This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Jan 19th to Jan 24th 2026, namely:
- SEBI raises HVDLE threshold to Rs 5000 crore; strengthens demat and governance norms;
- Project completion method permissible for landowners in JDAs; AO cannot impose percentage completion method: ITAT;
- Compensation rightly awarded as deceased died in the course of employment; HC’s interference unwarranted: SC;
- GSTN issues advisory on RSP-based valuation for notified tobacco goods under GST: Advisory;
- Assignment of leasehold rights in plot is not supply of service as same not in course or furtherance of business: HC; and
- From Profit Recognition to Equity Adjustment: Treatment of Change in Accounting Policy under AS and Ind AS.
1. SEBI raises HVDLE threshold to Rs 5000 crore; strengthens demat and governance norms
The SEBI vide notification dated January 20, 2026, has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026, introducing targeted changes to the LODR framework, with a primary focus on ‘High Value Debt Listed Entities’ (HVDLEs). The key amendments include revision in threshold limit for identifying HVDLEs, age cap compliance for appointment of non-executive directors, credit of securities to be effected only in dematerialised form and prohibition on processing transfer requests unless securities are held in demat form. The amendment regulations come into force from the date of their publication in the Official Gazette.
Key Amendments
The key amendments include:
- Revision in threshold limit for identifying HVDLEs
On October 27, 2025, SEBI proposed raising the threshold for identifying HVDLEs from the existing Rs 1000 crore to Rs 5000 crore. Now, this limit has been increased.
Under the amended Regulation 15(1A) of the LODR Regulations, an entity will be classified as an HVDLE only where the outstanding value of listed non-convertible debt securities is Rs. 5,000 crores or more. This change reduces the compliance burden for entities with lower levels of listed debt and makes it easier for regulated entities such as NBFCs, HFCs, ARCs, insurance companies, and REITs to raise funds through corporate bond issuances.
- Age cap compliance for appointment of non-executive directors
Regulation 62D(2) of the SEBI (LODR) Regulations, 2015, provides that an HVDLE must not appoint a person or continue the directorship of any person as a non-executive director who has attained the age of 75 years unless a special resolution is passed to that effect.
A proviso has now been inserted, clarifying that an HVDLE must ensure such compliance at the time of appointment or re-appointment, or at any time prior to the non-executive director attaining the age of 75 years.
SEBI has also clarified that the time taken for regulatory, statutory, or government approvals must be excluded from the timeline specified for obtaining shareholders’ approval for the appointment or reappointment of directors.
- Additional timeline of 3 months for filling vacancies in office of KMPs for companies emerging from CIRP
An amendment has been made to Regulation 62P relating to ‘Vacancies in respect of certain KMP’. It states that any vacancy in the office of the KMP of an HVDLE must be filled within 3 months from the date of approval of the resolution plan under Section 31 of the IBC.
However, if a person is appointed in an interim capacity, the HVDLE must have at least one full-time key managerial personnel managing its day-to-day affairs.
- Credit of securities to be effected only in dematerialised form
SEBI has also strengthened investor service and securities handling requirements. Regulation 39 has been amended to mandate that credit of securities pursuant to investor service requests, in relation to subdivision, split, consolidation, renewal, exchange or issuance of duplicate securities, must be effected only in dematerialised form and within a period of thirty days from the date of receipt of the request, along with the requisite documents.
- Prohibition on processing transfer requests unless securities are held in demat form
Regulation 40 relating to the ‘transfer or transmission or transposition of securities’ has been amended to further reinforce dematerialisation by prohibiting the processing of transfer requests unless the securities are held in dematerialised form.
Further, transmission or transposition of securities, whether held in physical or dematerialised form, must be effected only in dematerialised form.
However, transfers of securities executed before April 1, 2019, and still held in physical form may continue to be registered, subject to conditions specified by the SEBI.
Conclusion
In conclusion, SEBI’s amendments to the LODR Regulations adopt a balanced approach by rationalising the HVDLE threshold, clarifying governance norms for directors and KMPs, and strengthening dematerialisation requirements. Together, these measures aim to improve regulatory clarity, ease compliance for mid-sized issuers and enhance overall efficiency and transparency in the corporate bond market.
2. Project completion method permissible for landowners in JDAs; AO cannot impose percentage completion method: ITAT
The assessee, a real estate company, was engaged in real estate activity. During the survey proceedings, it was found that the assessee had entered into a Joint Development Agreement (JDA) with the developer. In respect of these joint development projects, the assessee adopted the project-completion method for recognising revenue/income.
