Author: inavatiq

Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing to extend the standing instruction facility for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) to mutual fund units held in demat form.

1. Existing Framework and Issue Identified

At present:

• The standing instruction facility for SWP/STP is available only for mutual fund units held in Statement of Account (SOA) mode.
• Investors holding mutual fund units in demat form are required to provide separate instructions for each SWP or STP transaction.

SEBI has noted that this differential treatment:

• Creates operational inconvenience for investors
• Increases compliance and processing effort for intermediaries
• Leads to inconsistency in processes across holding modes

2. Objective of the Proposal

The proposal seeks to:

• Align the process for mutual fund units held in demat form with those held in SOA mode
• Facilitate ease of doing business for investors and market participants
• Improve operational efficiency and standardisation in mutual fund transactions

3. Proposed Extension of Standing Instruction Facility

Under the proposed framework:

• Investors holding mutual fund units in demat form would be allowed to provide standing instructions for SWP and STP
• Once registered, such instructions would enable automatic execution of transactions without the need for repeated authorisations

4. Phased Implementation Approach

SEBI has further proposed that:

• The regulatory framework for standing instructions for SWP/STP mandates for demat-held mutual fund units be implemented in two phases
• A phased rollout would help address operational, system, and coordination challenges among market intermediaries

5. Invitation for Public Comments

In view of the implications for:

• Investors
• Mutual funds
• Depositories
• Stock exchanges and other intermediaries

SEBI has invited public comments and suggestions on the proposals outlined in the consultation paper.

6. Timeline for Submission of Comments

• Last date to submit comments – 26 February 2026

Stakeholders are encouraged to provide their feedback within the stipulated timeline to assist SEBI in finalising the framework.

Click Here To Read The Full Update 

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Consultation Paper Dated 05.01.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing measures to streamline the processes for winding up of Alternative Investment Fund (AIF) schemes and surrender of AIF registration.

The proposals seek to address practical challenges faced by AIFs that have completed their tenure but continue to exist for limited residual purposes.

1. Background and Regulatory Concerns

SEBI has observed that certain AIFs:

• Continue to retain liquidation proceeds beyond the permissible fund life
• Are unable to achieve a NIL bank balance, which is a prerequisite for surrender of registration

This situation commonly arises due to:

• Pending litigation
• Tax demands
• Outstanding operational or statutory liabilities

As a result, such AIFs face regulatory uncertainty despite having otherwise completed their fund lifecycle.

2. Objective of the Proposals

The consultation paper aims to:

• Provide regulatory clarity for AIFs that have completed their tenure
• Enable an orderly winding-up process where funds continue to exist only for limited residual purposes
• Address operational difficulties in surrendering registration due to unavoidable pending obligations

3. Key Proposals

3.1 Framework for AIFs Retaining Funds Beyond Permissible Life

SEBI has proposed a clearer regulatory framework for AIFs that:

• Have completed their permissible fund life, but
• Continue to retain funds solely to meet pending legal, tax, or operational requirements

This would help align regulatory expectations with practical realities.

3.2 ‘Inoperative’ Status for Certain AIFs

It has also been proposed that:

• AIFs that have not retained any monies beyond the permissible fund life
• May apply for an ‘inoperative’ status, instead of remaining fully operational or being compelled to surrender registration

This measure is intended to reduce unnecessary compliance burden on inactive funds.

4. Invitation for Public Comments

Considering the potential impact of these proposals on AIFs, fund managers, investors, and other market participants, SEBI has invited public comments and suggestions on the consultation paper.

5. Timeline for Submission of Comments

• Last date to submit comments – 26 February 2026

Stakeholders are encouraged to provide feedback within the prescribed timeline to aid SEBI in finalising the regulatory framework.

Click Here To Read The Full Update 

The post SEBI Proposes Flexibility for AIFs During Winding Up appeared first on Taxmann Blog.

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Press Release: 2025-2026/2055, Dated 06.02.2026

The Reserve Bank of India (RBI) has issued a Statement on Developmental and Regulatory Policies, setting out a series of key policy measures aimed at strengthening consumer protection, improving credit access, and further developing India’s financial markets.

