Rule 90: Non-IT international safe-harbour procedure
Rule 90 governs the safe-harbour option for eligible international transactions other than provision of information-technology services. It sets Form 49 filing, eligibility review, objection rights and time limits; the IT-services procedure is separately addressed by Rule 91.
Official notified Income-tax Rules, 2026Need advice on Rule 90?
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Rule 90 - Procedure relating to transactions other than provision of information technology services
(1) For the purposes of exercise of the option for safe harbour, — (a) the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer on or before the due date specified in section 263(1)(c) for furnishing the return of income for the relevant tax year; and (b) the return of income for the said tax year is furnished by the assessee on or before the date of furnishing of Form No. 49.
(2) On receipt of Form No. 49, the Assessing Officer shall verify whether— (a) the assessee exercising the option is an eligible assessee; and (b) the transaction in respect of which the option is exercised is an eligible international transaction, before the option for safe harbour by the assessee is treated to be validly exercised.
(3) Where the Assessing Officer doubts the valid exercise of the option for the safe harbour by an assessee, he shall make a reference to the Transfer Pricing Officer for determination of the eligibility of the assessee or the international transaction, or both, for the purposes of the safe harbour.
(4) For the purposes of sub-rule (3), the Transfer Pricing Officer may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnish the same within the time specified in such notice.
(5) Where — (a) the assessee does not furnish the information or documents or other evidence required by the Transfer Pricing Officer; or (b) the Transfer Pricing Officer finds that the assessee is not an eligible assessee; or (c) the Transfer Pricing Officer finds that the international transaction in respect of which the option referred to in sub-rule (1) has been exercised is not an eligible international transaction, the Transfer Pricing Officer shall, by order in writing, declare the option exercised by the assessee under sub-rule (1) to be invalid, after giving a reasonable opportunity of being heard to the assessee, and cause a copy of the said order to be served on the assessee and the Assessing Officer.
(6) If the assessee objects to the order of the Transfer Pricing Officer under sub-rule (5) declaring the option to be invalid, he may file his objections with the Commissioner, to whom the Transfer Pricing Officer is subordinate, within fifteen days of receipt of the order of the Transfer Pricing Officer.
(7) On receipt of the objection referred to in sub-rule (6), the Commissioner shall after providing a reasonable opportunity of being heard to the assessee, pass appropriate orders in respect of the validity, or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer.
(8) In a case, where option exercised by the assessee has been held to be valid, the Assessing Officer shall proceed to verify whether the transfer price declared by the assessee in respect of the relevant eligible international transactions is in accordance with the circumstances specified in rule 89(2) and, if it is not in accordance with the said circumstances, the Assessing Officer shall adopt the operating profit margin or rate of interest or commission specified in the said rule.
(9) For the purposes of this rule, — (i) no reference under sub-rule (3) shall be made by an Assessing Officer after expiry of a period of two months from the end of the month in which Form No.49 is received by him; (ii) no order under sub-rule (5) shall be passed by the Transfer Pricing Officer after expiry of a period of two months from the end of the month in which the reference from the Assessing Officer under sub-rule (3) is received by him; and (iii) the order under sub-rule (7) shall be passed by the Commissioner within a period of two months from the end of the month in which the objection filed by the assessee under sub-rule (6) is received by him.
(10) If the Assessing Officer or the Transfer Pricing Officer or the Commissioner, as the case may be, does not make a reference or pass an order, within the time specified in sub-rule (9), then the option for safe harbour exercised by the assessee shall be treated as valid.
(11) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265.
(12) The Assessing Officer may make a reference under section 166 in respect of international transaction other than the eligible international transaction.
Rule breakdown
File the return before or with the option
The assessee furnishes complete Form 49 to the AO by the stated return due date, and the return for that year must have been furnished on or before the date Form 49 is furnished.
The notified rule prints section 263(1)(c) as the due-date reference. Confirm the applicable current Act due date and any valid extension while keeping this return-before-option sequence.
Prepare the eligibility evidence
The AO checks whether both the assessee and transaction are eligible. Doubts are referred to the TPO, who may require information, documents or other evidence by a written notice.
Keep the definitions, functional profile, transaction values and required rating or cost evidence ready. Failure to supply requested material is an express ground for invalidity.
Hearing and fifteen-day objection
The TPO must provide a reasonable hearing before a written invalidity order on the stated grounds. An objection can be filed with the Commissioner within fifteen days of receipt.
The Commissioner also provides a reasonable hearing before deciding validity. Track service dates and preserve the orders and supporting submission.
Three separate two-month clocks
The AO reference limit runs two months from the end of the month of receiving Form 49. The TPO order limit runs from the end of the month of receiving the reference. The Commissioner’s decision limit runs from the end of the month of receiving the objection.
If the relevant authority does not make the reference or pass the order within the prescribed time, sub-rule (10) treats the option as valid. Do not substitute a single clock from the original filing for every stage.
Valid option does not ignore the pricing conditions
Once the option is valid, the AO checks the declared price against Rule 89(2). If it does not match the stated conditions, the rule directs adoption of the specified margin, interest rate or commission.
The AO can still refer international transactions other than the eligible transaction under section 166.
Electronic verification
Form 49 is furnished electronically using a digital signature or electronic verification code, and verified by the person authorised to verify the return under section 265.
Retain the completed form and filing acknowledgment along with the return and eligibility evidence.
Key takeaways
Return-first sequence
The return must be filed by the date Form 49 is furnished.
Fifteen-day objection
Measure from receipt of the TPO invalidity order.
Stage-specific clocks
Each two-month period starts from its own month-end event.
Pricing still checked
A valid option does not erase the Rule 89 conditions.
Practical checklist
- File and preserve the return before or with Form 49.
- Respond to the TPO’s evidence notice.
- Record each receipt date and month-end clock.
Avoid
- Do not ignore pricing conditions after option validity.
- Do not use this procedure without checking whether Rule 91 applies.
FAQs
Can Form 49 precede the return for that year?
Sub-rule (1)(b) requires the return on or before the date Form 49 is furnished.
Are all authority deadlines measured from Form 49?
No. AO reference, TPO decision and Commissioner decision have separate receipt events.
What happens if the stated deadline is missed by the authority?
Sub-rule (10) treats the option as valid where the specified reference or order is not made in time.
Does this rule govern IT-services options?
Its heading excludes provision of IT services, for which Rule 91 gives the separate procedure.
Glossary
- Form 49
- The safe-harbour option form prescribed by the relevant procedure.
- Deemed validity
- The treatment under sub-rule (10) when the specified authority time limit expires without the required reference or order.