Considering that the developer adopted the percentage completion method of accounting, the Assessing Officer (AO) contended that the assessee should also recognise the revenue accordingly. AO added to the assessee’s income under the percentage-of-completion method. The CIT(A) deleted the additions made by AO, and the matter reached the Bangalore Tribunal.
The Tribunal held that the assessee was only a landowner and not a developer or contractor. The assessee had granted the developer development rights to develop the property owned by the assessee. The developer was responsible for the construction of premium residential apartment buildings. The assessee, being the landowner, was the sole legal and beneficial owner of the scheduled property.
The assessee was recognising the revenue based on the ultimate registration of the sale deed. Since no part of the property had been registered under a duly registered sale deed, the amount received by the assessee was shown as a liability in the balance sheet. The assessee remained the owner of the land throughout the development of the property, and there was no transfer of ownership to the developer. At the highest, possession alone was given under the agreement and that too for a specific purpose.
The revenue cannot be thrust upon the assessee to adopt the percentage completion method of accounting merely because the developer was following it. The percentage completion method, as one of the recognised methods under the construction contract, is not applicable to the assessee firm, which is a landowner.
Since the assessee adopted the project completion method for revenue recognition and has consistently followed it over the years, the accounting method is also not subject to any change by the revenue.
3. Compensation rightly awarded as deceased died in course of employment; HC’s interference unwarranted: SC
The Supreme Court, in the matter of Panganti Vijaya vs. United India Insurance Company Ltd. [2026] 182 taxmann.com 109 (SC), ruled that since the death of the deceased occurred out of and in the course of employment, the appellant’s claim for compensation under the Workmen’s Compensation Act, 1923, was rightly allowed by the Commissioner and interference by the High Court was unwarranted.
Brief facts of the case:
In the instant case, the deceased was employed by the respondent, the vehicle’s owner, as a driver. While driving a vehicle, the deceased met with a fatal accident when a lorry coming from the opposite direction rammed into the vehicle. Thereafter, the appellant, being the legal representative of the deceased, filed a claim under the Workmen’s Compensation Act, 1923.
Relying on oral and documentary evidence, the Commissioner found that the deceased was employed as a driver with the respondent and that the accident occurred during and in the course of employment. Accordingly, joint and several liability was fixed, and the Insurance Company and the owner of the vehicle were directed to pay compensation of Rs. 3,73,747 along with interest at a rate of 12% per annum to the appellant.
The Insurance Company challenged the order before the High Court. The High Court allowed the appeal and set aside the Commissioner’s order. Then, an appeal was made before the Supreme Court against the order passed by the High Court.
Supreme Court Observations:
It was noted that the High Court, relying on an earlier counter-affidavit filed by the respondent, recorded that there was no employer-employee relationship between the deceased and the owner of the vehicle.
The finding recorded by the Commissioner was based on a correct appreciation of evidence and did not suffer from perversity or legal infirmity. The Commissioner had considered, in addition to the other material on record, the evidence of the owner who had specifically stated that the deceased had been in his employment since before the date of the accident. Based on this consideration, a finding of fact was recorded that the deceased was an employee of the owner of the vehicle involved in the accident.
Further, it was noted that the respondent failed to enter an appearance before the Supreme Court despite service of notice. Subsequently, the respondent appeared before the Court and filed an affidavit on oath, wherein he unequivocally admitted that the deceased was under his employment.
Supreme Court Ruling:
The Supreme Court held that the deceased was employed as a driver and that his death occurred during the course of and arising out of his employment. Further, the Commissioner rightly allowed the appellant’s claim, and the High Court’s interference was unwarranted. Accordingly, the judgment and order passed by the High Court were to be set aside, and the award passed by the Commissioner for Workmen’s Compensation was to be restored.
4. GSTN issues advisory on RSP-based valuation for notified tobacco goods under GST: Advisory
The GSTN has issued an advisory providing guidance on valuation and reporting of notified tobacco and tobacco-related goods under RSP-based valuation with effect from 01-02-2026, mandating GST computation on the declared RSP printed on the package irrespective of the actual transaction value. The guidance was provided in GSTN Advisory, Dated 23-01-2026.
About the Update
The GSTN has issued an advisory to provide guidance on reporting taxable value and tax liability for notified tobacco and tobacco-related goods subject to Retail Sale Price (RSP)-based valuation with effect from 01-02-2026. It clarifies that for goods covered under Notification No. 19/2025–Central Tax, dated 31-12-2025 and Notification No. 20/2025–Central Tax, dated 31-12-2025, GST is required to be computed on the basis of the declared RSP printed on the package, irrespective of the actual transaction value between the supplier and the recipient, and prescribes the statutory formula for deriving the deemed taxable value and tax amount from such RSP.
