Categories
Blog Updates

Govt. Proposes Lower CSR Thresholds and Mandatory CSR-Experienced Director on CSR Committee

CSR threshold amendment 2025

Bill No. XXXII of 2025, Dated: 08.12.2025

1. Background

The Government of India has introduced the Companies (Amendment) Bill, 2025, proposing significant amendments to Section 135 of the Companies Act, 2013, which governs Corporate Social Responsibility (CSR) obligations. The proposed changes seek to widen the CSR net and strengthen governance and expertise in CSR decision-making.

2. Lowering of CSR Applicability Thresholds

2.1 Proposed Eligibility Criteria

Under the Bill, a company will be required to comply with CSR provisions if, during the immediately preceding financial year, it meets any one of the following thresholds:

  • Net Worth  ₹100 crore or more
  • Turnover  ₹500 crore or more
  • Net Profit  ₹3 crore or more

This represents a substantial expansion of the CSR framework to include smaller and mid-sized companies.

3. Current CSR Thresholds (Existing Law)

At present, Section 135 applies only if a company meets any of the following criteria during the immediately preceding financial year:

  • Net Worth  ₹500 crore or more
  • Turnover ₹1,000 crore or more
  • Net Profit ₹5 crore or more

The existing regime does not mandate any specific experience requirement for CSR Committee members.

4. Mandatory CSR Expertise on CSR Committee

4.1 New Governance Requirement

The Bill proposes that the CSR Committee must include at least one director having extensive experience in CSR-related matters.

4.2 Objective

This requirement aims to:

  • Improve quality, impact, and accountability of CSR projects
  • Ensure informed decision-making in project selection, monitoring, and evaluation
  • Move CSR from a compliance-driven exercise to a strategic and outcome-oriented function

This is a new statutory requirement and does not exist under the current framework.

5. Regulatory Intent

The proposed amendments seek to:

  • Broaden CSR participation across a larger corporate base
  • Enhance professional oversight and governance of CSR initiatives
  • Improve effectiveness, credibility, and social impact of CSR spending
  • Align corporate responsibility obligations with India’s developmental priorities

6. Implications for Companies

If enacted, companies should prepare to:

  • Reassess CSR applicability under the revised financial thresholds
  • Constitute or reconstitute CSR Committees to include a CSR-experienced director
  • Build internal or external capacity for CSR strategy, implementation, and reporting
  • Increase budgetary planning for CSR obligations at an earlier stage of growth

Companies newly brought within the CSR ambit will need to put systems, policies, and governance structures in place well in advance.

7. Next Steps

The Bill will be taken up for Parliamentary consideration and debate. The amendments will take effect once passed by Parliament and notified by the Government.

Click Here To Read The Full Update

The post Govt. Proposes Lower CSR Thresholds and Mandatory CSR-Experienced Director on CSR Committee appeared first on Taxmann Blog.

source

Categories
Blog Updates

SEBI Defers Phase III of Nomination Circular Beyond Dec 15, 2025

SEBI Nomination Circular Phase III

Circular No. HO/42/36/12(4)2025-OIAE-IAD3, Dated: 11.12.2025

1. Regulatory Update

SEBI has deferred the implementation of Phase III of the Nomination Circular dated January 10, 2025, which had earlier been rescheduled to December 15, 2025. In view of operational challenges faced by market intermediaries and representations from stakeholders, SEBI has now postponed Phase III to a later date, which will be notified separately.

The circular comes into force immediately, but only for the purpose of deferring Phase III.

2. Key Clarifications

  • Phase III implementation is deferred The revised deadline of December 15, 2025 will no longer apply. A fresh implementation date will be announced separately.
  • All other provisions remain unchanged Phases I and II of the Nomination Circular, along with all other obligations, continue to apply as notified.
  • Immediate effect The deferral takes effect immediately upon issuance of the circular.

