Author: inavatiq

Case Details: A.G. Biotech Laboratories (India) Ltd. vs. Income-tax Officer - [2025] 180 taxmann.com 850 (Telangana)

Judiciary and Counsel Details

• P. Sam Koshy & Narsingh Rao Nandikonda, JJ.
• A.V.A. Siva Kartikeya, Ld. Counsel Appearing & A.V. Krishna Koundinya, Ld. Sr. Counsel for the Appellant.
• Ms Bokaro Sapna Reddy & J.V. Prasad, Ld. Sr. Counsels for the Respondent.

Facts of the Case

The assessee was engaged in the business of micro-propagation of plants through tissue culture technology. It earned income from the sale of tissue-cultured plants and claimed that it should be treated as agricultural income exempt from tax under section 10(1).

The Assessing Officer (AO) rejected the assessee’s claim. AO treated the income as business income subject to taxation. The CIT(A) upheld the order of the AO.

On further appeal, the Tribunal held that the majority of the activities were performed in a laboratory under sterile conditions, using sophisticated scientific equipment and research methods. In contrast, the land was used only incidentally to grow mother plants from which tissues were extracted. Thus, the plants were not a direct result of basic agricultural operations on land but rather the outcome of advanced scientific methods.

The matter reached before the High Court.

High Court Held

The High Court held that the fundamental question was whether the employment of advanced scientific techniques and laboratory-based processes necessarily transforms what is essentially an agricultural activity into a commercial or business operation.

The essence of the assessee’s activity remains rooted in agriculture: the cultivation of mother plants on land through basic agricultural operations, i.e., tilling, planting, nurturing, and harvesting, followed by the multiplication and propagation of plant material through tissue culture technology. The fact that sophisticated scientific methods are employed to enhance efficiency and productivity does not alter the agricultural character of the underlying operation.

The legislature, in defining agricultural income, did not intend to freeze the concept of agriculture in a time warp or to restrict it to primitive cultivation methods. Agriculture, like all human endeavours, evolves with technological advancement, and the introduction of tissue culture technology serves the same purpose as traditional agricultural methods, the production of plant material for cultivation, but achieves this objective with greater efficiency, uniformity, and disease-free quality.

Therefore, income earned by the assessee from the sale of tissue-cultured plants constituted agricultural income within the meaning of section 2(1A) and was exempt from tax under section 10(1).

List of Cases Reviewed

• I.T.A. No.1172 &1173/Hyd/2006, dated 28-9-2007 [Par 29] set aside
• CIT v. Soundarya Nursery [2002] 123 Taxman 372/[2000] 241 ITR 530 (Madras) (para 21)
• CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) (para 22)
• Puransingh M. Verma v. CIT [2015] 56 taxmann.com 218/230 Taxman 470 (Gujarat) (para 23)
• CIT v. Prabhat Agri-Biotech Ltd. [ITT Appeal No. 88 of 2014, dated 21-2-2014] (para 24)
• Pr. CIT v. Nuziveedu Seeds Ltd. [2025] 178 taxmann.com 486 (Telangana) (para 27) Followed.

List of Cases Referred to

• Puransingh M. Verma v. CIT [2015] 56 taxmann.com 218/230 Taxman 470 (Gujarat) (para 10)
• CIT v. Soundarya Nursery [2002] 123 Taxman 372/[2000] 241 ITR 530 (Madras) (para 11)
• CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) (para 22)
• CIT v. Prabhat Agri-Biotech Ltd. [ITT Appeal No. 88 of 2014, dated 21-2-2014] (para 24)
• Pr. CIT v. Nuziveedu Seeds Ltd. [2025] 178 taxmann.com 486 (Telangana) (para 27).

The post Income from Sale of Tissue-Cultured Plants Is Agricultural Income; Exempt | HC appeared first on Taxmann Blog.

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Case Details: DGAP vs. Dange Enterprise - [2025] 181 taxmann.com 491 (GSTAT-NEW DELHI)

Judiciary and Counsel Details

• Dr. Sanjaya Kumar Mishra, President

Facts of the Case

The Directorate General of Anti-Profiteering (DGAP) conducted an investigation and issued the first report to the New Delhi GST Appellate Authority. The report alleged that the respondent had profiteered an amount of Rs. 28,74,577, including GST on the base profiteered amount. The matter was remanded to the DGAP for further investigation. In the subsequent report, the DGAP quantified the profiteered amount to be Rs. 4,57,683. The respondent admitted the amount profiteered but disputed the liability to pay any penalty and interests thereon.

GSTAT Held

The Delhi GST Appellate Authority held that the enabling provision for interest under Rule 133(3)(c) was inserted in 2020 after the last date of the alleged profiteering. Thus, no interest was leviable for the period before the amendment. The relevant penal provision was introduced only in 2020. Therefore, no penalty could be imposed on the respondent. Further, the report submitted by the DGAP was accepted to the extent that the respondent profiteered an amount of Rs. 4,57,683 only from recipients who are faceless. The respondent was directed to deposit the profiteered amount in the Consumer Welfare Fund created by the Centre and States equally.

List of Cases Referred to

• DGAP v. Proctor and Gamble Group [2025] 178 taxmann.com 564 (GSTAT – NEW DELHI) (para 5).

