TaxTMI 
TaxTMI 
TaxTMI 
“SVB? We don’t deal with that. We’re not even paying customs duty.”
If that sounds like something youve said or heard, let’s hit pause.
Because here’s the surprise most businesses never see coming: SVB isn’t about customs duty. It’s about customs doubt.
If youre importing goods or services from your own group company—whether youre in a SEZ, EOU, or FTWZ—youre already on the SVB radar. And if you’re not prepared, the consequences can hit your business where it hurts most: your cash flow and credibility.
What is SVB and why is it triggering so many disruptions?
SVB, or Special Valuation Branch, is a specialised wing of Indian Customs that kicks in when there’s a related party transaction—usually between two group companies across borders.
Even if you’re importing at arm’s length pricing, Customs doesn’t take your word for it. They assume the pricing could be influenced, and then the burden of proof falls squarely on you.
They won’t just glance at your invoice and nod it through. They’ll question every line item, every discount, every licensing fee, and every royalty agreement. Until you prove that everything’s kosher, you’re stuck.
But we’re not even paying duty—why would SVB matter to us?
That’s exactly the problem. Many businesses operating under duty-free schemes—SEZs, EOUs, FTWZs—assume that no duty means no valuation risk.
But SVB is not about duty payable. It’s about valuation integrity. Even if the duty is exempt, Customs still wants to be sure youre not undervaluing to game another system—like GST input credit, FTP benefits, or even transfer pricing adjustments under Income Tax.
Yes, all departments talk to each other now.
One red flag in Customs can trigger a domino effect. Your GST officer might question input credits. Your Income Tax officer might revisit transfer pricing. DGFT may hold back your licence benefits.
Today’s compliance environment is completely interconnected. It takes just one SVB query to bring multiple departments knocking at your door.
What does an SVB inquiry look like in real life?
Let’s say you import components from your group company in Germany. The invoice is perfectly legal. But Customs officer notices it’s from a related party. Now, here’s what happens:
- Your clearance gets flagged.
- You’re asked to file a declaration and complete a lengthy questionnaire.
- Your imports may be provisionally assessed until SVB concludes.
- Your refunds and benefits may be blocked.
- You’re asked to submit detailed pricing documents, contracts, transfer pricing reports and more.
Even if your import duty is zero, your working capital is now frozen, your assessments are suspended, and your compliance team is buried in paperwork for the next few months.
And worst of all—you never saw it coming.
This isn’t about penalties. It’s about paralysis.
SVB rarely ends in a fine. But it does result in months of stuck shipments, sleepless nights, and missed revenue targets.
Most companies only realise how serious SVB is after the disruption hits. And by then, the damage is already done.
Still think SVB doesn’t apply to your business?
If your answer to any of the following is YES, then SVB is relevant to you:
- Are you importing from a related party?
- Do your imports include technical services, design fees, or royalty payments?
- Are you operating from an SEZ, EOU, or FTWZ?
- Do you have inter-company agreements where pricing could be questioned?
If yes, then you’re not just exposed to SVB—you might already be under its lens.
Here’s what you need to do today
Don’t wait for a notice to act. Get proactive.
Have your import pricing reviewed by someone who understands both Customs law and transfer pricing. Ensure your documentation can stand scrutiny. Prepare for SVB—even if you haven’t been flagged yet.