3. Regulatory Context

The Nomination Circular aims to strengthen investor protection by mandating nomination or opting out across securities market accounts, including demat accounts, mutual fund folios, and other investment holdings. Phase III was expected to address residual and legacy cases requiring enhanced system-level enforcement.

4. Regulatory Intent

The deferral reflects SEBI’s intent to:

  • Allow intermediaries additional time to address system, process, and operational readiness
  • Avoid disruption to investors due to premature enforcement
  • Ensure smoother, uniform implementation across market infrastructure institutions and intermediaries

5. Implications for Market Intermediaries

Intermediaries should:

  • Continue compliance with Phases I and II of the Nomination framework
  • Pause implementation efforts specifically linked to Phase III
  • Maintain readiness to implement Phase III once a revised timeline is notified
  • Update internal compliance calendars and client communication accordingly

6. Implications for Investors

  • No immediate change in nomination requirements beyond what is already applicable
  • Existing nomination or opt-out statuses remain valid
  • Further actions, if any, will be required only after SEBI notifies the revised Phase III date
Click Here To Read The Full Circular

The post SEBI Defers Phase III of Nomination Circular Beyond Dec 15, 2025 appeared first on Taxmann Blog.

source

Categories
Blog Updates

SEBI to Hold Investor Service Camp in Indore on Dec 16, 2025

SEBI Investor Service Camp Indore

PR No. 83/2025, Dated: 11.12.2025

1. Overview

SEBI’s Indore Local Office is organising an Investor Service Camp to provide a single-window facility for resolving common investor service and grievance issues, in collaboration with key market infrastructure institutions and service providers.

2. Date, Time and Venue

  • Date  December 16, 2025
  • Time  10:00 AM to 5:00 PM
  • Venue  Pravasa Hotels, Indore

3. Who Is Participating

The camp is being conducted with support from:

  • BSE and NSE
  • CDSL and NSDL
  • Leading RTAs (Registrar & Transfer Agents)

4. Services Available at the Camp

Investors will be able to access service desks for assistance on:

  • RTA service requests (company/RTA-related investor servicing)
  • KYC updation
  • Nominee updation
  • Dematerialisation
  • Transmission (including investor/holder change due to death, succession, etc.)
  • Name change/correction
  • Queries and guidance related to SCORES and SMART ODR (dispute resolution)

5. What This Camp Helps With

  • Faster, guided resolution of long-pending service requests
  • On-the-spot support for common account hygiene actions like KYC/nomination updates
  • Direction on the right process and next steps for SCORES/SMART ODR matters
Click Here To Read The Full Press Release

The post SEBI to Hold Investor Service Camp in Indore on Dec 16, 2025 appeared first on Taxmann Blog.

source

Categories
Blog Updates

RBI Allows Unrestricted Current | Cash Credit | Overdarft Accounts for Exposure Below Rs. 10 Crore

RBI current account rules

PR No. 2025-2026/1684; Dated: 11.12.2025

1. Regulatory Background

The Reserve Bank of India (RBI) has amended its directions governing the maintenance and operation of Cash Credit (CC), Current, and Overdraft (OD) accounts by banks. The amendments aim to simplify account operations for smaller borrowers, strengthen fund discipline, and ensure that banking facilities are used strictly for authorised business purposes.

2. Relaxation for Customers With Exposure Below ₹10 Crore

Under the amended directions:

  • Banks may open and maintain a Current Account or an Overdraft (OD) Account without any restriction for customers whose aggregate exposure across the banking system is less than ₹10 crore.

2.3 Significance

  • This relaxation reduces compliance friction for MSMEs, small businesses, and individual borrowers.
  • It removes earlier operational constraints linked to consortium or multiple banking arrangements for such customers.
  • Banks gain greater flexibility in offering transaction banking facilities to low-exposure customers.

3. Time Limit for Transfer From Collection Accounts

The amended framework mandates tighter fund movement controls:

  • Funds credited into collection accounts must be transferred within two working days.
  • Such funds must be remitted to the customer’s CC account, Current account, or OD account, as applicable.

