Author: inavatiq

IFSCA Circular IFSCA-FCR/4/2026-Banking; Dated: 03.02.2026

The International Financial Services Centres Authority (IFSCA) has mandated that all Finance Companies and Finance Units operating in the GIFT International Financial Services Centre (GIFT IFSC) and providing services to non-group clients must maintain a dedicated website or webpage.
This move is aimed at strengthening transparency, consumer awareness, and regulatory accountability in the IFSC ecosystem.

1. Applicability of the Requirement

The requirement applies to:

• Finance Companies and Finance Units registered with IFSCA
• Entities operating in GIFT IFSC
• Entities providing financial services to non-group clients

Group-only service providers are outside the scope of this mandate.

2. Objective of the Mandate

The directive seeks to:

• Enhance transparency in operations of IFSC entities
• Enable informed decision-making by customers and stakeholders
• Provide easy access to regulatory and operational information
• Strengthen consumer protection and grievance redressal visibility

3. Mandatory Disclosures on the Website/Webpage

The dedicated website or webpage must clearly and prominently disclose the following information:

3.1 Registration and Regulatory Details

• IFSCA registration details
• Licence or approval number
• Category and type of registration under applicable regulations

3.2 Permitted Activities

• List of activities permitted by IFSCA
• Scope of operations allowed under the regulatory framework

3.3 Products and Services Offered

• Details of financial products and services offered to clients
• Clear description to avoid misrepresentation or ambiguity

3.4 Grievance Redressal Mechanism

• Customer grievance redressal framework
• Contact details for grievance handling
• Timelines and escalation process

3.5 Key Managerial Personnel (KMP) Details

• Names and designations of key managerial personnel
• Governance and leadership disclosures, as applicable

4. Legal and Regulatory Framework

This requirement has been issued under:

• The IFSCA Act, and
• Applicable IFSCA (Finance Company) Regulations

The mandate forms part of IFSCA’s broader effort to align IFSC entities with global best practices in disclosure and consumer protection.

5. Effective Date

• Effective from – 1 April 2026
• Entities must ensure compliance on or before this date to avoid regulatory non-compliance.

Click Here To Read The Full Circular

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Ministry of Finance Notification; Dated: 03.02.2026

The Central Government has notified 5 February 2026 as the date on which the provisions of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 shall come into force.

1. Scope of Enforcement

All provisions of the Act will become effective from the notified date, except Section 25.

2. Section Excluded from Current Enforcement

• Section 25 of the Act has been expressly excluded from the current notification.
• The enforcement of Section 25 will be notified separately by the Central Government at a later date.

3. Legal Authority

The notification has been issued by the Central Government in exercise of the powers conferred under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, in accordance with established legislative practice.

4. Effective Date

• Effective date – 5 February 2026
• Exception – Section 25 (to be enforced separately)

Click Here To Read The Full Notification

The post Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act Effective from 5 Feb 2026 appeared first on Taxmann Blog.

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Case Details: O K Travels vs. State Tax Officer [2026] 182 taxmann.com 711 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• P.P. Vikram for the Petitioner.
• V. Prashanth Kiran, Govt. Adv. for the Respondent.

Facts of the Case

The petitioner challenged the order, which confirmed a demand arose after the non-reply to the show cause notice issued in GST DRC-01, and it was therefore confirmed against the assessee. Subsequently, it filed an application for rectification of mistake under Section 161 of the CGST Act and the Tamil Nadu GST Act, seeking correction of the order. The rectification application was rejected. The assessee contended that the rejection of the rectification application was arbitrary and contrary to law. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned order demonstrated that the jurisdictional officer under CGST and the jurisdictional officer under the Tamil Nadu GST Act complied with the procedural requirements of the respective GST enactments and the rules made thereunder. It was held that the assessee’s failure to respond to the show cause notice in GST DRC-01 rendered the demand’s confirmation legally sustainable. The High Court held that the rejection of the rectification application under Section 161 did not warrant interference.

The post GST Demand Upheld for Non-Reply to SCN | Appeal Allowed with Deposit appeared first on Taxmann Blog.

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Circular no. RBI/2025-26/204 DoR.CO.SOG(Leg) No.401/09.08.024/2025-26; Dated: 03.02.2026

The Government of India has requested that all bank branches handling Government receipts and payments remain open for public transactions on 31 March 2026 (Tuesday), even though the day is a public holiday.

