Comparison of Section 164 of the Income Tax Bill 2025 with Section 92BA of the Income Tax Act 1961

The concept of Specified Domestic Transactions (SDTs) was introduced in Indian tax law to ensure that transactions within India, involving related parties, adhere to arm’s length pricing principles—similar to international transfer pricing regulations.

Under the Income Tax Act, 1961, the definition and scope of SDTs were covered under Section 92BA. In the Income Tax Bill, 2025, Section 164 replaces this provision while making some structural refinements.

This article provides a detailed comparison of the two sections, highlighting key similarities and differences.

1. Purpose and Scope

Both Section 92BA (1961 Act) and Section 164 (2025 Bill) define the scope of Specified Domestic Transactions (SDTs) and ensure that transactions between related parties in India follow arm’s length pricing rules to prevent tax evasion and profit shifting.

Why SDTs Matter?

These provisions apply only to domestic transactions (not international) where there is a possibility of tax benefits being manipulated through related-party pricing. The tax department monitors these transactions to ensure fair taxation.

2. Key Provisions and Comparisons

Definition of Specified Domestic Transaction (SDT)

• Section 92BA (1961 Act): Defines SDTs as transactions between related domestic entities where there is potential for tax avoidance.
• Section 164 (2025 Bill): Retains the same core definition but provides updated references to new sections in the restructured tax framework.

Threshold for Applicability

• Section 92BA: Originally applied to transactions exceeding ?5 crore, but this was later increased to ?20 crore.
• Section 164: Maintains the threshold at ?20 crore, meaning only high-value domestic transactions are subject to transfer pricing scrutiny.

Types of Transactions Covered

Both sections list specific transactions that qualify as Specified Domestic Transactions (SDTs). While the underlying principles remain the same, the references to tax sections have been updated in the new law.

1. Transactions Covered in Section 92BA (1961 Act)

The following transactions were considered SDTs under Section 92BA: ? Transactions covered under Section 80A (related to tax incentives for inter-company transactions). ? Transfer of goods or services covered under Section 80-IA(8) (intra-group transfers in infrastructure businesses). ? Business transactions between related parties under Section 80-IA(10) (ensuring fair pricing between related Indian entities). ? Transactions covered under Chapter VI-A or Section 10AA (transactions involving tax-exempt businesses in SEZs). ? Business transactions covered under Section 115BAB(6) & Section 115BAE(4) (relating to new tax regimes for certain companies). ? Any other transaction as prescribed by the government.

2. Transactions Covered in Section 164 (2025 Bill)

The updated version in Section 164 maintains the same transaction categories but refers to the new sections in the Income Tax Bill, 2025: ? Transactions under Section 122 (corresponding to earlier Section 80A). ? Transfer of goods or services under Section 140(9) (corresponding to earlier Section 80-IA(8)). ? Business transactions under Section 140(13) (corresponding to earlier Section 80-IA(10)). ? Transactions under Chapter VIII or Section 144, where Section 140(9) or 140(13) applies (corresponding to earlier Chapter VI-A and Section 10AA). ? Business transactions under Section 205(4) (corresponding to earlier Section 115BAB & Section 115BAE). ? Any other transaction as prescribed by the government.

3. Key Differences Between Section 92BA and Section 164

1. Structural Reorganization

• Section 92BA was structured within Chapter X of the Income Tax Act, 1961, alongside international transfer pricing rules.
• Section 164 in the Income Tax Bill, 2025, is part of a newly structured tax framework, providing better clarity and cross-referencing with relevant provisions.

2. Alignment with New Tax Sections

• Section 92BA referenced older provisions like Sections 80A, 80-IA, and 10AA under the 1961 Act.
• Section 164 aligns these with new section numbers in the 2025 Bill (e.g., Section 122, Section 140(9), etc.), making it easier to navigate under the new tax law.

3. No Change in Threshold or Core Transactions

• The ?20 crore threshold for SDTs remains unchanged.
• The types of transactions covered also remain the same, ensuring continuity in compliance.

4. Future-Proofing Through General Provisions

• Both sections allow the government to prescribe additional transactions that may be covered under SDTs.
• This ensures flexibility in tax laws to accommodate new types of domestic transactions in the future.

4. Implications for Businesses

For Indian companies, partnership firms, and other entities engaging in domestic related-party transactions, the transition from Section 92BA to Section 164 means:

? No significant change in compliance requirements—businesses already adhering to 92BA rules can continue following the same principles under Section 164. ? Easier legal interpretation—thanks to improved cross-referencing with the revised tax framework. ? Continued scrutiny for high-value transactions—ensuring arm’s length pricing in domestic transactions exceeding ?20 crore. ? Greater transparency in tax benefits & exemptions—helping tax authorities prevent misuse of domestic tax incentives.

5. Final Thoughts

The shift from Section 92BA (1961 Act) to Section 164 (2025 Bill) does not introduce major substantive changes but enhances clarity and ease of compliance.

For businesses engaging in high-value domestic transactions, the new framework ensures continuity while improving legal structure and referencing. Taxpayers should focus on ensuring arm’s length pricing in domestic transactions to avoid tax adjustments.