The post No Retrospective Interest on Profiteering Before 1st April 2020 | GSTAT appeared first on Taxmann Blog.

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International Business Environment refers to the set of internal and external factors—such as political, legal, economic, cultural, technological, social, and global forces—that influence how businesses operate, compete, and make decisions across national boundaries. It determines the opportunities, risks, regulations, and conditions under which firms conduct cross-border trade, investment, and international operations.

Table of Contents

1. Introduction – International Business Environment – Concept & Relevance
2. Components of International Business Environment

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Opening Case Starbucks’ Entry into China When Starbucks arrived in China in 1999, scepticism about its prospects abounded. In a place where tea was the dominant drink and the Western café culture was largely unknown to consumers, the company seemed at a disadvantage. But Starbucks did its cultural homework—and customised market moves to match local consumers. The company chose bigger store sizes to fit in more people—an environment that adapted to China’s group-oriented society. It also launched locally flavored drinks like the green tea frappuccino and adjusted its pricing to target the emerging middle class. At the same time, Starbucks managed the complex political and legal regime in China, that included obtaining key licenses, complying with regulations governing foreign investment, and creating joint ventures with local partners because of the restrictive rules on foreign ownership.

Today, there are thousands of Starbucks stores across China, making it one of the company’s largest international markets. This case demonstrates the political, legal, cultural, and economical considerations that influence foreign business opportunities and stability.

1. Introduction – International Business Environment – Concept & Relevance

The global business environment includes both external and internal factors which affect the operation of a business and determine its performance and decisions within the global market. This ecosystem is encircled by a number of forces – political, legal, cultural, economic, social, and technological – each of which helps to shape the map of world trade and investment.

1.1 Why Do We Need to Understand the International Business Environment?

Knowledge of the international business environment is important for firms doing business in foreign countries as it helps anticipate opportunities and manage risk, and construct a competitive strategy. Some of the reasons are:

1. Risk Assessment and Management – Countries vary significantly in their political, regulatory, and economic environments. Considering these factors, companies can prevent themselves from potential challenges, for example, political instability, trade limitations, or currency volatilities. Coca-Cola, for example, was forced to withdraw from Venezuela following hyperinflation and political fallout which made running its business unsustainable.
2. Identification of Opportunities – A comprehensive investigation of various international geographies enables firms to find new markets, develop new segments of customers, beneficial trade regulations and countries suitable for investment. One of such examples is Netflix’s foray into India, where there is a huge demand for digital content on-the-go due to a large number of young tech-savvy populace.
3. Strategic Decision-Making – It is important for companies to have knowledge of cultural, legal and economic contexts when they are choosing an entry mode (e.g., joint venture, licensing, subsidiary) and crafting a marketing strategy. For instance, IKEA chose joint ventures in China, given that local laws did not allow foreign control of the total retail outlet.
4. Compliance with Laws and Regulations – Every country has its own laws regarding taxation, labor, consumers rights and intellectual property. Knowing these laws makes life easier and keeps you clear of legal ramifications. Such as, company like Google has already adjusted the way it operates in the European Union to comply with that region’s data protection laws under the General Data Protection Regulation (GDPR).
5. Adaptation to Cultural Differences – Cultural sensitivity reduces conflicts in negotiation, human resources management and marketing communication, and thus promotes acceptance to foreign markets. A good one of these is the McAloo Tikki – McDonald’s serves in India, to respect territory of vegetarian eaters and culture character.
6. Competitive Advantage – Businesses that understand the trends and environments internationally will be able to innovate, localise their products and respond quicker than the competitors. Samsung is an excellent example of this; by investing substantially in research and development to tailor its smartphone technology to evolving global customer demands, it responds frequently faster than their peers are able to do.
7. Sustainable Growth – Knowing the various economic indicators, policies and being aware of issues can be used to place company in a good position for expansion in international markets. Tesla’s entry into Norway is a prime example of this; the Norwegian government has been heavily active in offering financial incentives for those buying electric vehicles, and hence, the market is ripe for sustainable expansion.

In short, studying the international business environment allows businesses to navigate risks, seize opportunities, comply with diverse systems, and achieve global success.

2. Components of International Business Environment

International business operates in a highly complex environment influenced by a wide range of factors that have a direct impact on the way in which companies work in cross-border markets. These forces may be divided into internal (micro) and external (macro) forces. Internal (or micro) factors are factors internal to the organisation that it can control such as, its resources, management practices, capabilities, organisational culture, and the nature of relationships with suppliers and partners. On the other hand, some factors are beyond the firm’s control, and referred to as external, or macro factors, such as economy, political and/legal processes, socio-cultural changes, technology improvements, environmental impacts, and global developments. Knowledge of these internal and external factors is the foundation to identifying opportunities, controlling threats, and developing adequate strategies for the international sector.

2.1 Political Environment

Political environment refers to the framework, philosophy, policies, and functions of a country’s government and its system. Political considerations play a critical role in international trade, investments and business operations. Key factors to the political environment are:

• Political System
• Stability of Government
• Foreign Trade Policy & Tariff Structure
• Diplomatic Relations Between Countries
• The Influence of Political Parties and Ideologies
• Government Inducements and Restrictions on the Inflow of Foreign Capital

India’s “Make in India” scheme is a classic case in point, where foreign giants like Apple and Samsung have been wooed through huge incentives to set up plants in the country.