3.1 Objective

  • Prevents parking or misuse of funds in collection accounts
  • Improves cash flow transparency and monitoring
  • Ensures timely credit to operative accounts used for business activities

4. Restriction on Use of Accounts

RBI has reiterated that banks must ensure:

  • Each CC, Current, or OD account is used exclusively for transactions related to the customer’s authorised business activities
  • No unrelated, personal, or unauthorised transactions are permitted through these accounts

4.1 Compliance Focus

This measure strengthens:

  • End-use monitoring
  • Risk management and fraud prevention
  • Alignment with KYC, AML, and account-usage controls

5. Regulatory Intent

The amendments seek to:

  • Ease banking operations for small and mid-sized borrowers
  • Improve discipline in fund flows
  • Reduce complexity while maintaining strong supervisory safeguards
  • Ensure that credit and transaction accounts serve their intended commercial purpose

6. Implications for Banks

Banks should:

  • Update account opening and exposure-tracking systems to reflect the ₹10 crore threshold
  • Monitor timely remittance of funds from collection accounts
  • Strengthen transaction monitoring to ensure authorised-use compliance
  • Revise internal SOPs, customer communication, and staff training

Non-compliance may attract supervisory observations or regulatory action.

7. Impact on Customers

  • Customers with exposure below ₹10 crore benefit from simpler account operations
  • Businesses must ensure proper segregation of transactions and timely fund movement
  • Misuse of accounts may result in restrictions or corrective action by banks
Click Here To Read The Full Press Release

The post RBI Allows Unrestricted Current | Cash Credit | Overdarft Accounts for Exposure Below Rs. 10 Crore appeared first on Taxmann Blog.

source

Categories
Blog Updates

Writ Against CEGAT Order Not Maintainable When Alternate Remedy Exists | SC

 

Writ Against CEGAT OrderCase Details: Rikhab Chand Jain vs. Union of India - [2025] 180 taxmann.com 773 (SC)

Judiciary and Counsel Details

  • Dipankar Datta & Aravind Kumar, JJ.
  • Ms Chitrangda Rastravara, AOR, Anirudh SinghAbhijeet SinghAishwary MishraDhananjai ShekhawatMs Sakshi AggarwalMs Pearl PundirDashrath Singh, Advs. & Yuvraj Singh, Adv, for the Appellant.
  • Raghvendra P. Shankar, A.S.G., Amit Sharma IIRaman Yadav, Advs. & Arvind Kumar Sharma, AOR for the Respondent.

Facts of the Case

The appellant, challenged an order of confiscation and penalty passed by the Customs, Excise and Gold Appellate Tribunal (CEGAT) in respect of alleged smuggled silver. The CEGAT confirmed the confiscation but reduced the penalty from Rs. 50,000 to Rs. 30,000. The appellant approached the High Court under writ jurisdiction, contending illegality of the CEGAT order. The writ petition was dismissed on the ground that the appellant had failed to pursue the alternate appellate remedy available. The matter was accordingly placed before the Supreme Court.

Supreme Court Held

The Supreme Court held that where an equally efficacious remedy exists, invocation of writ jurisdiction is not maintainable. The Court observed that the appellant had a remedy by way of a reference before the High Court against the CEGAT order, which was sufficient and legally adequate. The appellant’s attempt to invoke writ jurisdiction constituted a misadventure and did not justify interference. Consequently, the Supreme Court upheld the High Court’s order, confirming that the writ petition was rightly dismissed.

List of Cases Referred to

  • State of Uttar Pradesh v. Md. Nooh AIR 1958 SC 86 (para 7)
  • Titaghur Paper Mills v. State of Orissa (1983) 2 SCC 433 (para 7)
  • Godrej Sara Lee v. Excise and Taxation Officer-cum-Assessing Authority 2023 SCC OnLine SC 95 (para 7)
  • Thansingh Nathmal v. A. Mazid, Superintendent of Taxes AIR 1964 SC 1419 (para 10)
  • A. V. Venkateswaran v. Ramchand Sobhraj Wadhwani 1961 taxmann.com 4 (SC) (para 12).