1. Proposed Instructions on Advertising and Sale of Financial Products

The RBI has proposed to issue detailed instructions governing the advertising, marketing, and sale of financial products by regulated entities.
These measures are intended to:

• Ensure fair and transparent communication with customers
• Prevent mis-selling and misleading claims
• Strengthen consumer confidence in the financial system

2. Review of Customer Liability in Unauthorised Electronic Transactions

The RBI has decided to review the existing framework on limiting customer liability in cases of unauthorised electronic banking transactions.

The review aims to:

• Assess the adequacy of current consumer protection safeguards
• Address evolving risks in digital payment systems
• Strengthen clarity and consistency in liability norms

3. Enhancement of Collateral-Free Loan Limit for MSEs

To improve access to formal credit, the RBI has announced an enhancement of the collateral-free loan limit for Micro and Small Enterprises (MSEs):

• Existing limit –  ₹10 lakh
• Revised limit – ₹20 lakh

This measure is expected to:

• Support small business growth
• Encourage bank lending to MSEs
• Reduce dependence on informal sources of credit

4. Development of Credit Derivatives and Corporate Bond Market

The RBI has also decided to issue, shortly, a regulatory framework for public consultation to enable:

• Introduction of derivatives on credit indices, and
• Total Return Swaps (TRS) on corporate bonds

These instruments are intended to:

• Improve risk management options
• Enhance liquidity and depth in the corporate bond market
• Support market-based credit risk transfer

5. Changes Relating to Voluntary Retention Route (VRR) for FPIs

The RBI has announced two key decisions relating to Foreign Portfolio Investors (FPIs) under the Voluntary Retention Route (VRR):

5.1 Reckoning of VRR Investments

• Investments made under the VRR shall now be reckoned within the overall limit for FPI investments under the General Route.

5.2 Additional Operational Flexibilities

• Certain additional operational flexibilities will be provided to FPIs investing under the VRR, with a view to encouraging stable, long-term foreign capital inflows.

6. Overall Policy Objective

The Statement reflects RBI’s focus on:

• Enhancing consumer protection
• Supporting MSME credit growth
• Deepening financial markets
• Promoting stable and efficient capital flows

Click Here To Read The Full Press Release

The post RBI Announces Consumer Protection | MSE Credit | Market Reforms appeared first on Taxmann Blog.

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Editorial Team – [2026] 183 taxmann.com 199 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. OECD Releases Revised Manual on Effective Mutual Agreement Procedures 2026 Edition

The OECD has announced the release of the Manual on Effective Mutual Agreement Procedures (MEMAP) 2026 Edition, updated under the Inclusive Framework on BEPS. The revised manual aims to improve tax certainty by supporting tax administrations and taxpayers in resolving cross-border tax treaty disputes efficiently, effectively, and in a timely manner.

The 2026 MEMAP serves as a practical roadmap for navigating the Mutual Agreement Procedure (MAP) and includes structured guidance, templates and best practices to promote consistent and effective international tax dispute resolution. While it builds on the 2007 edition, the revised version adopts a new structure shaped by the real-world experience of competent authorities. It contains 59 aspirational best practices, drawing on inputs from both tax administrations and business, as well as insights from more than a decade of BEPS Action 14 peer reviews and discussions on MAP cases.

The manual provides practical guidance across the full MAP lifecycle, structured around four key areas:

(a) Dispute prevention and competent authority organisation, including pre-MAP consultations and measures to prevent disputes early;

(b) Access to MAP and unilateral relief, covering eligibility, the structure of MAP requests, and circumstances where unilateral relief may resolve issues without bilateral negotiation;

(c) Bilateral discussions and MAP arbitration, including advice on position papers, meetings and, for the first time, detailed guidance and best practices on MAP arbitration; and

(d) Capacity building and templates, including support for low-capacity jurisdictions and practical tools such as templates for MAP requests and position papers.

Source – Announcement

2. Canada Issues Updated Guidance on Global Minimum Tax Filing Requirements

The Canadian Government has released updated guidance (dated 30 January 2026) to help taxpayers prepare for Global Minimum Tax filings. The guidance outlines the required filing schemas, due dates, and information to be collected in advance, including for the GloBE Information Return (GIR), the Global Minimum Tax Return, and the GIR Notification.