2.2 Legal Environment

It is a complete structure of laws, judiciary systems, and rules that can be used to govern business establishments. As each country has its own set of rules, firms have to adjust to this. The main components of legal system composition are:

• Corporate Laws, Labor Laws
• Proprietary Rights (Patents and Copyrights and Trademarks)
• Foreign Investment Laws and FDI Regulation
• International Trade Treaties and Arbitration Systems

For example, Microsoft devotes enormous resources in order to protect the legal status of its software in global markets where piracy and intellectual property protection are issues.

2.3 Economic Environment

The economic environment encompasses economic system, decision-making process, policies, rules, and regulations, and existing conditions that influence foreign trade and investment. The salient features of the economic environment are:

• Nature of the Economy (Capitalist, Socialist, Mixed)
• Economic Indicators – (Including GDP, Inflation, Unemployment, and Exchange rates)
• Trade Balance and Foreign Exchange Reserves
• The Economics Policies (Fiscal, Monetary, Industrial, Trade Policies etc.,)

For instance, high growth of India’s economy and the consequent rise of income levels of its middle class, drawing in itself the attention of many US multinational companies—Amazon, Walmart and IKEA.

2.4 Cultural Environment

A culture is a way of life of a group of people—the behaviors, beliefs, values, and symbols that they accept, generally without thinking about them, and that are passed along by communication and imitation from one generation to the next. It has a substantial impact on both consumer behavior and management policies.

In other words, it is a collective character or values of the society, which people inherit from their ancestors or are given to societal members by the society itself. Key components are:

• Mother tongue, religion, values and culture
• Society, social norms, manners, and consumerism
• Hofstede’s cultural differences (e.g., power distance, collectivism, uncertainty avoidance)

For example, KFC adapted its breakfast menu in China toward the congee (rice porridge) by local food catering and habits.

2.5 Technological Environment

Technology also defines the means through which organisations manufacture, deliver and market their products and services to customers. Technological innovation has transformed patterns of international trade and investment. The specific characteristics of technological environment are:

Innovation and R&D

• Digitalisation, e-commerce, and automation
• The media (which includes the internet, mobile phones and AI)
• Questions of technology transfer and intellectual property rights

Amazon, for instance, uses AI-based recommendation engines at the global scale but tailors them to the regional shopping dynamics and tastes.

2.6 Demographic and Social Environment

Population size, age profiles, education levels, lifestyle preferences and the extent of urbanisation are all important social characteristics that affect international business strategies. The major components in this field include:

• Rates and composition of population growth
• Migration/mobility of labor force
• Rates of literacy and levels of education
• Changes in lifestyle and urbanisation

For example, a large millennial population in India that led global giants like Spotify, Netflix, Instagram, etc. to focus on building digital entertainment platforms and content for young people as they are dominating the current share of population.

2.7 Global Environment

It includes the foreign institutions and foreign sector influences that shape a business’s opportunities and decisions in an increasingly global marketplace. The basic elements of the global environment are:

• Impact of such agencies like WTO, IMF, World Bank, UN etc.
• International treaties related to trade, environmental protection, and labor standards
• Currents of globalisation, climate change, and the digital economy
• Geopolitical adversities, conflicts, and interruptions in global logistics chains

The COVID-19 pandemic, for instance, caused a major disruption in the global supply chain, which forced firms such as Toyota and Apple to rethink their sourcing and logistics plans in light of new conditions in the area of international trade.

2.8 Competitive Environment

This refers to the presence of competitors in international markets and the strategies they adopt. Companies must monitor global competition to remain relevant. Key elements of competitive environment are:

• Local and global competitors
• Industry standards and benchmarks
• Pricing strategies and innovation levels
• Mergers, acquisitions, and alliances

For example, Pepsi and Coca-Cola continuously adapt their marketing and pricing strategies worldwide to outperform each other in beverages.

2.2.1 Political Environment and International Business

Political environment includes the structure of the government and government policies, regulations, and stability of the country, which affects the business and economy. Political choices, as a critical feature of the external environment, can promote or discourage trade and foreign investment. Political factors influence business operation in following ways:

• Government Type – A democratic, authoritarian, or monarchical form of political organisation is an important indication of policy consistency and predictability.
• Political Stability – A stable government provides a level of predictability in policies and rule enforcement, whereas an unstable one creates uncertainty that may adversely affect investment or business conduct.
• Regulatory Cliff – The business framework is heavily influenced by the nature of trade policies, foreign investment regulations, and taxation laws, labor laws and industry-specific regulations.
• Corruption and Red Tape – Corruption and level of bureaucracy have a direct bearing on extent to which doing business is easy, defining the operating environment as well as competitive environment.
• International Relations – Diplomatic relations, trade agreements, sanctions and other geopolitics are very important when it comes to cross-border operations, and they construct the environment in which enterprises must operate.

