Rules 2026

Rule 95 of the Income-tax Rules, 2026

Rule 95 — Eligible assessee for safe harbour rules for specified domestic transactions.

Where this rule sits

What this rule does

The rule defines "eligible assessee" for the safe harbour rules for specified domestic transactions. An eligible assessee is a person who has exercised a valid option for application of safe harbour rules in accordance with rule 97, and who is either a Government company engaged in the business of generation, supply, transmission or distribution of electricity, or a co-operative society engaged in the business of procuring and marketing milk and milk products.

Why it is there

Safe harbour treatment for specified domestic transactions has to be confined to a defined class, and the rule does that in two cumulative parts: a procedural qualification and a business qualification. Without the valid option under rule 97 there is no eligible assessee at all, whatever the business.

Who it applies to

A Government company engaged in the business of generation, supply, transmission or distribution of electricity, which has exercised a valid option under rule 97
A co-operative society engaged in the business of procuring and marketing milk and milk products, which has exercised a valid option under rule 97

What this means in practice

Both limbs must hold. The definition opens with the person who has exercised a valid option in accordance with rule 97 and then adds clauses (a) and (b), so a Government electricity company that never exercised the option is not an eligible assessee, and an option exercised by someone outside clauses (a) and (b) does not make one either. The business descriptions are narrow: clause (a) is generation, supply, transmission or distribution of electricity by a Government company, and clause (b) is procuring and marketing milk and milk products by a co-operative society. Whether the option is valid is a question for rule 97, not for this rule.

An example

Illustrative only, and invented for this page. The figures are chosen to show the requirement biting, not taken from any real matter.

A co-operative society that procures and markets milk exercises the safe harbour option in accordance with rule 97 for the tax year. It is an eligible assessee. A privately held electricity distribution company that exercises the same option is not, because clause (a) requires a Government company.

Where you meet this rule

You meet it at the threshold of any safe harbour claim for a specified domestic transaction — before the safe harbour terms are considered at all, the assessee has to answer this definition.

The words themselves

An "eligible assessee" means a person who has exercised a valid option for application of safe harbour rules in accordance with the provisions of rule 97

Rule 95, Income-tax Rules, 2026.

What people get wrong

Assuming the business qualification is enough. The definition also requires a valid option exercised in accordance with rule 97.
Extending clause (a) to any electricity company. It is limited to a Government company in that business.
Reading clause (b) as covering dairy business generally. It is a co-operative society engaged in procuring and marketing milk and milk products.
Looking here for the terms of the safe harbour. This rule defines who is eligible; it does not set the safe harbour itself.

What this page does not tell you. It does not reproduce the rule. Everything above was written from the rule’s own text as the Income Tax Department publishes it — the text is here. A rule is subordinate legislation: it prescribes the method, the form or the period, and it cannot enlarge the charge the section imposes. Where a figure matters, read the sub-rule it comes from.