Rules 90 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 90 and 91 lay down how an assessee exercises the option for safe harbour in Form 49: rule 90 for transactions other than information technology services and rule 91 for information technology services. Rule 92 switches the safe harbour rules off for certain counterparties, and rule 93 closes the mutual agreement procedure where safe harbour is accepted. This article reads the four rules as per the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026. Later notifications should be checked.
Under rule 90 the assessee furnishes Form 49 to the Assessing Officer on or before the due date in section 263(1)(c), after furnishing the return; a doubtful option goes to the Transfer Pricing Officer, and silence beyond two months makes the option valid. Under rule 91 an information technology services option, once valid, stays in force for five consecutive tax years, and Form 49 goes to the Director General of Income-tax (Systems). Rule 92 excludes notified and no tax or low tax counterparties; rule 93 bars the mutual agreement procedure.
Where the rules sit
Rule 93 is the one place in rules 86 to 93 that names the section: transfer price accepted under section 167. Read the section in our article on sections 167 to 169 on safe harbour rules and advance pricing agreements. Rule 93 also refers to section 159 and the agreements for avoidance of double taxation (section 159 on DTAA relief). The definitions come from rule 86, eligibility from rules 87 and 88 and the margins from rule 89. The group is summarised in the overview of rules 86 to 93. The parts of Form 49 are in our article on Form 49.
The form named is Form 49. If you are planning to opt in, our tax planning advisory team can map the time limits below to your return calendar.
Rule 90: transactions other than information technology services
The option (sub-rule (1))
To exercise the option the assessee shall furnish Form 49, complete in all respects, to the Assessing Officer on or before the due date in section 263(1)(c) for furnishing the return of income for the relevant tax year, and the return of income for that year must be furnished on or before the date of furnishing Form 49.
Verification and reference (sub-rules (2) to (5))
On receiving Form 49 the Assessing Officer verifies whether the assessee is an eligible assessee and the transaction is an eligible international transaction, before the option is treated as validly exercised. If he doubts valid exercise he makes a reference to the Transfer Pricing Officer. The Transfer Pricing Officer may by written notice require information, documents or evidence, to be furnished within the time in the notice. He must declare the option invalid, by written order, after a reasonable opportunity of being heard, if the assessee does not furnish what is required, or is found not an eligible assessee, or the transaction is found not an eligible international transaction. A copy of the order is served on the assessee and the Assessing Officer.
Objection (sub-rules (6) and (7))
The assessee may file objections with the Commissioner to whom the Transfer Pricing Officer is subordinate within fifteen days of receiving the order. The Commissioner, after a reasonable opportunity of being heard, passes orders on the validity of the option and serves a copy on the assessee and the Assessing Officer.
After a valid option (sub-rule (8))
Where the option is held valid, the Assessing Officer verifies whether the declared transfer price meets the circumstances in rule 89(2). If it does not, he adopts the operating profit margin, rate of interest or commission specified in that rule.
Time limits (sub-rules (9) and (10))
| Step | Limit printed |
|---|---|
| Reference by the Assessing Officer to the Transfer Pricing Officer | Not after two months from the end of the month in which Form 49 is received |
| Order of the Transfer Pricing Officer | Not after two months from the end of the month in which the reference is received |
| Order of the Commissioner | Within two months from the end of the month in which the objection is received |
| Consequence of missing a limit | The option for safe harbour is treated as valid |
Form 49 and other transactions (sub-rules (11) and (12))
Form 49 is furnished electronically, under digital signature or through electronic verification code, and is verified by the person authorised to verify the return of income under section 265. The Assessing Officer may make a reference under section 166 for an international transaction other than the eligible international transaction.
Rule 91: provision of information technology services
| Sub-rule | What it says |
|---|---|
| (1) | A validly exercised option continues in force for five consecutive tax years |
| (2) | The two thousand crore rupee threshold of aggregate operating revenue is tested for the first of the five years |
| (3) | Form 49, complete in all respects, goes to the Director General of Income-tax (Systems), for the first of the five years, on or before the due date in section 263(1)(c) for that first year |
| (4) to (7) | Verification is done electronically of eligibility, eligible transaction and validity; the assessee is told of acceptance or rejection within two months from the end of the month of exercise; no rejection without an opportunity to remove defects; reasons given for an electronic rejection |
| (8) | If accepted, the return is furnished in accordance with safe harbour for each of the five years on or before the due date in section 263(1)(c) |
| (9) to (12) | The option lapses for any tax year if withdrawn by declaration; withdrawal not after six months from the end of the first tax year; withdrawn option does not remain in force for that and later years; after withdrawal, no new option until the five years expire |
| (13) | For each of the four years after the first, a statement of eligible transactions, their quantum and profit margins, by the due date in section 263(1)(c) |
| (14) | Reference under section 166 possible for other international transactions |
| (15), (16) | Form 49 furnished electronically under digital signature or electronic verification code; certified by the chief executive officer or chairman and managing director and verified by the person authorised to verify the return under section 265 |
| (17) | The Director General of Income-tax (Systems), with the approval of the Board, lays down data structure, standards, format and procedure; what has been laid down is not in the text consulted |
Rule 92: where safe harbour does not apply
Nothing in rules 86 to 91 applies to eligible international transactions entered into with an associated enterprise located in a country or territory notified under section 176, or in a no tax or low tax country or territory (defined in rule 86 as a place where the maximum rate of income-tax is less than 15%). Which countries are notified is not in the text consulted.
Rule 93: no mutual agreement procedure
Where the transfer price of an eligible international transaction declared by an eligible assessee is accepted under section 167, the assessee cannot invoke the mutual agreement procedure under an agreement for avoidance of double taxation with a country or specified territory outside India, as referred to in section 159.
Example. Harbour Pharma Research Private Limited (invented) provides contract research on generic pharmaceutical drugs to its overseas parent. It files its return and then furnishes Form 49 to the Assessing Officer, both by the due date. The Assessing Officer makes no reference within two months from the end of the month in which Form 49 is received, so under sub-rule (10) the option is treated as valid. Once the transfer price is accepted, rule 93 closes the mutual agreement procedure for this transaction.
Need help with the option?
The option is lost or locked in by dates: the due date for Form 49, the six-month withdrawal window and the five-year bar after withdrawal. Our tax planning advisory team can plan the timing with you before the option is exercised.
Key takeaways
- Rule 90: Form 49 to the Assessing Officer by the section 263(1)(c) due date, after the return is furnished.
- A doubtful option goes to the Transfer Pricing Officer; the assessee may object to the Commissioner within fifteen days.
- Missed two-month limits make the option valid.
- Rule 91: five consecutive tax years for information technology services; Form 49 to the Director General of Income-tax (Systems); withdrawal within six months from the end of the first year, and no fresh option until the five years run out.
- Rule 92 excludes notified and no tax or low tax counterparties; rule 93 bars the mutual agreement procedure.
Read next
- Rule 86: safe harbour definitions
- Form 49: application for opting for safe harbour
- Rules 94 to 98: safe harbour for specified domestic transactions
- Rules 99 to 102: safe harbour for income attribution
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 2 October 2026. It explains the words of the rules and forms only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.