The filing deadline is 18 months after the last day of the fiscal year in which an entity of a qualifying MNE group is first subject to the rules, and 15 months after the fiscal year-end in all other cases. For fiscal years beginning on or after 31 December 2023 and ending on or before 31 December 2024, the due date for the prescribed returns or notification is 30 June 2026.

All filings must be submitted electronically through an API. The GIR must be filed using an XML schema, while the Global Minimum Tax Return and the GIR Notification must be filed using a JSON schema.

Source – Official Website

Click Here To Read The Full Article

The post [World Tax News] OECD Releases Revised Manual on Effective Mutual Agreement Procedures and More appeared first on Taxmann Blog.

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SEBI Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing a series of ease-of-doing-business (EoDB) measures for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The proposals aim to provide greater operational flexibility, improve capital efficiency, and support long-term infrastructure and real estate development while maintaining investor protection.

1. Retention of SPVs by InvITs After Concession Expiry

SEBI has proposed allowing InvITs to retain Special Purpose Vehicles (SPVs) even after the expiry of concession agreements, subject to:

• Adequate disclosures to investors
• A time-bound exit mechanism for such SPVs

This proposal seeks to address practical challenges faced during concession closures and facilitate orderly exits without disrupting trust operations.

2. Expanded Investment in Liquid Mutual Funds

It has been proposed to:

• Allow REITs and InvITs to expand their investments in liquid mutual fund schemes
• Subject to the condition that such schemes have a Credit Risk Value (CRV) of 10 or higher

This measure is intended to enhance treasury management flexibility while ensuring prudent risk standards.

3. Investment by Private InvITs in Greenfield Projects

SEBI has proposed permitting private InvITs to:

• Invest up to 10% of their asset value in greenfield infrastructure projects

This change aims to:

• Encourage early-stage infrastructure development
• Enable capital formation in new projects while limiting exposure to developmental risks

4. Widening the Permissible Use of Higher Borrowings

Under the current framework, borrowings beyond 49% of asset value are subject to strict end-use restrictions. SEBI has proposed to widen the permissible use of such borrowings to include:

• Refinancing of existing debt
• Capital expenditure (capex)
• Capacity augmentation
• Major maintenance expenditure, including for road assets

This proposal is expected to improve financial flexibility and asset sustainability for InvITs and REITs.

5. Objective of the Proposals

The consultation paper seeks to:

• Reduce operational and regulatory friction
• Align regulatory norms with market realities
• Strengthen the REIT and InvIT ecosystem
• Support infrastructure growth while safeguarding investor interests

6. Invitation for Public Comments

Considering the potential impact on trusts, sponsors, investment managers, lenders, and investors, SEBI has invited public comments and suggestions on the proposed measures.

Stakeholder feedback will be taken into account before finalising the regulatory framework.

Click Here To Read The Full Update

The post SEBI Proposes Easier InvIT Rules on SPVs and Greenfield Projects appeared first on Taxmann Blog.

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Circular No. HO/47/14/12(1)2026-MRD-POD2/I/4229/2026, Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a circular modifying the framework for the creation and invocation of pledge of securities through the depository system.

The changes are aimed at strengthening contractual compliance, investor protection, and process standardisation.

1. Mandatory Undertakings in Pledge Request Forms

Under the revised framework:

• Pledge request forms must include explicit undertakings by both the pledger and the pledgee.
• These undertakings shall confirm compliance with the provisions of the Indian Contract Act, 1872.

2. Requirement of Reasonable Notice Before Sale

The undertakings must specifically cover:

• The obligation to provide reasonable notice to the pledger
• Prior to the sale or invocation of pledged securities, as required under contract law

This measure reinforces legal safeguards and ensures fair treatment in pledge enforcement.

3. Standardisation of Pledge Request Forms

SEBI has further directed that:

• Depositories shall maintain a standardised pledge request form
• Uniformity in documentation will help ensure:

1. 1. Consistent disclosures
   2. Clear allocation of rights and responsibilities
   3. Reduced scope for disputes and ambiguity

4. Implementation Timeline

• The provisions of this circular shall be implemented on or before 6 April 2026.