For the purpose of reporting in e-Invoice, e-Way Bill and GSTR-1 / GSTR-1A / IFF, the advisory specifies that taxpayers shall report the net sale value (commercial consideration) in the taxable value field, compute and report tax strictly as per the RSP-based valuation formula, and report the total invoice value as the sum of the net sale value and such tax amount, even where the deemed taxable value differs from the commercial consideration. This reporting mechanism is applicable only to the notified HSNs and requires taxpayers to self-assess, self-calculate, and verify the correctness of the reported values, while ensuring correct classification and application of RSP-based valuation wherever statutorily applicable.
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5. Assignment of leasehold rights in plot is not supply of service as same not in course or furtherance of business: HC
The High Court held that assignment of leasehold rights in a plot of land does not constitute a supply of service under Section 7 of the CGST Act where the transaction is not undertaken in the course or furtherance of business. The Court held that the transaction was a mere transfer of immovable property, lacking any business nexus required for a taxable supply. This was held in Aerocom Cushions (P.) Ltd. vs. Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1.
Facts
The petitioner received a notice under Section 74(1) of the CGST Act alleging concealment of a transaction in which it assigned its leasehold rights in a plot of land allotted to it. It was contended that the assignment of leasehold rights would amount to the supply of services under Section 7 of the CGST Act. The petitioner challenged the notice by filing the instant writ petition, asserting that the transaction constituted a transfer of immovable property rather than a supply of services. The matter was accordingly placed before the High Court.
Held
The High Court held that the transaction on record constituted a transfer of immovable property, namely the assignment of leasehold rights in a plot allotted, and therefore did not involve any supply of services. It was observed that the transfer pertained exclusively to benefits arising out of immovable property and had no nexus with the business of the petitioner company, thus negating the essential element of supply of service in the course or furtherance of business. The Court held that such an assignment/transfer of leasehold rights is not subject to GST. The petition was allowed and the impugned order was set aside.
6. From Profit Recognition to Equity Adjustment: Treatment of Change in Accounting Policy under AS and Ind AS
Entities may revise their accounting policies to improve the relevance, reliability, and comparability of financial information. Such changes often arise from better alignment with economic substance, evolving business practices, or enhanced risk assessment methodologies. However, the change in accounting policy and its implementation raises a critical accounting question about whether the resulting impact should affect current-period profits or be adjusted against equity through retrospective application.
The accounting treatment of changes in accounting policies differs fundamentally under the Accounting Standards framework and Indian Accounting Standards, particularly in terms of timing of recognition, restatement of comparatives, and impact on reported profitability.
Under AS 1, Disclosure of Accounting Policies, accounting policies are defined as the specific accounting principles and methods applied in preparing and presenting financial statements. The standard requires entities to disclose material changes in accounting policies and to quantify their impact on financial statement items to the extent ascertainable. However, AS 1 does not prescribe retrospective application of changes in accounting policies. The emphasis is on transparency through disclosure rather than on restating prior-period figures.
In contrast, Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors adopts a principle-based approach that prioritises comparability across reporting periods. Where an accounting policy is changed voluntarily and no specific transitional provisions apply, Ind AS 8 requires the change to be applied retrospectively, unless it is impracticable to determine the period-specific or cumulative effects. Retrospective application involves adjusting the opening balance of affected components of equity for the earliest prior period presented and restating comparative figures as if the revised accounting policy had always been applied.
Consequently, under the Accounting Standards framework, changes in accounting policies are generally applied prospectively, with the resulting impact recognised in the statement of profit and loss in the year of change and supported by appropriate disclosures. Prior-period figures remain unadjusted. Under Ind AS, however, the cumulative impact of a change in accounting policy is adjusted through opening equity, with no effect on current-period profit or loss, thereby preserving consistency and comparability across periods.
Let’s analyse the above provision with an example. Let’s say, a manufacturing entity changed its accounting policies by shifting its inventory valuation method from FIFO to weighted average cost. The inventory change increased closing stock.
Under the Accounting Standards framework, the change in inventory valuation is recognised in the profit and loss account in the year the policies are revised, along with appropriate disclosures. However, under Ind AS, the cumulative effect is adjusted against opening retained earnings of the earliest comparative period, with prior-period figures restated. As a result, there is no impact on the current year’s profit.
The aforesaid example highlights a fundamental difference between the two frameworks: AS allows accounting policy changes to affect reported profits, whereas Ind AS routes such effects through equity to ensure that current-period profit reflects only operational performance.
The post Weekly Round-up on Tax and Corporate Laws | 19th January 2026 to 26th January 2026 appeared first on Taxmann Blog.
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