Significance of Political Environment to International Business

The political environment significantly influences the way in which firms in international markets carry on business. It sets the basic rules to be followed, describes the risks and opportunities behind international market entry, and affects strategic actions such as access to information and foresight to make informed decisions. The business’s level of information and insight in political context helps to determine potential challenges, compliance and investment. These are the key areas from which the importance of the political landscape emanates.

1. Determining Market Access – Markets are not open equally to foreign companies as it depends on political policies. The FTAs, as well as protectionist initiatives, may shape a firm’s international operations to a large extent. For example, the trade war between the United States and China along with import tariffs, has forced companies like Apple and Boeing to reconsider and reconfigure their supply chain and sourcing strategies. On the other hand, the regulatory body of the European Union (EU) promotes free trade among its member countries which is good for companies like BMW or Nestlé as they operate beyond borders within Europe.
2. Assessing Political Risk – Political risks such as instability, regime changes and unrest can present serious problems for foreign investors. Firms should do a comprehensive risk assessment before expanding into new markets such as Vodafone in India, where retrospective taxation proved to be huge challenges and has had a negative impact on its business as well as investment plans.
3. Influencing Regulatory Compliance – Businesses have to respect domestic laws about labor, the environment, taxes, and industry. Non-compliance can result in costly penalties, business disruptions, and negative publicity. For Example, Google or Facebook both had to adapt their behavior to the European General Data Protection Regulation (GDPR) on data privacy and that has affected their overall data management strategy around the globe.
4. Shaping Investment Decisions and Incentives – Governments often provide incentives, such as tax holidays, subsidies, and the like, to bring in foreign investment. On the other hand, some restrictions can act as barriers to entry. For example, Tesla’s Giga factory in Shanghai benefited from Chinese government incentives such as large tax cuts and fast-track approval. Foreign companies may be hesitant to invest in countries with high expropriation risk or heavy foreign ownership regulations (e.g. some of the Middle Eastern countries).
5. Effects on Strategic Planning and Longer-term Operations – The broader political climate is “hugely important” when it comes to key business decisions around supply chain management, pricing strategy, marketing approach and risk hedging. Firms must closely monitor political events if they want to remain competitive. Such as Coca-Cola and Unilever monitor political climates in markets like Nigeria and Venezuela, for example, and can adjust production, pricing and sourcing as needed.
6. Global Relations and Trade Policies – International political relations, sanctions, and trade agreements can determine the feasibility of entering or continuing operations in certain markets. As NAFTA (now USMCA) reshaped trade rules in North America, affecting manufacturing and supply chain decisions for companies like Ford and General Motors.

In conclusion, the political environment is one of the key drivers in international business, influencing entry to new markets, investment in countries, and operational risk, regulatory compliance and longer-term strategic decisions. Firms that thoughtfully analyse and respond to the political landscape will be able to capitalise, manage, and compete in the international markets.

2.2.2 Legal Environment and International Business

The legal environment is the complex system of rules, regulations, and legal institutions that directly or indirectly influence, restrain, and protect various aspects of (domestic and/or international) business. It is comprised by, more than the formal rules set by legislatures, and includes case laws, administrative regulations, and international agreements as a whole that regulate business. There are multiple legal factors that impacting important business considerations, such as:

• Business and Commercial Laws – This encompasses the contract law, company law, the competition law, and the corporate governance, all of which dictate how businesses are structured and run.
• Labor and Employment Laws – Laws related to salary, working hours, employee rights and the role of trade unions are essential to safeguard the workforce.
• Intellectual Property – This zone protects ideas and labels by developing patents, copyrights, trademarks and trade secrets.
• Tax and Financial Laws – These laws include income taxation, customs duties, and tariffs, and accounting regulations, which are paramount for financial compliance and planning.
• Environmental Regulations – Regulations on pollution prevention and management and sustainable use are ever-more relevant as businesses are challenged to reduce their environmental impact.
• Consumer Protection Laws – The focus of these laws is the safety and quality of products and promoting fair trade practices that encourage the protection of consumers.
• International Law Framework – This is the rule-based system, which incorporates trade agreements, export-import orders, and global accords, like the WTO rules.

Thus, the legal environment establishes the “rules of the game” for firms in terms of what activities are permitted and what are not, and allows for resolving conflicts between firms through the court system.

Importance of Legal Environment in International Business

1. Ensures Compliance with Laws – Businesses are bound by laws, both national and international, in order to keep their business running legally. Non-compliance can lead to heavy fines, lawsuits, and even to the business being shut down. For example, Uber and Airbnb are facing substantial legal battles in many countries where regulation of transportation and rental is supervised by a stringent law.
2. Protects Business Interests – Strong laws are indispensable to protect contracts, intellectual property and investments, to ensure a safe climate for overseas businesses. For example, Apple actively works to protect its patents and trademarks all around the world and puts up a fierce fight against counterfeiters.
3. Reduces Operational Risks – Knowing the law helps businesses predict the risks posed by taxation, labor laws, environmental regulations, and trade constraints. For example, pharmaceutical firms like Pfizer are required to follow strict rules pertaining to drugs and patent laws within each country to avoid legal issues.
4. Facilitates Trade and Investment – Legal systems that are transparent and congruent create an environment that is conducive to FDI (foreign direct investment) and international trade. Singapore, for example, and its well-regulated legal environment make it as a preferred regional hub of many MNCs in Asia.
5. Supports Ethical and Social Responsibility – Legislation on labor rights, environmental concerns and consumer safety pushes firms to pursue responsible and sustainable business practices. Companies like Unilever comply with environmental and labor laws globally to maintain their brand and ensure marketplace access.

