This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Mar 30th to April 4th 2026, namely:
- Analysis of 20+ Changes in the New ITR Forms Applicable for Assessment Year 2026-27
- CBDT Amends GAAR Rules to Allow Grandfathering of Investments Made Before 01-04-2017
- Lok Sabha Approves IBC Amendment Bill, 2026 Enabling Creditor-Led Insolvency and Faster Resolutions
- Section 60(4) of Social Security Code Held Discriminatory for Restricting Maternity Benefits to Adoption of Infants Under 3 Months as It Violates Article 14: SC
- Attachment of Overdraft Account for GST Recovery Impermissible as No Actual Funds Available: HC
- Assignment of Industrial Plot Leasehold Rights Not Liable to GST as Transfer Lacked Business Nexus: HC
- ICAI Allows One-Time Relaxation to Generate Pending UDINs During the Portal Transition Period
- NFRA Issues Auditor–Audit Committee Series 5 Discussing Auditing Provisions and Contingencies Under Ind AS and SA
- Accounting Treatment of Foreign Exchange Fluctuations in Inventory Purchases Under the Ind AS Framework
1. Analysis of 20+ Changes in the New ITR Forms Applicable for Assessment Year 2026-27
The Central Board of Direct Taxes (CBDT) has notified Income-tax Return (ITR) Forms 1 to 7, along with ITR-V and ITR-U, for the Assessment Year 2026–27, relating to income earned during the Previous Year 2025–26 (April 1, 2025, to March 31, 2026).
The ITR forms have been notified on time this year, unlike last year, when their release in the last week of April 2025 delayed the ITR utility and resulted in an extension of the ITR filing deadlines. This article presents an analysis of the key changes incorporated in the revised ITR forms for AY 2026–27, which includes as follows:
- Requires the reporting of turnover & income from futures & option trading.
- Reporting is required for the disallowance of MSME interest.
- Requires disclosure of the interest and remuneration due or received from the partnership firm.
- Reporting of the fee for furnishing the revised return of income.
- Name and PAN of the political party to be furnished under Schedule 80GGC.
- Schedule 80G seeks the IFSC and Transaction Reference Number.
- Changes made to incorporate the due date, extended to 31st August by the Finance Act 2026, for filing the return of income.
- Assessees opting for the presumptive tax scheme are required to disclose the investment made by them.
- ‘Total value’ of investment made by the charitable trust, instead of its ‘Nominal value’, will be reported.
- Reporting is required for the validity period of registration obtained under other laws.
- Reporting of income from the presumptive scheme applicable to non-residents.
- Reporting of interest income from Companies, NBFCs and HFCs in Schedule OS.
- Removal of the fields seeking reporting of foreign retirement accounts from ITR 1 and ITR 4
- Rationalisation of auditor details sought in ITR Forms
2. CBDT Amends GAAR Rules to Allow Grandfathering of Investments Made Before 01-04-2017
Rule 10U of the Income-tax Rules, 1962, lays down the situations where GAAR (General Anti-Avoidance Rules) will not apply, i.e., it provides “grandfathering” and exceptions.
Rule 10U(1)(d) provides that GAAR shall not apply to any income accruing, arising, or received by or deemed to accrue, arise, or be received by any person as a result of a transfer of investments made before April 1, 2017. This is called the “grandfathering” provision. Further, Rule 10U(2) provides an exception to Rule 10U(1)(d) that GAAR can apply to any arrangement irrespective of the year in which it was entered into, provided the tax benefit is obtained on or after April 1, 2017.
The CBDT has amended Rule 10U and the corresponding Rule 128 of the Income-tax Rules, 2026, to clarify the scope of grandfathering. The amended rules clarify that the grandfathering provisions apply to investments made before 01-04-2017.
The pre-amendment Rule 10U(2) was framed as a ‘without prejudice’ proviso, meaning it operated over and above and effectively overrode the grandfathering under Rule 10U(1)(d). The ‘without prejudice’ language is removed entirely from Rule 10U(2). Instead, Rule 10U(2) now contains an explicit exception. GAAR applies to arrangements generating benefits on or after April 1, 2017, except where such income arises from the transfer of investments made before that date.