Depositories, intermediaries, and market participants are required to align their systems, documentation, and processes within the stipulated timeline.

5. Key Takeaway

The revised framework:

• Strengthens compliance with contractual law
• Enhances transparency and investor protection in pledge transactions
• Promotes standardisation across the depository system

Click Here To Read The Full Circular

The post SEBI Tightens Pledge Framework via Depositories appeared first on Taxmann Blog.

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Circular No. HO/47/15/11(2)2025-MRD-TPD1/ I/4226/2026 dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has tightened the margin framework applicable to single-stock derivatives by restricting the availability of calendar spread margin benefits on the expiry day for contracts expiring on that day.

This move aligns the treatment of single-stock derivatives with the existing margin framework for index derivatives and seeks to address potential risks arising on expiry days.

1. Withdrawal of Calendar Spread Margin Benefit on Expiry Day

Under the revised norms:

• Calendar spread margin benefits will not be available on the expiry day for positions involving the contract expiring on that day.
• The restriction applies only to calendar spreads that include the current expiry contract.
• The measure is aimed at mitigating heightened volatility, settlement risk, and sharp price movements typically observed on expiry days.

2. Margin Treatment for Other Calendar Spreads Remains Unchanged

SEBI has clarified that:

• Margin calculations remain unchanged for calendar spread positions involving expiries other than the current expiry.
• Calendar spread benefits will continue to apply to such positions, even on the day of the nearest expiry.

3. Illustrative Example

Assume monthly expiries fall on:

• 29th – Current month expiry
• 30th – Next month expiry
• 31st – Far month expiry

3.1 On 29th (Current Month Expiry Day):

3.1.1 Calendar Spread Benefit Not Available

• Positions involving 29th & 30th
• Positions involving 29th & 31st

3.1.2 Calendar Spread Benefit Continues

• Positions involving 30th & 31st

Accordingly, only calendar spreads that include the expiring contract lose the margin benefit on its expiry day.

4. Effective Date

• The circular shall come into force three months from the date of issuance.

Market participants are expected to update their margin systems and trading strategies in line with the revised framework.

5. Key Takeaway

The change:

• Harmonises margin treatment across single-stock and index derivatives
• Reduces expiry-day risk concentration
• Preserves margin benefits for non-expiring calendar spread positions

Click Here To Read The Full Circular

The post SEBI Bars Calendar Spread Margin Benefit on Expiry Day appeared first on Taxmann Blog.

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Case Details: Asst. CIT, Circle 3.3.1 vs. Shapoorji Pallonji Solar Holdings (P.) Ltd. [2026] 182 taxmann.com 788 (Mumbai-Trib.)

Judiciary and Counsel Details

• Saktijit Dey, Vice President & Jagadish, Accountant Member
• Dharmesh Shah & Ms Mitali Parekh, Advs. for the Appellant.
• Arun Kranti Datta, CIT DR for the Respondent.

Facts of the Case

The assessee company was engaged in the business of generating and supplying power and energy. Along with its holding company, the assessee decided to sell its entire shareholding in four group companies to a Singapore-incorporated company, part of the KKR group in the USA. The assessee received a total consideration of Rs. 39.25 crores, as against the purchase cost of shares at Rs. 202.19 crores. This resulted in a long-term capital loss (LTCL) of around Rs. 183 crores.

The assessee furnished voluminous documentary evidence to justify its claim of LTCL on the sale of shares, including a valuation report determining the valuation of the shares as on the date of sale. However, the Assessing Officer (AO) rejected the assessee’s claim of LTCL primarily on the reasoning that the assessee failed to furnish the requisite documentary evidence. On appeal, the CIT(A) allowed the LTCL claim. Aggrieved by the order, the AO filed the instant appeal before the Tribunal.

ITAT Held

The Mumbai Tribunal held that the assessee had sold shares to a completely unrelated foreign entity. Therefore, it cannot be said that the sale of shares was made to generate a loss as part of a premeditated arrangement. When transactions are between unrelated parties, the cost of such transactions is determined through negotiation, taking into account various factors, including the net worth and profitability of the entity whose shares are transacted.

