Income-tax Act, 1961Section 94B
- Interest above 30% of EBITDA on AE debt disallowed when over ₹1 crore
- Carry forward for 8 years
- Banks and insurers excluded
Applies to FY 2025-26 (AY 2026-27) and earlier years.
IT Act 1961 → 2025 / Section 94B
Transfer pricingSection 94B → Section 177
Thin capitalisation: limit on interest to non-resident associated enterprises
Section 94B of the old Income-tax Act, 1961 · new section 177 under the Income-tax Act, 2025
New reference Section 177
Income-tax Act, 2025Section 177
- Same rule, now section 177
- 30% of EBITDA cap; ₹1 crore threshold
- 8-year carry forward
- Exclusions for banking/insurance and notified NBFCs
Applies from tax year 2026-27 (from 1 April 2026).
What changed
Renumbered; limits unchanged.
Practice notes
- Guarantees by AEs can make third-party debt count as AE debt.
Frequently asked
What is section 94B called in the new Income Tax Act 2025?
Section 177: interest above 30% of EBITDA on associated-enterprise debt is disallowed where it exceeds ₹1 crore.
What is section 94B called in the new Income-tax Act, 2025?
Section 94B of the Income-tax Act, 1961 corresponds to Section 177 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).
What changed in section 94B under the new Income Tax Act?
Renumbered; limits unchanged.
Is section 94B still applicable for FY 2025-26?
Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 94B of the 1961 Act. Section 177 of the 2025 Act applies from tax year 2026-27.