The amendment comes into force on March 31, 2026. The Explanatory Memorandum explicitly states that Chapter X-A shall not be invoked ‘on or after the date of publication’ in cases of pre-April 2017 investment transfers.
3. Lok Sabha Approves IBC Amendment Bill, 2026 Enabling Creditor-Led Insolvency and Faster Resolutions
On March 30, 2026, the Lok Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026, introducing a creditor-initiated framework, tighter timelines, enhanced CoC oversight, and clearer treatment of claims, guarantor assets and avoidance transactions, aimed at improving efficiency and value realisation under the Code.
3.1 Key Highlights
The key highlights of the Bill are as follows:
- Time-bound Admission or Rejection of CIRP Applications [Section 7] – Earlier, section 7(5) of the IBC allowed the Adjudicating Authority to admit or reject applications upon satisfaction of default, without a strict timeline. The proposed amendment now mandates that such admission or rejection must be done within 14 days of receipt of the application. The requirement to allow rectification of defects continues. This is expected to bring greater certainty and reduce delays at the admission stage.
- Regulated Withdrawal of CIRP Applications with Defined Timelines [Section 12A] – Previously, withdrawal of CIRP applications was permitted with 90% CoC approval, but procedural clarity was limited. The proposed amendment allows withdrawal even when made by the resolution professional and introduces restrictions by prohibiting withdrawal before the CoC constitution and after the invitation for resolution plans. It also mandates disposal within 30 days, with reasons for any delay to be provided. This brings structure and prevents misuse of withdrawal provisions.
- Supervisory Role of CoC in Liquidation Proceedings [Section 21] – Under the earlier framework, the role of the CoC largely ceased upon commencement of liquidation. The proposed amendment now provides that the CoC must supervise the conduct of liquidation by the liquidator. It also enables participation of additional classes of creditors without voting rights. This strengthens creditor oversight even during liquidation.
- Transfer of Guarantor Assets during CIRP with CoC Approval [Section 28A] – The Code did not expressly deal with the transfer of guarantor assets during CIRP. The newly inserted section 28A permits such transfers, subject to CoC approval and specified conditions. It also prescribes different approval thresholds and treatment of proceeds depending on whether the guarantor is under CIRP, liquidation or bankruptcy. This provides clarity and enables better value realisation across interconnected entities.
- Streamlined Approval, Implementation and Finality of Resolution Plans [Section 31] – Earlier, provisions did not clearly provide for phased approvals or strict timelines. The proposed amendment allows approval of implementation first, followed by distribution, and mandates that the Adjudicating Authority render a decision within 30 days. It also allows rectification of defects, requires prior regulatory approvals, and protects licences and permits post-approval. Further, it clarifies the extinguishment of pre-approval claims against the corporate debtor while preserving the liabilities of guarantors. This significantly improves the certainty and enforceability of resolution plans.
- Expanded Scope and Enforcement of Avoidance Transactions [Section 47] – Earlier, section 47 was limited to undervalued transactions and could be invoked only in specific circumstances. The proposed amendment expands its scope to include preferential, extortionate and fraudulent transactions. It also empowers creditors to initiate applications directly and enables the Adjudicating Authority to pass orders akin to those on applications by insolvency professionals. This strengthens the overall avoidance framework and creditor rights.
- Expanded Contribution Obligations of Secured Creditors in Liquidation [Section 52(8)] – Earlier, secured creditors enforcing security outside liquidation were required to contribute only towards CIRP costs. The proposed amendment expands this obligation to include liquidation costs and workmen’s dues, aligned with section 53 of the IBC. It also introduces a regulatory framework for the manner and timelines of such contributions. This ensures equitable distribution and protects the rights of priority stakeholders.