1. Purpose of Keeping Banks Open

The measure has been taken to ensure that all Government transactions relating to receipts and payments are properly accounted for within the Financial Year 2025–26, which concludes on 31 March 2026.

Keeping bank branches operational on this day will facilitate:

• Timely accounting of Government receipts
• Settlement of Government payments
• Smooth closure of accounts for the financial year

2. RBI Direction to Agency Banks

Pursuant to the Government’s request, the Reserve Bank of India has issued directions to all agency banks to keep their designated branches open on Tuesday, 31 March 2026.

Agency banks are required to ensure that branches dealing with Government business are fully functional for the purpose of processing Government-related transactions.

3. Applicability

This directive applies to:

• All agency banks
• Bank branches authorised to handle Government receipts and payments

The instruction is limited to Government transactions and does not necessarily extend to all regular banking services unless otherwise specified by the respective banks.

4. Date to Note

• Operational Date – Tuesday, 31 March 2026
• Occasion – Public Holiday
• Purpose – Closure and accounting of Government transactions for FY 2025–26

Click Here To Read The Full Circular

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1. Introduction

The Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) has issued an Exposure Draft on the “Standard on Auditing for Audits of Financial Statements of Less Complex Entities (SA for LCE)”, with the objective of introducing a simplified yet robust auditing standard tailored to entities with lower levels of complexity.

2. Exposure Draft on LCE

The proposed SA for LCE is designed to enable auditors to obtain reasonable assurance that the financial statements of Less Complex Entities are free from material misstatement, whether arising from fraud or error, while ensuring that audit procedures remain proportionate to the size, nature, and risk profile of such entities. The standard is premised on firms being subject to Standard on Quality Management (SQM) 1, thereby reinforcing that audit quality remains central even in a simplified framework.

3. Optional Use of SA for LCE

Despite the entity satisfying the criteria of a Less Complex Entity (LCE) as prescribed in the standard, the application of this Standard remains optional. The auditor may, based on professional judgment, elect to conduct the audit in accordance with the full set of Standards on Auditing (SAs) instead of the SA for LCE. In such cases, the audit shall be planned, performed, and reported strictly in compliance with the applicable Standards on Auditing, and no reference to compliance with the SA for LCE shall be made in the auditor’s report.

4. Criteria for Classification as a Less Complex Entity

A key feature of the exposure draft is the clear articulation of eligibility criteria for classifying an entity as an LCE. These criteria encompass:

4.1 Specific Prohibitions

An entity may be considered for audit under the “SA for LCE” only where no law or regulation restricts its application or mandates the use of any other auditing framework.

The entity must be unlisted in nature and should not operate as a banking or insurance entity, nor should its principal activities involve providing insurance services to the public. The framework is also not applicable in circumstances involving group audits, including situations where the principal auditor relies on the work of other auditors in respect of components of the entity.

Further, the entity should not be governed by any special statute and must operate as a standalone entity, i.e., it should neither be a holding, subsidiary, nor an associate of another entity. These conditions collectively ensure that the SA for LCE is applied only to entities with limited regulatory complexity and straightforward ownership and reporting structures.

4.2 Quantitative Criteria

From a quantitative perspective, an entity qualifies as a Less Complex Entity only if it remains within prescribed size thresholds. Specifically, its paid-up share capital does not exceed ₹10 crore, and its turnover, as reported in the profit and loss account for the immediately preceding financial year, is limited to ₹50 crore.

In addition, the entity should not have borrowings, including public deposits, exceeding ₹25 crore at any point during the accounting year. Where applicable, such as in the case of Section 8 companies or similar entities, cumulative grants and donations should also not exceed ₹25 crore at any time during the year.

Further, the entity’s employee strength must remain within 100 employees throughout the accounting year, ensuring that the scale of operations remains consistent with the characteristics of a less complex entity.

4.3 Qualitative Criteria

From a qualitative standpoint, an entity may be regarded as a “Less Complex Entity” only where it is exempt from the requirements of Section 143(3)(i) of the Companies Act, 2013, which mandates reporting on the adequacy and operating effectiveness of internal financial controls with reference to financial statements.

In addition, the entity’s business activities, operations, and related transactions should be straightforward in nature, with no complex matters or circumstances that could significantly affect the preparation of the financial statements.

