Rule 87 defines the "eligible assessee" who may use the safe harbour: a person who has validly opted under rule 90 and provides low-risk IT or R&D services to a foreign principal, makes an intra-group loan, gives a corporate guarantee, exports auto components, receives low value-adding group services, or provides data centre services — with factors for judging "insignificant risk".
87
Rules 2026 · Rule 87
Eligible assessee for safe harbour rules for international transactions
Rules 77-130
Who qualifies (sub-rule 1). A person who has exercised a valid option for safe harbour in accordance with rule 90 and:
Judging "insignificant risk" (sub-rules 2 and 3). For (a), the Director General of Income-tax (Systems) has regard, and for (d) the Director General, Assessing Officer or Transfer Pricing Officer has regard, to whether: the foreign principal performs most of the economically significant functions, including conceptualisation, product design and strategic direction, through its own employees or other associated enterprises; the foreign principal or its associates provide the funds, capital and economically significant assets including intangibles, and the assessee receives only remuneration for its work; the assessee works under the foreign principal's direct supervision, which has the capability to control and actually controls or supervises through strategic decisions and regular monitoring; the assessee assumes no economically significant realised risks (and where a contract says the principal controls risk but conduct shows the assessee does, the contractual terms are not the final determinant); and the assessee has no ownership right, legal or economic, in any intangible generated or the outcome of the research, which vests in the foreign principal as the contract and conduct of the parties show.