- Time-bound Liquidation with CoC Oversight on Pending Proceedings [Section 54(1)] – The earlier framework lacked clarity on timelines and treatment of pending proceedings at dissolution. The proposed amendment prescribes a 180-day timeline, extendable by 90 days, and empowers the CoC to decide continuation and distribution of recoveries from pending proceedings. This ensures time-bound closure without loss of value.
- Introduction of Creditor-Initiated Insolvency Framework [Section 58A] – The Code earlier did not provide for a distinct creditor-initiated framework outside standard CIRP. The proposed amendment introduces a new mechanism that allows specified creditors to initiate insolvency proceedings for notified categories of corporate debtors, subject to conditions and exclusions. This creates a more targeted and flexible resolution framework.
- Introduction of Group Insolvency Framework for Coordinated Resolution [Section 59A] – The Code earlier lacked a mechanism for group insolvency. The proposed amendment introduces a framework enabling coordinated proceedings for group entities, including common processes, professionals and creditor coordination. This addresses complexities in interconnected structures and improves value maximisation.
- Structured Initiation Mechanism for Creditor-Led Insolvency Process [Section 58B] – The new provision lays down a structured process requiring 51% creditor approval, an opportunity for debtor representation, and appointment of a resolution professional. It also restricts parallel proceedings and provides for commencement through public announcement. This ensures procedural fairness while enabling creditor-led action.
- Defined Timelines and Limited Extension for Creditor-Initiated Process [Section 58D] – A strict 150-day timeline is prescribed for completing the process, with a one-time 45-day extension subject to CoC approval. In case of failure, the Adjudicating Authority proceeds towards closure. This ensures speed and discipline in the newly introduced framework.
- Time-bound Passing of Dissolution Orders with Accountability [Section 54(4)] – No specific timeline previously existed for passing dissolution orders. The proposed amendment now requires the Adjudicating Authority to pass such orders within 30 days, with reasons for any delay to be recorded. This introduces accountability at the final stage of the process.
- Clarification on Government Dues in Winding-Up Distribution [Section 178] – There was ambiguity regarding the treatment of government dues in winding up. The proposed amendment clarifies that dues for two years fall under clause (d), irrespective of security, with remaining dues under clause (e). This aligns treatment with the statutory distribution framework.
- Enabling Electronic Platform for Insolvency Processes [Section 240B] – The proposed amendment introduces a provision enabling the Central Government to notify an electronic platform for conducting insolvency processes. This is expected to improve transparency, efficiency and ease of administration.
Read the Insolvency and Bankruptcy Code (Amendment) Bill, 2026
4. Section 60(4) of Social Security Code Held Discriminatory for Restricting Maternity Benefits to Adoption of Infants Under 3 Months as It Violates Article 14: SC
The Supreme Court, in the matter of Hamsaanandini Nanduri vs. Union of India [2026] 184 taxmann.com 355 (SC), held that the restriction under Section 60(4) of the Code on Social Security, 2020, limiting maternity benefits only to adoptive mothers of children below three months, was unconstitutional, being violative of Article 14 of the Constitution of India. The Court read down the provision to extend maternity benefit of 12 weeks to all adoptive mothers, irrespective of the child’s age at the time of adoption.
4.1 Brief Facts of the Case
In the instant case, the petitioner, an adoptive mother of two children, filed a writ petition challenging the constitutional validity of the restriction imposed on adoptive mothers in claiming maternity benefits.
Initially, the challenge was made to Section 5(4) of the Maternity Benefit Act, 1961 (as amended in 2017). However, upon the enactment of the Code on Social Security, 2020, which consolidated the relevant provisions, the petitioner was permitted to amend the petition to challenge Section 60(4) of the Code.
The impugned provision granted maternity benefits of 12 weeks only to a woman who legally adopted a child below the age of three months (and to a commissioning mother) from the date the child was handed over. The challenge was confined to adoptive mothers.
The petitioner contended that such a restriction created an unreasonable classification among adoptive mothers based solely on the age of the child and was violative of Article 14 of the Constitution.