In closing, the legal environment is an integral part of the world of international business. It sets ground rules, safeguards commercial concerns, limits the risk and encourages ethical practices. Companies that excel in deciphering and complying with legal necessities are more likely to succeed in foreign business, whereas those ignoring legal compliance are at risk of financial costs, setbacks and reputational damage.

2.2.3 Cultural Environment and International Business

The cultural environment includes a set of core values, beliefs, norms, traditions, customs, habits, and ways of doing things that are widely accepted in a society and that affect the ways in which people carry out daily activities, including communication and conducting business. In the field of international business, it is necessary to have a good grasp of cultural environment because it will affect consumer behavior, operation of company, and management policies. There are a number of key factors of cultural environment in which businesses operate:

1. Language – It serves as the dominant form of expression, spoken and written, within a given society. In advertising, sales, labelling products, and customer service it is highly important. Mistranslations, interpretations and misunderstandings can drive quite big marketing failures. One illustrative instance is that of the American car company Chevrolet’s experience with its car name “Nova” when sold in Germany, where the car is positioned as “No go” – indicating a lack of functionality by implication. Despite the fact that “Nova” carries a positive connotation in Spanish—new—the negative meaning to speakers of other languages hurt sales. It just shows how deeply linguistic differences, along with idioms and meanings, can affect how a product is perceived, emphasising the importance of well-thought-out localisation strategies.
2. Religion and Beliefs include the spiritual and moral values to which the people adhere and the role they sustain within a society. Such beliefs may have a real impact on food consumption, holiday celebrations, and ethical requirements. Companies are treading those religious sensitivities carefully so as not to offend consumers. For example, McDonald’s India offers vegetarian options on its India menu and doesn’t serve beef in India, in line with Hindu dietary restrictions.
3. Values and Attitudes are core principles and outlooks that guide behavior, such as individualism vs. collectivism, or risk tolerance. These affect consumer preferences, leadership styles, and employee behavior. In Japan, collective decision-making is valued, whereas in the U.S., individual initiative is often rewarded.

The post International Business Environment – Concept | Components | Global Impact appeared first on Taxmann Blog.

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1. Introduction

Treasury shares represent an entity’s own equity instruments that are re-acquired and held either directly by the entity or indirectly through a subsidiary or any other entity under its control. Ind AS 32, Financial Instruments: Presentation sets out clear guidance for the accounting and presentation of treasury shares, yet these guidanceis frequently misunderstood in practice. One of the most commonly observed non-compliances relating to treasury shares pertains to their incorrect presentation in the financial statements. Here we have explained the non-compliance with the help of case scenario.

2. Facts

Radiant Limited hereinafter referred to as “the company” is engaged in the business of manufacturing of electronic equipment. The company operates through two divisions, namely the hardware division and the software division. Considering the adverse financial affects, the company decided to go for demerger. Thus, under the scheme of demerger approved by the “High Court”, the company transferred its software division to an independent trust. It is hereby important to note that, the company retained a beneficial interest in the trust.

The assets transferred to the trust comprised investments in equity shares of the company, investments in associate companies and other unlisted companies, along with the related borrowings and liabilities of the software division. Despite the shares of the company legally held by the independent trust, the company continues to have rights over the economic benefits arising from the sale of such shares.

The company’s shares held by the trust are intended to be sold and the proceeds thereof are to be realised for the benefit of the company. Thus, the company is of opinion that the beneficial interest held by the company in the trust shall be treated as financial assets.

3. Relevant Provision of Ind AS 32

Para 33 of Ind AS 32

If an entity reacquires its own equity instruments, those instruments (treasury shares) shall be deducted from equity. No gain or loss shall be recognised in profit or loss on the purchase, sale and cancellation of an entity’s own equity instruments. Such treasury shares may be acquired and held by the entity or by other members of the consolidated group. Consideration paid or received shall be recognised directly in equity.

Para AG 36 of Ind AS 32

An entity’s own equity instruments are not recognised as a financial asset regardless of the reason for which they are reacquired. Paragraph 33 requires an entity that reacquires its own equity instruments to deduct those equity instruments from equity. However, when an entity holds it sown equity on behalf of others, eg a financial institution holding its own equity on behalf of a client, there is an agency relationship and as a result those holdings are not included in the entity’s balance sheet.

Click Here To Read The Full Story

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Circular No. HO/17/11/24(1)2025-DDHS-POD1/I/491/2025, Dated: 18.12.2025

1. Regulatory Background

SEBI had earlier amended the framework governing the issuance of debt securities and non-convertible redeemable preference shares (NCRPS) to permit issuance at a reduced face value of ₹10,000, primarily to enhance market accessibility and liquidity.

Building on this reform, SEBI has now further liberalised the issuance conditions under the Non-Convertible Securities (NCS) Master Circular.