The post Writ Against CEGAT Order Not Maintainable When Alternate Remedy Exists | SC appeared first on Taxmann Blog.

source

Categories
Blog Updates

HC Quashes DRC-13 Recovery for Interest on Regularised IGST ITC

DRC-13 interest on regularised IGST ITC

Case Details: Rivera Enterprises vs. Commercial Tax Officer (STO) [2025] 181 taxmann.com 216 (Madras)

Judiciary and Counsel Details

  • C. Saravanan, J.
  • K. Sureshkumar for the Petitioner.
  • Mrs K. Vasanthamala, GA for the Respondent.

Facts of the Case

The petitioner, challenged the assessment and DRC-13 recovery for interest on belated IGST input tax credit (ITC). It was submitted that the proceedings had initially commenced through GST ASMT-10, invoking Section 16(4) of the CGST Act, for reversal of ITC, and that the non-reversal of such ITC had resulted in the issuance of DRC-01 and the subsequent impugned order. It was contended that an earlier writ had regularised the belated availment of ITC. Any recovery of interest under DRC-13 predicated on the premise that the ITC had not been regularised was arbitrary and lacked justification. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the belated IGST ITC had already been regularised by the prior writ order and, therefore, the impugned assessment and DRC-13 recovery of interest on such ITC was arbitrary. The Court noted that the amount specified in the impugned order corresponded to the ASMT-10 figure. It was further observed that the authorities were required to reconsider the recovery in the light of the earlier writ order, ensuring that no interest is levied on ITC that has been regularised. The Court quashed the DRC-13 recovery of interest and remanded the matter for fresh consideration, in accordance with Sections 16, 50, and 79 of the CGST Act.

List of Cases Reviewed

  • Rivera Enterprises v. Deputy State Tax Officer, Chengalpattu [WP. No.16289 of 2025, dated 2.7.2025] (para 7) followed

List of Cases Referred to

  • Rivera Enterprises v. Deputy State Tax Officer, Chengalpattu [WP. No.16289 of 2025, dated 2.7.2025] (para 3)
  • Seeniselvam v. Regional Passport Officer [W. P. (MD) No. 25081 of 2024, dated 17-10-2024] (para 4).

The post HC Quashes DRC-13 Recovery for Interest on Regularised IGST ITC appeared first on Taxmann Blog.

source

Categories
Blog Updates

Govt. Amends Banking Regulation Rules | Introduces Rule 5-A

Banking Regulation Rules

Notification No. G.S.R. 891(E)., Dated 10.12.2025

1. Overview

The Central Government has notified amendments to the Banking Regulation (Co-operative Societies) Rules, 1966, introducing new definitions, procedures, and revised forms to strengthen governance and streamline the removal and cessation process for directors in co-operative banks.

2. Insertion of Definition “Ineligible Director”

A new definition of “ineligible director” has been inserted into the Rules.

2.1 Purpose of the Definition

  • Establishes a clear statutory basis for identifying directors who no longer meet eligibility criteria.
  • Prevents individuals who fail to satisfy prescribed fit-and-proper norms from continuing in office.
  • Supports enhanced governance, transparency, and accountability within co-operative banking institutions.

The definition will be central to determining which directors are liable for removal or cessation under the revised rules.

3. New Rule 5-A Procedure for Determination and Drawing of Lots

A new Rule 5-A has been added to lay down detailed procedures for identifying directors who shall cease to hold office or be removed, particularly in situations where:

  • The board needs to be reconstituted,
  • Excess directors must demit office, or
  • Rotation or tenure-based removal is required.

3.1 Key Features of Rule 5-A

1. Grouping of Directors by Tenure

Directors must be grouped based on:

  • Length of time in office,
  • Eligibility status, and
  • Categories specified in the amended rules.

This ensures the removal process is objective and tenure-balanced.

