Rule 92: Jurisdiction exclusions from international safe harbour
Rule 92 prevents the international safe-harbour rules from applying to specified transactions with associated enterprises located in excluded jurisdictions. The location screen is necessary even where the service, margin and option would otherwise appear to fit.
Official notified Income-tax Rules, 2026Need advice on Rule 92?
This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.
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Bare law
Rule 92 - Safe harbour rules for international transactions not to apply in certain cases
Nothing contained in rule 86, 87, 88, 89, 90 or 91 shall apply 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.
Rule breakdown
Two separate exclusion routes
The exclusion covers a country or territory notified under section 176, or a no-tax or low-tax country or territory. These are alternative tests; absence from a notified list does not automatically clear the second test.
Rule 86 defines the latter category by a maximum income-tax rate below 15%. Check the relevant jurisdiction’s actual legal position rather than the group’s informal description.
Identify the associated enterprise and its location
The text concerns eligible international transactions entered into with an associated enterprise located in the excluded jurisdiction. Record the counterparty, its location and the evidence supporting that determination.
Do not rely solely on the currency of payment, bank location or the location of an unrelated group company.
Review before calculating safe-harbour margins
The rule says Rules 86 through 91 do not apply to these cases. A margin above the table minimum does not override this location exclusion.
Check the location gate before spending time treating a rate or margin as a safe-harbour solution.
Keep a dated eligibility record
Retain the notification search, relevant rate-law evidence and counterparty documents for the tax year under review. Obtain advice where residence, location or the relevant rate is unclear.
If excluded, analyse the applicable ordinary transfer-pricing framework and available procedures; do not describe the transaction as safe-harbour accepted merely because a form was prepared.
Key takeaways
Alternative exclusions
A section 176 notification and the no/low-tax definition are distinct tests.
Margin does not override location
The eligibility exclusion applies before safe-harbour acceptance.
Keep year-specific evidence
The relevant jurisdiction facts and law must be checked.
Practical checklist
- Check both exclusion routes.
- Document the associated enterprise’s location.
- Retain current notification and tax-rate evidence.
Avoid
- Do not assume a qualifying margin cures an excluded jurisdiction.
- Do not substitute a bank’s location for the counterparty analysis.
FAQs
Is absence from the section 176 list enough?
No. The separate no-tax or low-tax territory test also applies.
Can a higher profit margin cure the exclusion?
Rule 92 excludes the specified transactions from Rules 86–91; a higher margin does not remove that exclusion.
What is the rate threshold in the Rule 86 definition?
It refers to a country or territory whose maximum income-tax rate is less than 15%.
Glossary
- No-tax or low-tax territory
- The Rule 86 category defined by a maximum income-tax rate below 15%.