Further, there should be no indicators of heightened complexity arising from the entity’s ownership structure, corporate governance arrangements, or the policies, procedures, and processes established by the entity. Collectively, these conditions ensure that the entity’s financial reporting environment remains simple and transparent, consistent with the objectives of the SA for LCE framework.

Click Here To Read The Full Story

The post ICAI Seeks Comments on Exposure Draft for Audits of Less Complex Entities appeared first on Taxmann Blog.

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Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. EU-India Conclude Landmark Free Trade Agreement – Tariff Measures for Mutual Market Access

The European Union (EU) and India have concluded negotiations for a landmark free trade agreement (FTA), marking the most ambitious trade opening ever granted by India and the largest FTA for the EU. The agreement strengthens economic and political ties between the two economies and highlights their commitment to rules-based trade, economic openness, and sustainable development.

The guidance outlines tariff reductions, market access for goods and services, intellectual property (IP) protections, and sustainability commitments. It also details preferential treatment for EU businesses in India, protection of sensitive sectors, and mechanisms to support small and medium enterprises (SMEs) in both regions.

Key aspects of this agreement include:

(a) Tariff Reductions on Industrial and Agri-food Products – India will eliminate or reduce tariffs on 96.6% of EU goods exports, saving approximately €4 billion per year in duties. Tariffs on cars will gradually decrease from 110% to 10%, while tariffs on car parts will be fully abolished within five to ten years. Machinery, chemicals, and pharmaceuticals will also benefit from substantial tariff reductions.

For agri-food products, Indian tariffs on wines will be cut from 150% to 75% at entry into force and eventually to 20%. Olive oil tariffs will fall from 45% to zero over five years, and tariffs of up to 50% on processed agricultural products, such as bread and confectionery, will be removed.

All goods imported into India must continue to comply with the EU’s strict health and food safety regulations. This ensures that while India reduces tariffs, European exporters must meet EU standards when bringing products into India.

(b) Market Access and Services Provisions – EU companies will obtain privileged access to India’s services market, including financial services and maritime transport. The agreement includes India’s most ambitious commitments on financial services to date, exceeding commitments made to other trading partners.

Both EU and Indian SMEs will benefit from dedicated contact points to navigate the FTA’s provisions and gain access to information on tariffs, regulatory requirements, and procedural support.

(c) Intellectual Property Protection – The agreement ensures a high level of IP protection and enforcement, covering copyright, trademarks, designs, trade secrets, and plant variety rights. It aligns Indian and EU IP laws with existing international treaties, facilitating trade and investment for businesses reliant on IP assets.

(d) Sustainable Development and Environmental Commitments – A dedicated chapter addresses environmental protection, climate change, labour rights, and women’s empowerment. The EU and India will establish a platform for cooperation on climate action, with €500 million in EU support over the next two years to help India reduce greenhouse gas emissions and promote sustainable industrial transformation.

(e) Implementation and Next Steps – The negotiated draft texts will undergo legal revision, translation, and adoption processes in the EU. Following the European Parliament’s consent, Council approval, and India’s ratification, the agreement will enter into force. Separate negotiations on Geographical Indications and Investment Protection remain ongoing to complement the FTA framework.

Source – Official Source

Click Here To Read The Full Article

The post [Global IDT Insights] EU-India Free Trade Agreement – Tariff & Market Access Highlights appeared first on Taxmann Blog.

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1. Introduction

Revenue recognition for construction contracts requires careful judgment due to their long-term nature and evolving scope. Ind AS 115 introduces a principles-based approach that focuses on the transfer of control rather than the completion of activities. Under this standard, entities must assess whether revenue is recognised over time or at a point in time, determine appropriate measures of progress, and estimate variable consideration arising from variations and claims. Given the complexity and uncertainty inherent in construction contracts, applying Ind AS 115 consistently is critical to ensure that revenue reflects the actual performance of the entity.

2. Challenges in Applying POCM by Real Estate Companies

Real estate companies often face significant challenges in applying the Percentage of Completion Method (POCM) under Ind AS 115. This is primarily because the criteria for recognising revenue over time—specifically, the transfer of control of a good or service to the customer—are rarely met in typical real estate arrangements.

The September 2017 “IFRIC Update” examined this issue in detail and concluded that, in most multi-unit real estate developments, the criterion relating to control over an asset created or enhanced by the entity is not fulfilled. As a result, revenue recognition over time using POCM is generally not permitted in such cases.

