existing rules were applicable only up to AY 2019-20. The said notification are applicable from 1 April 2020.

The key directives / clarifications of the notification are as follows:

1. In rule 10TD of the Income-tax Rules, 1962 (the Rules), a new sub-rule (3B) has been inserted, which states that the provisions of sub-rules 10TD(1) and 10TD(2A) shall apply for AY 2020-21.

This insertion has been made so that the eligible assessee can avail of SHR benefits in AY 2020-21, as the earlier provisions of the SHR were applicable only upto AY 2019-20 (AY 2017-18 and two AYs immediately following that AY). As a result, the rates and the circumstances mentioned in the table prescribed under sub-rule 10TD(2A) would be applicable.

2. Further, in sub-rule 10TE(2), a new proviso has been inserted after the third proviso, which provides that the said sub-rule 10TE(2) will not be applicable in case the SHR option under sub-rule 10TD(3B) is validly exercised.

This amendment has been made so as to specify that the SHR option exercised in AY 2020-21 would be valid only for 1 year, which is AY 2020-21. This is a further deviation from the original SHRs which provided for a time of maximum 5 years, which was then reduced to 3 years and now it is for just 1 year.

3. Also, a clerical error in the heading of the Form no. 3CEFA which erroneously referred to sub-rule10(1) has been corrected so as to now refer to sub-rule10TE(1), which lays down the SHR procedure.

4. Further, the CBDT has also expressly certified that no person has been adversely affected by giving retrospective effect to these rules. The Rules are dated 20 May 2020 but applicable from 1 April 2020.


Ministry of Finance
(Department Of Revenue)
(Central Board Of Direct Taxes)

Notification No. 25/2020-Income Tax

New Delhi, the 20th May, 2020

G.S.R. 304(E).—In exercise of the powers conferred by section 295 read with sub-section (2) of section 92CB of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

1. Short title and commencement.—(1) These rules may be called the Income-tax (9th Amendment) Rules, 2020.

(2) They shall come into force and shall be deemed to have come into force from the 1st day of April, 2020.

2. In the Income-tax Rules, 1962,—

(i) in rule 10TD, after sub-rule (3A), the following rule shall be inserted, namely:—

“(3B) The provisions of sub-rules (1) and (2A) shall apply for the assessment year 2020-21”;

(ii) in rule 10TE, in sub-rule (2), after the third proviso, the following proviso shall be inserted, namely:

“Provided also that nothing contained in this sub-rule shall apply to the option for safe harbour validly exercised under sub-rule (3B) of rule 10TD.”; and

(iii) in Appendix II, in Form No 3CEFA, in the heading, in the brackets, for the word and figure “rule 10” the word, figure and letters “rule 10TE” shall be substituted.

[Notification No. 25/2020/ F. No. 370142/14/2020-TPL]

NEHA SAHAY, Under Secy.(Tax Policy and Legislation)

Explanatory Memorandum:It is hereby certified that no person is being adversely affected by giving retrospective effect to these rules.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, section-3, sub-section (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and were last amended vide notification number GSR No. 282(E), dated the 06th May, 2020.

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One Comment

  1. Varsha Jain B says:

    We have business which is into B2B model, but to attract more employees we have a scheme as per which employees can buy products in which we deal, at a price lower than its available in the market. The employees buy for there personal consumption.
    Now because of the above transaction can the business be denied to be of B2B model and thus the benefit above circular be denied?

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