2. Permission to Issue Zero-Coupon Debt Securities

Under the revised framework:

Issuers are now permitted to issue zero-coupon debt securities:

• With a fixed maturity, and
• Without any structured obligations

This is in addition to the already permitted:

• Interest-bearing debt securities, and
• Dividend-bearing non-convertible redeemable preference shares

The inclusion of zero-coupon instruments expands the range of permissible debt structures under the reduced face-value regime.

3. Conditions and Safeguards

The relaxation applies only where the zero-coupon debt securities:

• Have a fixed and clearly defined maturity, and
• Do not involve structured or complex payout obligations

This ensures that reduced face-value issuances remain plain-vanilla and transparent, limiting risk for investors.

4. Applicability and Scope

• The revised norms apply only to private placement issues of debt securities.
• All other provisions of the NCS Master Circular remain unchanged.
• The circular applies to all private placement issues of debt securities that are proposed to be listed, from the date of issuance of the circular.

Public issue norms are unaffected by this amendment.

5. Regulatory Intent

SEBI’s move aims to:

• Broaden the range of debt instruments available at lower face value
• Improve accessibility for investors, including smaller institutional and sophisticated investors
• Enhance flexibility for issuers in structuring debt instruments
• Maintain simplicity and transparency by disallowing structured obligations

The reform aligns with SEBI’s broader objective of deepening the corporate bond market while preserving investor protection.

6. Implications for Issuers and Market Participants

6.1 For Issuers

• Greater flexibility to issue zero-coupon instruments under private placement
• Ability to tailor funding strategies without recurring interest obligations
• Opportunity to attract a wider investor base through reduced denomination

6.2 For Investors

• Access to a broader mix of fixed-income products
• Clear visibility on maturity and redemption value
• Continued regulatory safeguards against complex structures

6.3 For Intermediaries

• Need to update structuring, disclosure, and listing documentation
• Ensure compliance with eligibility conditions under the NCS Master Circular

7. Key Takeaway

SEBI’s amendment enables issuance of zero-coupon debt securities at a reduced face value of ₹10,000 under private placement, while keeping the broader NCS framework intact. The change enhances market flexibility without compromising on simplicity or investor protection.

Click Here To Read The Full Circular

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Circular No. RBI/2025-26/155 FIDD.CO.LBS.BC.No.09/02.08.001/2025-26; dated: 18.12.2025

1. Background – Creation of a New District

The Government of Gujarat, through Gazette Notification No. GHM/2025/210/M/RD/RCO/e-file/15/2025/5360/L1 dated September 24, 2025, formally notified the creation of a new district named Vav-Tharad.

The formation of the new district necessitated corresponding administrative and banking arrangements, including the assignment of Lead Bank responsibility under the Lead Bank Scheme.

2. RBI’s Decision on Lead Bank Assignment

Following the creation of the new district, the Reserve Bank of India (RBI) has assigned Bank of Baroda as the Lead Bank for the newly formed Vav-Tharad district

This designation entrusts Bank of Baroda with the responsibility of coordinating banking and credit-related initiatives in the district.

3. Role of the Lead Bank

As the Lead Bank for Vav-Tharad district, Bank of Baroda will be responsible for:

• Coordinating implementation of government-sponsored schemes
• Promoting financial inclusion initiatives
• Facilitating district-level credit planning
• Convening and supporting District Consultative Committee (DCC) and related meetings
• Acting as the nodal bank for interaction with district administration and other banks

4. No Change for Other Districts in Gujarat

The RBI has also clarified explicitly that:

• There is no change in the Lead Bank responsibilities for any other districts in the State of Gujarat
• Existing Lead Bank arrangements for all other districts continue unchanged

This clarification ensures continuity and avoids operational ambiguity for banks operating in the state.

5. Regulatory Intent

The assignment seeks to:

• Ensure smooth banking administration in the newly created district
• Maintain alignment between administrative reorganisation and banking infrastructure
• Support credit delivery, financial inclusion, and local economic development in Vav-Tharad
• Provide clarity to banks and stakeholders under the Lead Bank Scheme

6. Key Takeaways

• Vav-Tharad is a newly created district in Gujarat
• Bank of Baroda is designated as the Lead Bank for the district
• No changes have been made to Lead Bank assignments in other districts of Gujarat
• Banks should update internal jurisdictional and coordination records accordingly

Click Here To Read The Full Circular

The post RBI Assigns Bank of Baroda as Lead Bank Responsibility for “Vav-Tharad” appeared first on Taxmann Blog.

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Case Details: Infodesk India (P.) Ltd. vs. Union of India - [2025] 181 taxmann.com 395 (Gujarat)

Judiciary and Counsel Details

• A.S. Supehia & Pranav Trivedi, JJ.
• Anand Nainawati for the Petitioner.
• Deepak N Khanchandani & Param V Shah for the Respondent.