2. Drawing of Lots

If directors need to be removed or rotated out:

  • The process shall be conducted by drawing of lots, ensuring fairness and non-discrimination.
  • The rules lay out procedural safeguards for conducting the lot-drawing process.

3. Rules for Exclusion

Certain directors may be excluded from the lot, such as:

  • Those already identified as ineligible directors,
  • Those protected under statutory or regulatory tenure provisions,
  • Directors completing defined mandatory terms.

These exclusions maintain compliance integrity and continuity of governance.

4. Amendments to Forms I and IX

The notification also introduces multiple amendments to Form I and Form IX, which relate to:

  • Reporting of office-bearer and director details,
  • Compliance declarations,
  • Eligibility and cessation records.

4.1 Purpose of Amendments

  • Align documentation with the new definition of “ineligible director”
  • Support proper recording of removal/rotation proceedings
  • Enhance auditability and transparency in director appointments and cessation

5. Regulatory Intent

The amendments aim to:

  • Improve governance standards in co-operative banks
  • Ensure transparent, rule-based removal of directors
  • Prevent conflicts of interest or arbitrary selection
  • Strengthen prudential oversight and protect depositor interests
  • Modernise documentation and procedural compliance

These reforms align co-operative bank governance with contemporary regulatory expectations under the Banking Regulation Act, 1949 (as amended).

6. Implications for Co-operative Banks

Banks must:

  • Update internal bylaws and governance policies to reflect the new rules
  • Establish systems to determine eligibility and identify “ineligible directors”
  • Set up procedures for grouping directors by tenure and conducting lots under Rule 5-A
  • Revise internal formats to align with amended Forms I and IX
  • Train board secretariat and compliance officers on the updated procedures

Non-compliance could lead to regulatory scrutiny, governance findings, or supervisory directives.

Click Here To Read The Full Notification

The post Govt. Amends Banking Regulation Rules | Introduces Rule 5-A appeared first on Taxmann Blog.

source

Categories
Blog Updates

Negative Blocking of ITC Ledger Beyond Available Balance Not Allowed | HC

negative blocking ITC Rule 86A

Case Details: Mannat Steels vs. Union of India [2025] 181 taxmann.com 196 (Punjab & Haryana)

Judiciary and Counsel Details

  • Mrs Lisa Gill & Deepak Manchanda, JJ.
  • Pankaj Gupta, Adv. for the Petitioner.
  • Ajay Kalra, Senior Standing Counsel for the Respondent.

Facts of the Case

The petitioner, challenged the blocking of its electronic credit ledger (ECL). It was submitted that, under Rule 86A of the CGST Rules and the corresponding Punjab GST Rules, a negative blocking entry was created on the ECL despite the available balance being insufficient, without any prior notice. It was contended that Rule 86A does not authorise blocking of ITC beyond the balance actually available and that such action was inconsistent with the statutory scheme, emphasising that eligibility and recovery under GST must be determined through proper adjudication. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that Rule 86A permits the jurisdictional officer under CGST to impose a temporary restriction on the debit of ITC when there are reasons to believe that the credit has been fraudulently or ineligibly availed, and that such restriction may be imposed without prior show-cause notice. The Court observed that creating negative blocking entries exceeding the actual ITC balance is impermissible, and that authorities could resort to statutory recovery procedures instead. It was further held that determination of eligibility for ITC must occur through formal adjudication.

List of Cases Reviewed

List of Cases Referred to

The post Negative Blocking of ITC Ledger Beyond Available Balance Not Allowed | HC appeared first on Taxmann Blog.

source

Categories
Blog Updates

Govt. Releases the Draft Industrial Relations (Delhi) Rules, 2025

Industrial Relations (Delhi) Rules 2025

Notification No. 15(12)/Lab/2022/4473-4479; Dated: 03.12.2025

The Government has notified the draft Industrial Relations (Delhi) Rules, 2025. These rules apply to the industrial establishments that fall under the jurisdiction of the Government of the National Capital Territory of Delhi. The draft rules have been issued in the exercise of the powers conferred by Section 99 of the Industrial Relations Code, 2020 (‘Code’).