In this case, a careful analysis of the chart clearly demonstrated that the sale value per share of the companies exceeds their Net Asset Value (NAV) as of the date of sale. Further, the AO had not made any adverse observations with reference to the value determined by the independent valuer appointed by the assessee. Although the department had ample opportunities to challenge the assessee’s share valuation at various stages, it failed to do so. Even the department had not furnished any material to demonstrate what, according to the department, would have been the value of shares as on the date of sale.

Without doing his homework, the AO cannot summarily reject the valuation of the assessee and the LTCL arising out of the sale of shares. Therefore, the impugned LTCL claim of the assessee was to be allowed.

The post AO Cannot Reject Share Valuation and LTCL Without Basis | ITAT appeared first on Taxmann Blog.

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Case Details: Tamil Nadu Auto Parts vs. Deputy Commissioner (CT) [2026] 182 taxmann.com 874 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• S. Rajasekar for the Petitioner.
• TNC Kaushik, Additional Government Pleader for the Respondent.

Facts of the Case

The petitioner challenged the assessment order issued in Form GST DRC-07, alleging that the show cause notice (SCN) in Form GST DRC-01 was not uploaded on the GST portal due to a portal glitch, resulting in no effective opportunity to respond. The petitioner received an intimation in Form GST ASMT-10, furnished a partial reply, and uploaded Form GST DRC-06, while departmental records showed the SCN in Form GST DRC-01 for the same period. The petitioner filed a statutory appeal against the DRC-07 order, which was rejected on the ground of limitation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the portal glitch and non-uploading of the SCN in Form GST DRC-01 amounted to a tacit admission of violation of the principles of natural justice. Since the petitioner had deposited 10% of the disputed tax at the time of filing the appeal, the impugned DRC-07 assessment order was to be quashed. The matter was remitted to the adjudicating authority for fresh adjudication on merits expeditiously. The petitioner was directed to file a reply to the SCN in Form GST DRC-01, treating the impugned assessment order as an addendum to the SCN.

The post DRC-07 Quashed for Portal Glitch – SCN Not Uploaded | HC appeared first on Taxmann Blog.

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Markus Susilo & Nimesh Malik – [2026] 183 taxmann.com 147 (Article)

The UAE’s introduction of an Advance Pricing Agreement (‘APA’) framework marks a significant milestone in the country’s corporate tax evolution. With the release of the Federal Tax Authority’s Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1), taxpayers now have a structured mechanism to obtain prospective certainty on transfer pricing outcomes. Beginning with domestic unilateral APAs from December 2025 and cross‑border applications expected in 2026, the framework arrives at a pivotal moment, offering businesses a forward‑looking tool for risk management, planning, and governance.

Many businesses are encountering, for the first time, the formal expectation that related‑party transactions adhere to the arm’s‑length standard outlined in Article 34 of the Corporate Tax Law, while Article 59 provides statutory authority for APAs. The ability to agree in advance on transfer pricing methodology can be invaluable—reducing uncertainty, preventing disputes, and supporting multi‑year commercial strategies. In this context, the APA programme represents not only a procedural advancement but an important step toward cultivating a predictable and collaborative tax environment.

A topic that has naturally generated interest is the AED 100 million materiality threshold in the APA Guide. While the APA Guide sets this threshold for the value of controlled transactions proposed for coverage per tax period, it also clarifies that lower‑value transactions may still be considered where arrangements are complex or raise material transfer pricing uncertainty. This balance—clear criteria paired with administrative flexibility—reflects the diverse nature of UAE business models, where complexity does not always correlate with the size of the transaction.

One aspect that warrants careful reflection is the nature of the APA Guide itself. As a non‑binding administrative guide, it mirrors global practice for early‑stage APA regimes. This approach enables the tax authority to refine processes, incorporate feedback, and build internal capability before formalising elements through legislation. Over time, however, many jurisdictions choose to introduce more defined legislative backstops—such as codified access thresholds or procedural timelines—to enhance long‑term predictability for taxpayers.

Click Here To Read The Full Article

The post [Opinion] Shaping Certainty in a New Tax Landscape | Reflections on the UAE’s APA Programme appeared first on Taxmann Blog.

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