Section 167 - Power of Board to make safe harbour rules
Safe harbour is an elective certainty mechanism. Compare its prescribed margin or rate with the taxpayer's fact-based transfer-pricing result, cash tax, documentation cost and dispute exposure.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 167 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Safe harbour is an elective certainty mechanism. Compare its prescribed margin or rate with the taxpayer's fact-based transfer-pricing result, cash tax, documentation cost and dispute exposure.
Who should use this section
Eligible taxpayers electing a prescribed safe harbour for international, specified domestic or income-attribution cases.
Old-law bridge
section 92CB
The old-law bridge is navigational, not automatic precedent transfer. Match the 1961 Act wording, saved proceedings, current 2025 Act text and effective date before importing an older interpretation.
Finance Act 2026 / current-law note
No section-specific Finance Act, 2026 textual substitution is separately flagged for section 167; the consolidated post-Finance-Act-2026 text remains the controlling version and must be used instead of pre-1 April 2026 extracts.
Professional alert
Application caution Rules exclude or restrict safe harbour for specified jurisdictions and transaction classes. Check the live rule for the tax year.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| Rule 86-102 | International, specified-domestic and income-attribution safe-harbour procedures | 49 |
Worked application
An eligible captive service provider may choose the prescribed safe-harbour margin instead of litigating a benchmark, provided every eligibility and filing condition is met.
Evidence / compliance checklist
- eligibility computation (section 167 evidence control 1).
- Form 49 (section 167 evidence control 2).
- transaction category mapping (section 167 evidence control 3).
- margin or rate working (section 167 evidence control 4).
Common mistake
A common section 167 error is to apply the old-law label or headline rate without rebuilding the current statutory conditions. For “Safe harbour rules”, the safer control is to test the exact taxpayer/transaction facts, the operative tax year, every linked Rule/Form and the Finance Act 2026 consolidated wording. Application caution Rules exclude or restrict safe harbour for specified jurisdictions and transaction classes. Check the live rule for the tax year.
Recommended approach
For section 167, start with the legal trigger in “Safe harbour rules”, document the evidence for that trigger, then run the computation or procedural step against the current text. As a cross-check, verify this provision-specific checkpoint: Safe harbour is an elective certainty mechanism. Compare its prescribed margin or rate with the taxpayer's fact-based transfer-pricing result, cash tax, documentation cost and dispute exposure.
Thresholds, periods and timing checkpoints
- Section 167 contains no standalone numeric checkpoint extracted for the register; apply its operative conditions from the current statutory text.
Related provisions and interaction map
Section 167 forms part of the sections 161-173 transfer-pricing code; apply Rules 77-124 only as relevant and cross-check sections 263, 286/296 plus treaty / PE provisions for this section.
Provision summary - verify verbatim text in the official Act
Text-status note: This guide does not reproduce the complete verbatim provision for section 167. Use the linked official consolidated Act before quoting sub-section language or preparing a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Quoting note: Use the official consolidated Act for verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 case automatically decide section 167?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which text should be quoted in advice or litigation?
Quote the consolidated official statute for the relevant tax year. If this page presents a provision summary rather than complete statutory text, use the official consolidated Act for verbatim legislative language.