Section 99 of the Industrial Relations Code, 2020, empowers the appropriate Government to make rules for giving effect to the provisions of the Code. It authorises detailed rule-making on matters such as trade union processes, grievance redressal, standing orders, strikes, lock-outs, retrenchment, closure and powers of authorities. The rules have been published for stakeholder comments. Objections and Suggestions can be submitted within 30 days to the Labour Department.

The key highlights of the draft Industrial Relations (Delhi) Rules, 2025 are as follows:

(a) Constitution of Works Committee As per the draft rules, employers must constitute a Works Committee, with a maximum of 20 members, ensuring that the number of representatives of workers is not less than the number of representatives of the employer. Registered Trade Unions may choose their representatives as members for the works committee in proportion to their membership.

(b) Formation of Grievance Redressal Committee  The draft rules prescribe the formation of a Grievance Redressal Committee comprising an equal number of members representing the employer and workers, which shall not exceed 10. There must be an adequate representation of women workers in the Committee, and such representation must not be less than the proportion of women workers to the total workers employed in the establishment.

(c) Payment of subscription by Trade Union Member Section 7 of the Industrial Relations Code, 2020 states that a trade union is not eligible for registration unless the rules provide for payment of a subscription by members of the trade union as may be prescribed. Subscription refers to the annual fee that each member of the trade union must pay to remain a valid member.

Under the draft Rules, the minimum annual subscription payable by each member of a Trade Union must not be less than Rs 100/- per annum. The draft rules also require that the annual audit of the accounts of any registered trade union must be conducted by an auditor authorised to audit the accounts of companies under section 139 of the Companies Act, 2013.

(d) Voluntary Reference of Disputes to Arbitrator  The draft rules specify a formal agreement process for voluntary arbitration, specifying who can sign on behalf of employers and workers and mandating written consent from arbitrators. The agreement must be accompanied by the consent of the arbitrator or arbitrators, either in writing or electronically.

(e) Procedure for selection of Members of Industrial Tribunal  The draft rules outline the procedure for selection, tenure, salary, and service conditions of Judicial Members and Administrative Members of the Industrial Tribunal.

A Judicial Member will be appointed through a Search-cum-Selection Committee headed by the Chief Justice of the Delhi High Court or a Judge nominated by the High Court. The Administrative Member must be appointed by the appropriate Government based on the recommendation of the Search Cum Selection Committee.

(f) Procedure for Strikes and Lockouts  The draft rules formalise the procedures for strikes and lockouts. The notice of strike must be given to the employer of an industrial establishment in a prescribed form, duly signed by the Secretary and five elected representatives of the registered trade union. Employers issuing lockout notices must notify labour authorities and display the notice on a notice board or an electronic board at the main entrance.

(g) Special Provisions relating to Lay-off, Retrenchment and Closure  As per the draft rules, the employer must submit applications for permission in the prescribed form, and a copy of the application must be served electronically or by registered or speed post. The appropriate Government may review its order within 30 days of granting or refusing such permissions.

(h) Worker Re-Skilling Fund  The draft rules require employers who retrench a worker to electronically transfer an amount equivalent to 15 days’ last drawn wages of the retrenched worker to the account of the appropriate Government within 10 days. The Government must transfer the funds received electronically to the worker within 45 days of receipt of funds from the employer. The worker must utilise the amount for his re-skilling.

(i) Protected Workers  The draft rules mandate that every registered Trade Union connected with an industrial establishment, must communicate to the employer before the 30th April of every year, the names and addresses of the officers of the Union who are employed in the establishment and who, in the opinion of the Union, must be recognised as protected workers.

(j) Manner of Composition of Offence by a Gazetted Officer  Under the draft rules, the officer notified by the appropriate Government for compounding of offences must send a notice electronically/through a web portal to the accused in the prescribed form, consisting of three parts.