4.2 Supreme Court Observations
It was noted that the classification created under Section 60(4) of the 2020 Code, between adoptive mothers of children below three months and those adopting older children, lacked any reasonable basis.
Further, it was noted that the provision failed to disclose any intelligible differentia that distinguished between the two classes of adoptive mothers. Additionally, such differentiation had no rational nexus with the object sought to be achieved, namely, providing maternity benefits to support child care and maternal bonding.
The Supreme Court observed that the provision suffered from under-inclusiveness, as it excluded a significant category of adoptive mothers who were similarly situated in terms of the need for maternity benefits.
Accordingly, the provision operated unequally upon adoptive mothers without any reasonable justification, thereby violating the guarantee of equality under Article 14 of the Constitution.
4.3 Supreme Court Ruling
The Supreme Court held that Section 60(4) of the Code on Social Security, 2020, was unconstitutional and violative of Article 14 of the Constitution to the extent it prescribed an age limit of three months for adoptive children.
Therefore, Section 60(4) of the 2020 Code was to be read as:
‘A woman who legally adopts a child or a commissioning mother shall be entitled to maternity benefit for a period of twelve weeks from the date the child is handed over to the adopting mother or commissioning mother, as the case may be.
5. Attachment of Overdraft Account for GST Recovery Impermissible as No Actual Funds Available: HC
The High Court held that attachment of an overdraft account for GST recovery under Section 79 is impermissible as it does not represent actual funds of the assessee. It permitted filing of appeal beyond limitation subject to 50% pre-deposit. This was held in Ratna Cafe vs. Assistant Commissioner [2026].
5.1 Facts
The petitioner was issued a show cause notice (SCN) under the CGST Act and the Tamil Nadu GST Act, to which a reply was filed but no personal hearing was attended. Thereafter, an Order-in-Original was passed confirming tax, interest, and penalty. The petitioner did not file a statutory appeal within the prescribed limitation period, and subsequent recovery proceedings were initiated. It was submitted that the bank account attached was merely an overdraft (OD) account and therefore not liable for attachment under recovery provisions. The petitioner further sought liberty to file a statutory appeal despite expiry of limitation. The matter was accordingly placed before the High Court.
5.2 Held
The High Court held that where a statutory appeal was not filed within the limitation period, the assessee could be granted liberty to file such appeal within 30 days, subject to deposit of 50% of the disputed tax in two instalments within two months, upon which the appellate authority under Section 107 of the CGST Act shall adjudicate the appeal on merits without reference to limitation. It was held that attachment of an overdraft account under recovery proceedings initiated under Section 79 of the CGST Act was impermissible, as such account does not represent actual funds of the assessee. It was held that recovery could be pursued against available secured assets, subject to the bank’s rights and the outcome of the appeal. Accordingly, the petitioner was granted relief with permission for a conditional appeal.
6. Assignment of Industrial Plot Leasehold Rights Not Liable to GST as Transfer Lacked Business Nexus: HC
The High Court held that assignment of leasehold rights in an industrial plot, resulting in complete extinguishment of rights, is not liable to GST as it does not constitute ‘supply’ in absence of business nexus. It reasoned that transfer of benefits arising from immovable property falls outside Section 7 where not in course or furtherance of business, and cannot be residually classified as ‘other miscellaneous services’. This was held in Vidarbha Beverages vs. Union of India [2026].
6.1 Facts
The petitioner held a transferable lease of an industrial plot along with a factory building allotted by Maharashtra Industrial Development Corporation (MIDC) and, with prior consent of MIDC, assigned its entire leasehold rights in favour of an individual, resulting in complete extinguishment of its rights in the said immovable property. Subsequently, a show cause notice was issued proposing levy of GST by treating the consideration received as taxable supply of services which was confirmed by adjudication. It was contended that the transaction was an assignment of leasehold rights amounting to the transfer of benefits arising from immovable property and did not qualify as ‘supply’, as it was not in the course or furtherance of business. The matter was accordingly placed before the High Court.