Facts of the Case

The petitioner was a wholly owned Indian subsidiary of a US company established exclusively to provide services fulfilling the parent company’s technical requirements by assisting it in carrying on the business of software development and related consultancy. It managed IT infrastructure, editorial and content creation activities, customer support, and raised tax invoices for providing software consultancy services directly to the parent company. It was submitted that the services were provided in an independent capacity and not as an agent or intermediary. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the petitioner was required to assist the parent company in carrying on its software consultancy business. The Court observed that the petitioner was to perform the services on its own account with payment based on actual costs plus an 8 per cent markup, thereby earning a profit. It found that the petitioner could not be regarded as an intermediary or agent and that the services were zero-rated exports. The Court directed the jurisdictional officer under GST to process the refund claim for unutilised input tax credit in accordance with Section 16 of the IGST Act and Section 54 of the CGST Act.

List of Cases Referred to

• Chromotolab and Biotech Solutions v. Union of India [2022] 143 taxmann.com 374/[2022] 67 GSTL 160/[2023] 95 GST 199 (Gujarat) (para 9)
• Genpact India (P.) Ltd. v. Union of India [2021] 130 taxmann.com 145/88 GST 285 (Punjab & Haryana) (para 12)
• OHMI Industries Asia (P.) Ltd. v. Asstt. Commissioner, CGST [2023] 150 taxmann.com 497/98 GST 435/74 GSTL 421 (Delhi) (para 12)
• Ernst & Young Ltd. v. Additional Commissioner, Central GST Appeals [2023] 148 taxmann.com 461/73 GSTL 161/97 GST 820 (Delhi) (para 12).

The post Subsidiary’s Services to US Parent Are Zero-Rated Exports – ITC Refund Allowed | HC appeared first on Taxmann Blog.

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Case Details: ISKCON Steel Traders vs. Union of India - [2025] 181 taxmann.com 396 (Punjab & Haryana)

Judiciary and Counsel Details

• Mrs Lisa Gill & Parmod Goyal, JJ.
• Deepak Gupta, Adv. for the Petitioner.
• Ajay Kalra, Sr. Standing Counsel & Ms Ridhi Bansal, Adv. for the Respondent.

Facts of the Case

The petitioner challenged the action of the jurisdictional officer under GST effected negative blocking of input tax credit (ITC) in the Electronic Credit Ledger under Rule 86A of the CGST Rules. The petitioner submitted that Rule 86A does not authorise blocking of ITC exceeding the credit actually available and that negative blocking without available ITC is impermissible. The matter was accordingly placed before the High Court.

High Court Held

The High Court permits withholding only of available ITC in the Electronic Credit Ledger and does not authorise negative blocking in absence of available credit. The Court observed that the provision is designed for emergent situations and can be exercised without prior notice but must be limited to credit actually present in the ledger. The Court further held that the authorities retain the statutory remedies for recovery under Sections 73 and 74 of the CGST Act if any amount is due. The Court directed that negative blocking without available ITC is impermissible.

List of Cases Referred to

• Karuna Rajendra Ringshia v. Commissioner of Central GST [2024] 168 taxmann.com 249/[2025] 107 GST 164 (Delhi) (para 5)
• Kings Security Guard Services Pvt Ltd. v. Deputy Director, Directorate General of GST Intelligence, DZU [2024] 169 taxmann.com 409/[2025] 108 GST 490/95 GSTL 92 (Delhi) (para 5)
• Samay Alloys India Pvt Ltd. v. State of Gujrat [2022] 135 taxmann.com 243/91 GST 338/61 GSTL 421 (Gujarat) (para 5)
• Best Crop Science Pvt Ltd. v. Principal Commissioner, CGST Commissionerate [2024] 166 taxmann.com 654/106 GST 440/90 GSTL 131 (Delhi) (para 5)
• Shyam Sunder Strips v. Union of India [2025] 180 taxmann.com 414 (Punjab & Haryana) (para 5)
• Basanta Kumar Shaw v. Asstt. Commissioner of Revenue, Commercial Taxes and State Tax [2022] 141 taxmann.com 528/94 GST 259/65 GSTL 436 (Calcutta) (para 9)
• R.M. Dairy Products LLP v. State of U.P. [2021] 129 taxmann.com 37/88 GST 650/55 GSTL 524 (Allahabad) (para 9)
• Sugna Sponge and Power Pvt Ltd. v. Superintendent of Central Tax [2025] 170 taxmann.com 521/95 GSTL 421 (Andhra Pradesh) (para 9)
• Laxmi Fine Chem v. Asstt. Commissioner [2024] 161 taxmann.com 270/104 GST 245/87 GSTL 197 (Telangana) (para 9)
• Rawman Metal and Alloys v. Deputy Commissioner of State Tax [2025] 179 taxmann.com 387/112 GST 585 (Bombay) (para 9).

The post Negative Blocking of ECL Without Available ITC Held Impermissible | HC appeared first on Taxmann Blog.

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Circular No. IBBI/CIRP/89/2025; Dated: 18.12.2025

1. Regulatory Background

The Insolvency and Bankruptcy Board of India (IBBI) has introduced important procedural changes relating to filing of forms under Regulation 40B of the IBBI (Corporate Insolvency Resolution Process) Regulations.

The changes include:

• Introduction of a modification utility for CP Forms filed on the IBBI portal, and
• Commencement of levy of fees for delayed filing of forms.

These measures aim to improve data accuracy, regulatory compliance, and timeliness of disclosures by Insolvency Professionals (IPs).

