Rule 92 of the Income-tax Rules, 2026

Where this rule sits

Rule 92 gives effect to Section 176 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

← Rule 91  ·  Rule 93 →

What this rule does

The rule carves two situations out of the safe harbour scheme. Nothing contained in rule 86, 87, 88, 89, 90 or 91 applies in respect of eligible international transactions entered into with an associated enterprise located in any country or territory notified under section 176, or in a no tax or low tax country or territory.

It is a single sentence of exclusion. It does not alter the arm's length price, prescribe a substitute margin, or say how the excluded transaction is to be dealt with; it removes those six rules from the picture and leaves the transaction to the ordinary transfer pricing provisions.

Why it is there

A safe harbour lets a taxpayer declare a margin and be spared a full arm's length inquiry. That bargain assumes the counterparty is in an ordinary jurisdiction, so that the margin declared here is the whole of the profit at stake. Where the associated enterprise sits in a jurisdiction notified under section 176, or in a no tax or low tax country or territory, the same margin can leave income parked untaxed on the other side, so rule 92 withdraws the concession rather than adjusting it.

Who it applies to

• An assessee who would otherwise opt for a safe harbour under rules 86 to 91
• Assessees transacting with an associated enterprise located in a country or territory notified under section 176
• Assessees transacting with an associated enterprise located in a no tax or low tax country or territory
• The Transfer Pricing Officer testing whether a safe harbour option is available at all

What this means in practice

The bar attaches to the location of the associated enterprise, not to the nature of the transaction: a transaction that is an eligible international transaction in every other respect gets nothing from rules 86 to 91 if the counterparty is in an excluded jurisdiction. The exclusion is also wider than the section 176 list — a no tax or low tax country or territory is caught even where no notification has issued — so a taxpayer cannot clear this rule by checking notifications alone. And the consequence is not a penalty: the transaction simply reverts to ordinary arm's length determination, with the documentation and comparability burden that carries.

An example

A company opts for a safe harbour on its software development services and files on the footing that rule 86 covers it. Its associated enterprise is located in a territory notified under section 176. Rule 92 makes none of rules 86 to 91 applicable to that transaction, so the declared margin gives no protection and the arm's length price falls to be determined in the ordinary way.

Where you meet this rule

You meet it at the threshold of any safe harbour claim, when the option is examined and the location of the associated enterprise is checked against the section 176 notifications and against the no tax or low tax description.

The words themselves

What people get wrong

• Checking only the section 176 notifications. Rule 92 also excludes an associated enterprise located in a no tax or low tax country or territory.
• Testing the transaction rather than the counterparty. The exclusion turns on where the associated enterprise is located.
• Reading the rule as barring only some of the safe harbours. It disapplies rules 86, 87, 88, 89, 90 and 91 alike.
• Assuming an excluded transaction is disallowed or penalised. Rule 92 only removes the safe harbour; the arm's length price is then determined in the ordinary way.

Read with

• Rule 86
• Rule 87
• Rule 88
• Rule 89
• Rule 90
• Rule 91