The IT industry has welcomed the government's newly announced safe-harbour rules for transfer pricing in the sector.

On Wednesday, the union finance ministry announced so-called `safe harbour' rules to ensure certainty in issues related to taxation of overseas transactions and slash cases related to transfer pricing.

The new rules, which are considerably easier than the draft rules announced by the Central Board of Direct Taxes (CBDT) in August, prescribe the limit & conditions within which the value of cross-border transactions with a linked firm declared by an assessee isn't questioned by India's tax authorities.

In addition, the new norms will give MNCs as well as domestic companies with overseas subsidiaries to approach authorities for tax estimation in advance.

Welcoming the new rules, Nasscom President Som Mittal said, "Majority of our recommendations have been taken in this notification. Earlier, multinational companies were facing hurdles because of such limited transaction regulations. It will boost exports."

Dinesh Kanabar, deputy chief executive of KPMG India, described the introduction of the new safe harbour norms as a "very positive step".

The government introduced the new norms after seeing a drastic increase in the number of disputes under the transfer-pricing mechanism.