Section 92BA: Meaning of Specified Domestic Transaction

A specified domestic transaction (SDT) is a qualifying domestic transaction covered by the transfer pricing provisions when the aggregate value of the prescribed categories exceeds Rs. 20 crore during the relevant year. Section 92BA of the Income-tax Act, 1961 governed the definition for relevant earlier years; section 164 of the Income-tax Act, 2025 provides the corresponding framework for tax years beginning on or after 1 April 2026.

Meaning and essential conditions

A domestic transaction is an SDT only if it is not an international transaction, falls within a listed statutory category, and the combined value of such qualifying transactions exceeds the statutory threshold. Ordinary domestic related-party purchases do not automatically qualify merely because the parties are related.

Section 92BA of the Income-tax Act, 1961

For applicable earlier years, the provision covers these categories:

1. Clause (ii): transactions referred to in section 80A, including relevant inter-unit transactions affecting deductions.
2. Clause (iii): transfers of goods or services under section 80-IA(8), involving eligible businesses and other businesses of the same assessee.
3. Clause (iv): business arrangements within section 80-IA(10), where close connections or other reasons result in more than ordinary profits for an eligible business.
4. Clause (v): transactions under other applicable Chapter VI-A provisions or section 10AA to which section 80-IA(8) or (10) applies.
5. Clause (va): business transactions covered by section 115BAB(6), concerning qualifying manufacturing companies.
6. Clause (vb): business transactions covered by section 115BAE(4), concerning qualifying manufacturing co-operative societies; introduced with effect from 1 April 2024.
7. Clause (vi): any further transaction prescribed under the law.

Important historical change: Clause (i), concerning certain payments to persons specified in section 40A(2)(b), was omitted with effect from 1 April 2017. Such payments alone are not SDTs under that omitted clause for later relevant years. The threshold increased from Rs. 5 crore to Rs. 20 crore with effect from 1 April 2016.

Section 164 of the Income-tax Act, 2025

For tax years governed by the 2025 Act, section 164 identifies the following categories:

1. Section 164(a): transactions referred to in section 122.
2. Section 164(b): transfers of goods or services referred to in section 140(9).
3. Section 164(c): business transactions between persons described in section 140(13).
4. Section 164(d): transactions under other relevant provisions of Chapter VIII to which section 140(9) or 140(13), or the applicable legacy provisions of section 80-IA(8) or (10) of the 1961 Act, apply. The reference to section 144 was omitted by the Finance Act, 2026 with effect from 1 April 2026.
5. Section 164(e): business transactions between persons referred to in section 205(4).
6. Section 164(f): any other transaction as may be prescribed.

The aggregate threshold remains more than Rs. 20 crore per tax year. The new provision should be applied to the relevant tax year, rather than assuming all numbering and categories under the 1961 Act continue unchanged.

Practical threshold example

Assuming both transactions fall within the applicable statutory categories, the aggregate exceeds Rs. 20 crore and the SDT transfer pricing requirements apply. If the total were exactly Rs. 20 crore, the statutory threshold would not be crossed.

Arm's length pricing and compliance

For relevant years under the 1961 Act, section 92(2A) requires income, expenditure, interest and allocated costs relating to SDTs to be computed having regard to the arm's length price. Section 92C addresses determination of the arm's length price; section 92D addresses supporting information and documents; and section 92E requires an accountant's report, generally furnished in Form 3CEB, where applicable. Under the 2025 Act, consult the corresponding Chapter X provisions and the applicable rules and forms for the tax year concerned.

Maintain agreements, transaction schedules, segmental accounts, cost-allocation workings, comparable data and the reasoning for the selected pricing method. Where there are multiple covered transactions, aggregate their values when testing the threshold.

Frequently asked questions

Are all domestic related-party transactions SDTs?

No. The transaction must fall within a statutory category, and the aggregate threshold must be exceeded.

Is the threshold Rs. 20 crore or more?

The wording is exceeds Rs. 20 crore, so the aggregate must be greater than Rs. 20 crore.

Does section 40A(2)(b) alone trigger SDT reporting?

No. The earlier section 92BA(i) category was omitted with effect from 1 April 2017. Other qualifying categories must be examined independently.

Which law applies after 1 April 2026?

For tax years commencing on or after that date, consult section 164 of the Income-tax Act, 2025 and the corresponding transfer pricing provisions, subject to applicable transitional rules.

Official statutory sources and guidance

• Income Tax Department: Section 92BA, Income-tax Act, 1961
• Income Tax Department: Section 164, Income-tax Act, 2025 (as amended)
• Income-tax Act, 2025 - official PDF
• Income Tax Department: Transfer Pricing guidance

This article provides general statutory information. Verify the applicable law, rules, notifications and tax-year-specific compliance requirements before filing.