2. Introduction of Modification Utility in CP Forms

To address errors or omissions in filings, IBBI has enabled a modification utility on the portal.

2.1 Key Feature

Where an Insolvency Professional identifies any deficiency in a form already submitted, the IP may:

• Access the modification utility, and
• Make the necessary corrections or updates to the filed CP Form.

2.2 Regulatory Significance

• Eliminates the need for informal correspondence or re-filing
• Ensures accuracy and completeness of insolvency process data
• Facilitates better regulatory monitoring and analytics

3. Levy of Fee for Delayed Filing of Forms

IBBI has also operationalised the fee mechanism for delayed filing as provided under Regulation 40B of the CIRP Regulations.

3.1 Applicability

• Applies to all forms that were due on or before 31 December 2025
• Where such forms are submitted after 31 December 2025, a fee becomes payable

3.2 Fee Structure

• ₹500 per form
• For each calendar month of delay
• Fee is calculated form-wise, not consolidated

This introduces a recurring financial consequence for prolonged delays.

4. Effective Date

• The fee requirement applies to all eligible delayed forms filed after 31 December 2025
• The modification utility is available immediately on the portal

5. Regulatory Intent

The measures are intended to:

• Improve timeliness and discipline in statutory filings
• Encourage self-correction through the modification utility
• Reduce regulatory follow-ups on inaccurate or incomplete submissions
• Ensure reliable insolvency ecosystem data for supervision and policymaking

6. Compliance Takeaways for Insolvency Professionals

IPs should:

• Review all pending and past-due CP Forms immediately
• File delayed forms at the earliest to minimise monthly fee exposure
• Use the modification utility promptly upon identifying any error
• Strengthen internal filing calendars and documentation checks
• Budget for potential late fees where delays are unavoidable

Failure to comply may result in:

• Accumulation of monthly fees
• Regulatory scrutiny during inspections or disciplinary proceedings

7. Key Takeaway

From 1 January 2026 onwards, delayed filing of CP Forms under Regulation 40B carries a financial cost, while the newly introduced modification utility provides a structured mechanism for correcting deficiencies in filings.

Click Here To Read The Full Circular

The post IBBI Introduces CP Form Modification Utility and Late Fee for Delayed Filings appeared first on Taxmann Blog.

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Editorial Team – [2025] 181 taxmann.com 634 (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. Dutch Government Publishes Overview of 2026 Tax Measures

The Dutch Ministry of Finance has released an overview of the main tax changes for 2026 following Senate approval of the 2026 Tax Plan and related laws on 16 December 2025.

Key measures include revised income tax brackets (lower first-bracket rate, higher second-bracket rate, unchanged top rate), a further reduction in the self-employed deduction, amendments to the ETK scheme restricting tax-free reimbursements, lower income thresholds for the labour tax credit, and the introduction of CBAM levies on imports based on CO₂ emissions.

Additional changes include reduced tax incentives for electric and plug-in hybrid vehicles, a lower taxable benefit discount for zero-emission company cars, an increase in VAT on short-term accommodation (excluding camping), a reduction in real estate transfer tax for residential property, a higher gambling tax rate, new reporting obligations for crypto-asset service providers under DAC8, and an increase in late-payment interest to 4.3% from 2026.

The Senate also approved several accompanying bills, covering technical tax amendments effective from 1 January 2026, distance-based flight taxation from 2027, streamlined taxpayer inspection rights, updates to the Minimum Tax Act aligned with OECD guidance (largely retroactive), implementation of DAC9 for exchange of GloBE information, and further amendments to environmental legislation to operationalise CBAM.

Source – Government of the Netherlands

2. Australia Releases New and Updated Pillar Two Guidance, Including for Tax Consolidated Groups

The Australian Taxation Office (ATO) released new guidance on the Pillar Two global minimum tax on 17 December 2025, focusing on the interaction of the Pillar Two rules with Australia’s tax consolidation regime. The newly issued guidance addresses, in particular:

• Pillar Two lodgment obligations for tax consolidated groups, explaining how filing requirements apply where entities are members of a tax consolidated group;
• Top-up tax for tax consolidated groups, outlining the methodology for calculating and allocating top-up tax within consolidated groups; and
• Pillar Two reporting for tax consolidated groups, describing available reporting simplifications for consolidated groups under the Pillar Two framework.

In addition, the ATO has updated several related guidance materials, including:

• Global and domestic minimum tax, providing an overview of the implementation of Pillar Two under the OECD/G20 Two-Pillar Solution for multinational groups in Australia;
• When and how the Pillar Two rules apply, explaining the operation, scope, and applicability of the global and domestic minimum tax rules;
• Lodging, paying and other Pillar Two obligations, setting out compliance requirements such as returns, payment obligations, and key deadlines;
• Transitional CbC reporting safe harbour, detailing the application of the transitional Country-by-Country reporting safe harbour under Pillar Two; and
• Specific Pillar Two issues, addressing particular matters raised by stakeholders through consultation and other channels that are not covered elsewhere in the Pillar Two guidance.

Source – Australian Taxation Office

Click Here To Read The Full Article

The post [World Tax News] Dutch Government Publishes Overview of 2026 Tax Measures and More appeared first on Taxmann Blog.

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