6.2 Held
The High Court held that the transaction constituted an assignment of leasehold rights leading to the extinguishment of the petitioner’s rights and amounted to the transfer of benefits arising out of immovable property. It held that the essential requirement of ‘supply’ under Section 7 of the CGST Act, namely that the activity must be in the course or furtherance of business, was not satisfied. The Court further held that classification of such transaction under residual entry at Sr. No. 35 of the rate notification as ‘other miscellaneous services’ was legally unsustainable, as the said entry could not be extended to cover assignment of leasehold rights in immovable property. It was observed that the transaction was an assignment and not a sub-lease, and therefore could not be subjected to GST under the said entry. Accordingly, the notice and adjudication order were quashed and set aside.
7. ICAI Allows One-Time Relaxation to Generate Pending UDINs During the Portal Transition Period
The UDIN Directorate of ICAI has introduced a one-time relaxation, allowing members to generate pending UDINs that could not be issued earlier due to the transition to the new UDIN portal.
This relief covers documents and reports signed between 22nd October 2025 and 22nd November 2025, with a special window open from 1stApril to 30th April 2026 to complete the process. The move is aimed at helping members regularise past documents and ensure compliance without procedural setbacks.
Importantly, this relaxation is limited to the specified period. For all other documents, the existing requirement continues – the UDIN must be generated within 60 days of the date of signing.
8. NFRA Issues Auditor–Audit Committee Series 5 Discussing Auditing Provisions and Contingencies Under Ind AS and SA
NFRA, through its Auditor–Audit Committee Interaction Series – 5, highlights key auditing considerations for provisions, contingent liabilities, and contingent assets—areas that involve significant judgement and estimation uncertainty. Drawing on Ind AS 37, along with SA 540 and SA 501, the series outlines the challenges in assessing obligations, evaluating probabilities, and determining reliable estimates.
It also emphasises the importance of effective auditor–audit committee communication, particularly in judgment-intensive areas, and the need for robust audit procedures, including professional scepticism and evaluation of assumptions. Overall, the series serves as a practical guide to strengthen oversight and enhance the quality of financial reporting.
9. Accounting Treatment of Foreign Exchange Fluctuations in Inventory Purchases Under the Ind AS Framework
In a globalised business environment, foreign currency purchases of inventory are routine, yet the accounting for exchange differences continues to create confusion. The core issue lies not in recording the transaction, but in correctly applying the interplay between Ind AS 2 and Ind AS 21. Misinterpretation can significantly impact inventory valuation, profitability, and financial ratios.
The key question is whether exchange differences arising between the purchase date and settlement date should be included in inventory cost or recognised in profit or loss. Ind AS provides a clear conceptual boundary. Inventory is initially recognised at the exchange rate prevailing on the transaction date, establishing its historical cost. Once recognised, inventory, being a non-monetary item, is not re-measured for exchange fluctuations. Accordingly, Ind AS 2 does not permit the inclusion of exchange differences, as these do not contribute to bringing inventory to its present location and condition.
This can be illustrated by the case of Alpha Private Limited, which imports inventory worth USD 10,000 at a rate of ₹80 per USD. The inventory is recorded at ₹8,00,000. At the reporting date, the exchange rate rises to ₹85, resulting in an exchange loss of ₹50,000 on the outstanding payable, which is recognised in profit or loss. Upon settlement at ₹83, a gain of ₹20,000 is recorded. Importantly, even though 40% of the inventory remains unsold, its closing value continues at ₹3,20,000, unaffected by exchange rate changes.
The critical takeaway is that exchange differences arise from re-measurement of a monetary liability, not from the cost of inventory. Therefore, they must be recognised in profit or loss and should not be capitalised. Any attempt to allocate such differences to closing inventory would effectively revalue a non-monetary asset, leading to distorted financial results and non-compliance with Ind AS 2 and Ind AS 21.
The post Weekly Round-up on Tax and Corporate Laws | 30th March to 4th April 2026 appeared first on Taxmann Blog.
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