The IFRIC highlighted the following key considerations:

a) The asset created by the entity’s performance is the real estate unit itself, not the contractual right to receive the unit in the future. The ability to sell or pledge this contractual right does not indicate control over the real estate unit under construction.

b) Control must be assessed with reference to the part-constructed unit. During construction, customers typically do not have the ability to direct the use of, or obtain substantially all the remaining benefits from, the real estate unit.

c) Although customers may be exposed to changes in the market value of the unit, such exposure alone does not provide the ability to direct its use as construction progresses.

d) Rights that allow customers (collectively) to replace the developer in the event of non-performance are protective in nature and do not indicate control.

Accordingly, customers do not control the part-constructed real estate unit, and the over-time revenue recognition criterion based on control is generally not met.

There is another pathway under Ind AS 115 that may allow some real estate entities to apply POCM. An entity must demonstrate that the asset being constructed has no alternative use and that it has an enforceable right to payment for performance completed to date. In practice, this criterion is also rarely satisfied, as contracts often do not provide such rights, or applicable laws may prohibit recovery for work performed if the contract is terminated.

3. Para 35 of Ind AS 115

An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs

b) the entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced, or

c) the entity’s performance does not create an asset with an alternative use to the entity,and the entity has an enforceable right to payment for performance completed to date

Click Here To Read The Full Story

The post Revenue Recognition in Real Estate under Ind AS 115 | Case Analysis appeared first on Taxmann Blog.

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Case Details: Nazir Ahmad Bhat vs. Chairman/ Managing Director J&K Bank Corporate Office - [2026] 182 taxmann.com 310 (HC-Jammu & Kashmir and Ladakh)

Judiciary and Counsel Details

• Sanjeev Kumar & Sanjay Parihar, JJ.
• Tariq M. Shah & Zahid Ahmad, Advs. for the Appellant.
• Ms Insha Rashid & Ms Taniya, Advs. for the Respondent.

Facts of the Case

In the instant case, the petitioner-borrower availed a cash credit facility from the respondent-bank, secured by a mortgage of an immovable property. Due to default, the account was classified as NPA. The possession notice was issued under section 13(4) of the SARFAESI Act.

The Bank issued an e-auction notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, for the of a sale secured asset, and later issued an addendum extending the bid submission deadline and rescheduling the auction date. The Successful bidder deposited consideration, and a sale certificate was issued.

The petitioner then challenged the possession notice, the e-auction notice, the addendum and the sale certificate, alleging deprivation of the statutory 30-day period under Rule 9(1) to clear dues.

High Court Held

The High Court held that the petitioner was not deprived of a 30-day opportunity, as he had more than three months from the initial auction notice to date of the auction to redeem the secured asset; thus, the contention was untenable. Further, since the petitioner failed to clear outstanding dues despite sufficient opportunity, the petition was liable to be dismissed.

List of Cases Reviewed

• M. Rajendran v. KPK Oils and Protiens India (P.) Ltd. [2025] 178 taxmann.com 574 (SC)/2025 LiveLaw (SC) 931 (para 12) followed
• Mathew Varghese v. M. Amritha Kumar [2014] 44 taxmann.com 137/125 SCL 209 (SC)/[2014 (5) SCC 610] (para 15) distinguished

List of Cases Referred to

• Mathew Varghese v. M. Amritha Kumar [2014] 44 taxmann.com 137/125 SCL 209 (SC) (para 11)
• M. Rajendran v. KPK Oils and Protiens India (P.) Ltd. [2025] 178 taxmann.com 574 (SC) (para 12).

The post HC Dismisses Plea Against Auction of Mortgaged Asset appeared first on Taxmann Blog.

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Case Details: Central Board of Trustees Employees Provident Fund vs. Holy Cross Girls Higher Secondary School - [2025] 181 taxmann.com 928 (HC - Chhattisgarh)

Judiciary and Counsel Details

• Ramesh Sinha, CJ. & Ravindra Kumar Agrawal, J.
• Sunil Pillai, Adv. for the Petitioner.

Facts of the Case

In the instant case, the respondent-employer was covered under the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952. It was found that the respondent had failed to deposit the provident fund contributions for its employees within the stipulated time. Accordingly, the competent authority initiated proceedings under section 14B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, for default in furnishing information and levied damages under section 14B and interest under section 7Q of the Act.

