Meaning of specified domestic transaction
[Section-164 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
In this Chapter, “specified domestic transaction” in case of an assessee means any of the following transactions, not being an international transaction—
- (a) any transaction referred to in section 122;
- (b) any transfer of goods or services referred to in section 140(9);
- (c) any business transacted between the assessee and other person as referred to in section 140(13);
- (d) any transaction, referred to in any other section under Chapter VIII or section 144, to which provisions of section 140(9) or (13) are applicable;
- (e) any business transacted between the persons referred to in section 205(4);
- (f) any other transaction as prescribed,
and where the aggregate of such transactions entered into by the assessee in a tax year exceeds a sum of twenty crore rupees.
FAQs on Section 164 of Income Tax Act 2025
What is a specified domestic transaction under Section 164?
A specified domestic transaction refers to certain defined domestic transactions undertaken by an assessee, which are not international transactions, but fall under specific provisions of this Act and exceed ₹20 crore in aggregate during a tax year.
Is there a monetary threshold for specified domestic transactions?
Yes, the total value of all such transactions must exceed ₹20 crore in a tax year for them to be considered specified domestic transactions.
Are international transactions covered under Section 164?
No, Section 164 applies only to domestic transactions and explicitly excludes international transactions.
Which transactions are covered under clause (a) of Section 164?
Clause (a) covers any transaction referred to in Section 122.
What does clause (b) of Section 164 include?
Clause (b) includes any transfer of goods or services referred to in Section 140(9).
What is meant by transactions under clause (c) of Section 164?
Clause (c) refers to any business transacted between the assessee and another person as referred to in Section 140(13).
What does clause (d) of Section 164 refer to?
Clause (d) includes any transaction under Chapter VIII or Section 144 that is subject to the provisions of Section 140(9) or 140(13).
Who are the persons referred to in clause (e) of Section 164?
Clause (e) includes any business transacted between persons referred to in Section 205(4).
What is covered under clause (f) of Section 164?
Clause (f) is a residual clause that includes any other transaction as may be prescribed under the rules or notifications.
When does Section 164 become applicable?
It is applicable from the tax year beginning on or after 1st April, 2026.
Is compliance with transfer pricing provisions required for specified domestic transactions?
If a transaction falls within the definition under Section 164 and exceeds ₹20 crore in a tax year, transfer pricing provisions (such as those in Section 140) become applicable.
What is the purpose of defining specified domestic transactions?
The purpose is to ensure that certain high-value domestic transactions, especially those involving related parties or specific entities, are conducted at arm’s length and subject to proper scrutiny.
Does Section 164 apply to all assessees?
It applies to any assessee who enters into the specified transactions defined under this section, provided the aggregate threshold is exceeded.
Can a transaction qualify as both an international transaction and a specified domestic transaction?
No, Section 164 applies only to transactions that are not international transactions.
What are examples of transactions under Section 140(9) or 140(13)?
These would involve transfer of goods or services and business dealings between related parties or specified persons as outlined in those sub-sections.
What if the aggregate value of transactions is less than ₹20 crore?
In that case, the transactions are not considered specified domestic transactions under Section 164, and the related transfer pricing provisions may not apply.
Who prescribes the ‘other transactions’ mentioned in clause (f)?
The Central Board of Direct Taxes (CBDT) or other relevant authority may notify such transactions through rules or notifications.
What happens if an assessee fails to comply with provisions related to specified domestic transactions?
Non-compliance may lead to penalties, adjustments to income, or other consequences as per the relevant provisions of the Act.
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