Section 164 Income Tax Act 2025: Which Domestic Transactions Qualify?
Section 164 defines a specified domestic transaction for the transfer pricing provisions of Chapter X. It identifies covered transactions and applies an aggregate value threshold exceeding Rs. 20 crore in a tax year.
What is a specified domestic transaction under Section 164?
A specified domestic transaction is a domestic transaction falling within one of the categories expressly listed in Section 164, provided it is not an international transaction and the aggregate of such transactions entered into by the assessee during the tax year exceeds Rs. 20 crore. Merely crossing the monetary threshold does not make every domestic transaction a specified domestic transaction: the transaction must also fall within a statutory category.
Which transactions are covered by Section 164?
Section 164 identifies the following categories:
- Clause (a): Transactions referred to in Section 122.
- Clause (b): Transfers of goods or services referred to in Section 140(9).
- Clause (c): Business between the assessee and another person referred to in Section 140(13).
- Clause (d): Transactions referred to in other provisions of Chapter VIII to which Section 140(9) or 140(13) of the 2025 Act, or Section 80-IA(8) or (10) of the Income-tax Act, 1961, applies. The reference to Section 144 appearing in the original enactment was omitted by the Finance Act, 2026.
- Clause (e): Business between persons referred to in Section 205(4).
- Clause (f): Other transactions prescribed under the applicable rules.
These categories must be read together with the referenced provisions and applicable rules. The threshold is measured on the aggregate of qualifying transactions of the assessee for the relevant tax year.
Relevant statutory definitions and concepts
Practical examples of the Rs. 20 crore threshold
What happens when Section 164 applies?
Where a transaction qualifies, the assessee should examine the Chapter X transfer pricing provisions, including Section 161 on computation with reference to arm's length price, Section 165 on determining that price, Section 171 on records and documentation, and Section 172 on the accountant's report. The precise filing, documentation and reporting requirements depend on the applicable provisions and rules.
Businesses should identify covered transaction categories, maintain transaction-wise supporting records, reconcile annual aggregate values, and review pricing and reporting requirements before filing their returns.
Frequently asked questions
Is every domestic transaction above Rs. 20 crore covered?
No. The transaction must fall within a category listed in Section 164, and the aggregate of such transactions must exceed Rs. 20 crore.
Does Section 164 cover international transactions?
No. The definition expressly excludes international transactions, which are separately addressed in Section 163.
Is the threshold Rs. 20 crore or more?
The statutory language is exceeds Rs. 20 crore. Exactly Rs. 20 crore does not satisfy that threshold.
Is Section 164 of the 2025 Act about discretionary trusts?
No. Section 164 of the Income-tax Act, 2025 concerns specified domestic transactions. The trust provision bearing the same section number belongs to the Income-tax Act, 1961.
Official legislation and related provisions
Updated: 11 November 2026. This article provides general legal information and should be read with the current statutory text and rules.