The respondent admitted the delay in depositing the contribution, and the authority passed an order directing the respondent to pay damages under section 14B and interest under section 7Q of the Act.

On appeal, the Appellate Tribunal reduced the damages under section 14B to 25 per cent of the assessed amount, while affirming the liability under section 7Q. The Single Judge dismissed the writ petition and held that reducing the penalty/damages to 25 per cent of the assessed amount by the Appellate Tribunal was just and proper. Thereafter, an appeal was made before the High Court.

High Court Held

The High Court held that the order passed by a single judge was based on a proper appreciation of the facts of the case as well as provisions of law, and also the ratio laid down by the Kerala High Court in Central Board of Trustees v. Bake ‘N’ Joy Hot Bakery [2024] 1 taxmann.com 9413 (Kerala). Therefore, the writ appeal was to be dismissed.

List of Cases Reviewed

• Order of Single Judge in WPL No. 223/2024 dated 27.11.2024 (para 13) affirmed
• Central Board of Trustees v. Bake ‘N’ Joy Hot Bakery [2024] 1 taxmann.com 9413 (Kerala) (para 12) followed.

List of Cases Referred to

• Central Board of Trustees v. Vidyut Grih Higher Secondary Vidyalaya [WPL No. 199 of 2013] (para 8)
• Horticulture Experiment Station Gonikoppal, Coorg v. Regional Provident Fund Organisation [2022] 2 taxmann.com 2397 (SC) (para 8)
• Central Board of Trustees v. Bake ‘N’ Joy Hot Bakery [2024] 1 taxmann.com 9413 (Kerala) (para 10)
• Halwasiya Vidya Vihar v. Regional P.F. Commissioner (2006) 4 SCC 46 (para 11)
• Navin Vidya Bhawan v. Union of India 2015 SCC Online MP 4504 (para 11)
• RPF Commissioner v. SD College (1997) 1 SCC 241 (para 11).

The post HC Upholds Reduction of EPF Damages to 25% appeared first on Taxmann Blog.

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Case Details: Haffkine Bio Pharmaceutical Corporation vs. ACIT [2026] 182 taxmann.com 695 (Mumbai-Trib.)

Judiciary and Counsel Details

• Anikesh Banerjee, Judicial Member & Prabhash Shankar, Accountant Member
• Mayur Makadia for the Appellant.
• Hemanshu Joshi, SR DR for the Respondent.

Facts of the Case

The assessee, a Government of Maharashtra undertaking, has consistently followed the same method of creating provisions for salary revisions since the financial year 1976-77. It was bound to implement the Pay Commission’s recommendations as and when sanctioned by the State Government.

During the relevant assessment year, the assessee created a provision for salary on account of the expected increase in annual personnel cost arising from the implementation of the Sixth Pay Commission. The matter reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessee consistently followed the same method of creating provisions towards salary revision since the financial year 1976-77, based on past experience and a reasonable estimation of the enhanced liability. The provision in question was created in respect of services already rendered by the employees during the relevant previous year, and only the quantification of the enhanced salary was deferred to a future date, subject to formal approval.

The liability, therefore, had accrued during the year under consideration and cannot be characterised as contingent in nature. The mere deferment of approval or payment does not render the liability contingent. In view of the consistent accounting practice followed by the assessee, the binding nature of the Pay Commission recommendations, and the settled legal position that a provision for an accrued but unquantified liability is allowable as a deduction, the disallowance of the provision was unjustified.

List of Cases Reviewed

• CIT v. Bharat Heavy Electrical Ltd. [2012] 26 taxmann.com 252/210 Taxman 155 (Mag)/[2013] 352 ITR 88 (Delhi)
• TATA Communications Ltd. v. Jt. CIT [2013] 32 taxmann.com 197/57 SOT 1 (Mum-Trib) (para 10) followed

List of Cases Referred to

• CIT v. Bharat Heavy Electrical Ltd. [2012] 26 taxmann.com 252/ 210 Taxman 155 (Mag)/[2013] 352 ITR 88 (Delhi) (para 7)
• TATA Communications Ltd. v. Jt. CIT [2013] 32 taxmann.com 197/57 SOT 1 (Mum-Trib) (para 8).

The post Provision for Salary Revision Allowed as Accrued Liability | ITAT appeared first on Taxmann Blog.

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