To enhance "Ease of Doing Business" for technology sector, Finance Minister Nirmala Sitharaman has announced a massive overhaul of the Safe Harbour Rules (SHR) for IT and IT-enabled services (ITeS).
This reform specifically targets Global Capability Centres (GCCs) and large-scale IT exporters who have long struggled with protracted transfer pricing litigation.
The most major change is the raising of the eligibility threshold for safe harbour protection.
Reduced Litigation: With higher thresholds and a unified margin, thousands of cross-border transactions will now be accepted by tax authorities without need for in-depth audits.
Boost to GCCs: India currently hosts over 2,000 GCCs. This move provides the "tax predictability" needed to attract higher-value mandates like AI development and platform engineering.
Operational Simplicity: Firms no longer need to spend years in Advance Pricing Agreement (APA) process for transactions below the ₹2,000 crore mark, as the safe harbour provides an immediate "Green Channel" for tax compliance.
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