In Part I of the Form, the compounding officer must specify the name of the offender, details of the offence and the section in which the offence has been committed. Part II of the Form specifies the consequences if the offence is not compounded, and Part III of the Form must contain the application to be filed by the accused if he desires to compound the offence.

Further, if the offence is compounded before the prosecution, then no complaint for prosecution must be initiated against the accused.

Click Here To Read The Full Notification

The post Govt. Releases the Draft Industrial Relations (Delhi) Rules, 2025 appeared first on Taxmann Blog.

source

Categories
Blog Updates

[Opinion] The 2025 OECD Update on Fixed Place Permanent Establishment and Work from Home

OECD 2025 work from home

Sheetal Bhatia – [2025] 181 taxmann.com 279 (Article)

During the pandemic I advised a mid-sized engineering firm whose overseas project managers started working from their homes abroad. What seemed like a harmless operational tweak quickly raised a tax question Could those home offices create a permanent establishment (PE) for the foreign enterprise?

The OECD’s 2025 update to the Model Tax Convention directly addresses that modern reality. Paragraph 29 of the Commentary on Article 5, alongwith practical examples now gives clearer guidance on when a home or other remote workplace becomes a fixed place PE.

1. What Does the 2025 OECD Update State?

Simply put, the OECD has clarified that a home or remote workplace becomes a fixed place PE only when it functions as a place of business of the enterprise and is at the enterprise’s disposal in a meaningful way.

Key factors to consider

  • Degree of control and availability – Is the location made available by the enterprise (e.g., provided, required, or regularly used for business purposes)? If the enterprise requires the employee to use that place and it is used continuously, the risk of PE increases
  • Regularity and continuity of activities – Intermittent or incidental use usually does not create a PE but continuous, core business activities carried out from the home are more likely to do so.
  • Nature of activities – Administrative or preparatory tasks are less likely to create a PE than core revenue-generating activities.
  • Enterprise’s provision of the space – If the enterprise provides the workspace, equipment, or pays for it, that strengthens the case for a PE.
  • Expectation and contractual terms – Written policies, employment contracts, or client arrangements that require or expect work from that location are relevant evidence of intent and control.

2. Practical Illustrations by the OECD

The OECD commentary also provides fact-based scenarios to illustrate how the place of business test applies to homes and other personal spaces. One may use these scenarios as references before forming an opinion.

S. No. Scenarios PE Risk Premises
1 Employee normally works in Country R; post holidaying in Country S, rents a place there and works from that rented place for three straight months. Low Three months is temporary and lacks permanence
2 The same employee works from her home in Country S for one or two days per week throughout a twelve-month period (30% of working time) Low The home in Country S is a permanent place but the time spent is less than 50% of her total working time.
3 The same employee works from her home in Country S for 80 per cent of her working time in any twelve-month period. She regularly visits her clients in Country S for providing services. High The home in Country S is a permanent place and the time spent is also more than 50% of total working time. Further, the client visits show a clear commercial reason for the presence.
4 The same employee works from home in Country S for 60% of her working time in any twelve-month period. Her role is client-facing across multiple countries and works remotely. She meets a client in Country S once a quarter for a day. Medium to Low Home use exceeds 50% (which raises risk), but client meetings are intermittent and services are mainly delivered remotely. Thus, the risk of creation of fixed place PE would be medium to low, depending on overall facts and commercial purpose.
5 The same employee normally works from home in Country S. She provides services online to customers in Country R and other countries in different time zones. Because she works from Country S, she can be available in real time or near real time for those customers. High Home use exceeds 50% (which raises risk). Further, the employer benefits from the employee being in Country S because her location lets the company serve customers in other time zones effectively. Thus, the home would be considered as a Fixed Place PE.
Click Here To Read The Full Article

The post [Opinion] The 2025 OECD Update on Fixed Place Permanent Establishment and Work from Home appeared first on Taxmann Blog.

source