What is an International Transaction?
The international transaction meaning is set to undergo a major overhaul under Clause 163 of the Income Tax Bill, 2025, replacing the current definition under Section 92B of the Income-tax Act, 1961. This shift is expected to bring greater clarity and wider scope, directly impacting transfer pricing compliance for Indian businesses with cross-border dealings.
Clause 163 vs Section 92B: What Has Changed?
| Aspect | Section 92B (1961 Act) | Clause 163 (Bill, 2025) |
|---|---|---|
| Basic Definition | Narrower definition covering specific categories | Broader and principle-based language |
| Deemed Transactions | Limited coverage under explanations | Explicit inclusion of deemed transactions |
| Business Restructuring | Not clearly included | Specifically includes business restructurings |
| Guarantees & Intangibles | Implicit references, often litigated | Clearly includes guarantees, intangibles, cost sharing |
| Exclusion Clause | Ambiguous scope | Grants CBDT powers to notify exclusions |
Why This Matters for Taxpayers
- More transactions under scrutiny: With a wider scope, even internal arrangements like cost-sharing or intra-group loans can attract transfer pricing compliance.
- Higher documentation burden: Clause 163 expands the compliance base. Entities must maintain robust documentation.
Legal Basis and Government Intent
- The government aims to align with OECD BEPS Action Plans and make the law future-ready.