Section 164 of the Income Tax Bill 2025 vs Section 92BA: SDT Compared

India introduced the concept of Specified Domestic Transactions (SDTs) to bring arm’s length pricing to deals inside the country. These are transactions between related parties, and they are priced much as international transfer pricing rules price cross-border deals.

Section 92BA of the Income Tax Act, 1961 set out what an SDT is. In the Income Tax Bill, 2025, Section 164 takes that place, with some structural changes.

This article compares the two sections in detail. It sets out where they match and where they differ.

1. Purpose and Scope

Both sections define the scope of SDTs. Both require related parties in India to price their deals at arm’s length. The aim is to stop tax evasion and profit shifting.

Why SDTs Matter?

These rules cover domestic transactions only, not cross-border ones, and only where related-party pricing could shift tax benefits. The tax department checks these deals so that the tax is fair.

2. Key Provisions and Comparisons

Definition of Specified Domestic Transaction (SDT)

• Section 92BA (1961 Act): an SDT is a transaction between related domestic entities where tax avoidance is possible.

• Section 164 (2025 Bill): the core definition is the same, but the references point to the new sections in the restructured law.

Threshold for Applicability

• Section 92BA: the threshold began at ₹5 crore and was later raised to ₹20 crore.

• Section 164: the threshold stays at ₹20 crore. Only high-value domestic deals face transfer pricing scrutiny.

Types of Transactions Covered

Both sections list the transactions that count as SDTs. The underlying rules stay the same. Only the section references have changed 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 intercompany 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) and 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 text in Section 164 keeps the same categories but points 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 and Section 115BAE).

• Any other transaction as prescribed by the government.

3. Key Differences Between Section 92BA and Section 164

1. Structural Reorganization

• Section 92BA sat in Chapter X of the Income Tax Act, 1961, next to the international transfer pricing rules.

• Section 164 sits in the newly structured framework of the Income Tax Bill, 2025. It cross-refers more clearly to the provisions around it.

2. Alignment with New Tax Sections

• Section 92BA pointed to older provisions such as Sections 80A, 80-IA and 10AA of the 1961 Act.

• Section 164 points to the new section numbers in the 2025 Bill, such as Section 122 and Section 140(9). The new law is easier to follow as a result.

3. No Change in Threshold or Core Transactions

• The ₹20 crore threshold for SDTs stays the same.

• The transactions covered also stay the same, so compliance continues without a break.

4. Future-Proofing Through General Provisions

• Both sections let the government prescribe more transactions as SDTs.

• That keeps the law flexible for new kinds of domestic transactions.

4. Implications for Businesses

For Indian companies, partnership firms and other entities that enter into domestic related-party transactions, the move from Section 92BA to Section 164 means four things:

• No big change in compliance: businesses that already follow 92BA can keep the same approach under Section 164.

• Easier legal reading, because the cross-references are better in the revised framework.

• Continued scrutiny for high-value deals: arm’s length pricing still applies above ₹20 crore.

• Clearer tax benefits and exemptions, which helps the tax authorities stop misuse of domestic incentives.

5. Final Thoughts

The move from Section 92BA (1961 Act) to Section 164 (2025 Bill) brings no major substantive change. It does make the law clearer and compliance easier.

For businesses with high-value domestic transactions, the new framework keeps continuity and improves the structure and referencing of the law. Taxpayers should make sure their domestic transactions are priced at arm’s length, to avoid tax adjustments.