Author: inavatiq

Case Details: Mita Ashish Desai vs. Deputy Commissioner of Income-tax [2025] 180 taxmann.com 815 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Pranav Trivedi, JJ.
• Tushar Hemani & Ms Vaibhavi K Parikh, Advs. for the Petitioner.
• Ms Maithili D Mehta, Senior Standing Counsel for the Respondent.

Facts of the Case

The assessee filed her return of income for the relevant assessment year and declared short-term capital gains on the sale of shares of a company. Subsequently, the Assessing Officer (AO) issued a notice for reassessment based on information from a search under section 132 on that group of companies. The search revealed incriminating documents showing evidence of cash transactions providing bogus entries.

The assessee filed objections to the reassessment notice, contending that all purchase and sale transactions of shares were duly recorded, short-term capital gains were fully disclosed and taxed, and no long-term capital gains were earned during the year. However, the AO rejected the objections and passed an order holding that the short-term capital gains were bogus and reopened the assessment.

The assessee filed a writ petition to the Gujarat High Court against the reassessment order.

High Court Held

The High Court held that the AO failed to provide sufficient details in the reasons recorded to establish a prima facie belief that income had escaped assessment. The reasons recorded only refer to information received from credible sources, indicating that a search was conducted on a group of companies and that incriminating documents were found and seized during the search. Upon reviewing the information available on the Insight Portal, it was found that the assessee was one of the beneficiaries of accommodation entries in various forms of income, such as Long Term Gains/Loss, Short Term Gains/Loss, and also as a beneficiary of unsecured loans, among others, without any proper basis for forming such a belief.

It was clear that the AO recorded the reasons solely based on borrowed satisfaction, without any live link between the information available on the Insight Portal and the assessee’s record. Therefore, the AO cannot be said to have formed an independent satisfaction regarding the reasons recorded for reopening the assessment, in order to reach the prima facie conclusion that there is escapement of income.

Accordingly, the petition was allowed, and the reassessment notice was quashed and set aside.

The post HC Quashes Reassessment Based on Borrowed Satisfaction Without Live Link appeared first on Taxmann Blog.

source

Editorial Team – [2025] 181 taxmann.com 366 (Article)

Global Financial Insights is a weekly feature for Taxmann.com Accounts and Audit Module subscribers. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. Financial Accounting Standard Board Issues an Accounting Standard Update to Improve Interim Reporting

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to improve the disclosure requirements in Topic 270, Interim Reporting. This update provides the additional guidance on what disclosures should be provided in interim reporting periods. Further, it also provides clarity on the form and content of interim financial statements in accordance with Generally Accepted Accounting Principle (GAAP). However, the user shall hereby note that this update does not expand or reduce current interim disclosure requirements but provides clarity on current interim reporting requirements. The amendments in the aforesaid ASU are discussed herewith:

(a) Clarify that the guidance in Topic 270 is applicable to all entities that prepare interim financial statements and accompanying notes in accordance with GAAP.

(b) Develop a comprehensive listing within FASB detailing all interim disclosure requirements for financial statements and notes prepared in accordance with GAAP.

(c) Introduce a disclosure principle aligned with prior Securities and Exchange Commission guidance, requiring entities to report events and changes occurring after the end of the most recent fiscal year that have a material effect on the entity.

(d) Enhance the guidance regarding the nature, content, and presentation format of information included in interim financial statements.

Effective Date

The amendments in this Update are effective for interim reporting periods within annual periods beginning on or after 15th December 2027, for public business entities, and for interim reporting periods within annual periods beginning on or after 15th December 2028, for all other entities. Early adoption is permitted for all entities.

Source – Financial Accounting Standard Board

2. FASB Issues New Standard Providing Guidance on the Accounting for Government Grants

The Financial Accounting Standard Board (FASB) in its Accounting Standard Update (ASU) has issued a new standard providing guidance on the accounting for government grants received by business entities. This update provides guidance on recognition, measurement, and presentation of government grants. Thus, the board has taken care of areas where stakeholders have consistently highlighted a need. The update is briefly discussed below:

2.1 Definitions

Government Grant – A transfer of a monetary asset or a tangible non-monetary asset, other than in an exchange transaction (including an exchange transaction that may be at a significant discount to fair value), from a government to an entity except for a not-for-profit entity and an employee benefit plan.

Grant related to an Asset – A government grant, or part of a government grant, that is conditioned on the purchase, construction, or acquisition of an asset.

Grant related to an Income – A government grant, or part of a government grant, other than a grant related to an asset

2.2 Recognition Criteria

An entity shall not recognise a government grant until:

(a) It is probable that both of the following criteria are met:

i. The entity will comply with the conditions attached to the government grant.

ii. The government grant will be received.

(b) An entity meets the recognition guidance for a grant related to an asset or a grant related to income

2.3 Disclosures

This Update also includes disclosure requirements regarding the nature of government grants, accounting policies applied, and significant terms and conditions.

2.4 Effective Date

For public business entities, the amendments in this update are effective for annual reporting periods beginning after 15th December 2028, and interim reporting periods within those annual reporting periods. For entities other than public business entities, the amendments are effective for annual reporting periods beginning after 15th December 2029, and interim reporting periods within those annual reporting periods.

Source – Financial Accounting Standard Board

3. A US Audit Firm Gets Sanctioned By the PCAOB for Its Failure to Reasonably Supervise an Unregistered Firm

A public accounting firm in the United States (US) was engaged in auditing a China-based company. The Public Company Accounting Oversight Board (PCAOB) observed that the US-based firm failed to reasonably supervise the work performed by an unregistered China-based firm, which had a significant role in the audit. Therefore, PCAOB concluded that the US-based firm violated PCAOB rules and standards in connection with its use of the work from an unregistered firm.

The PCAOB identified that the China-based firm significantly exceeded the 20% participation threshold in the audits of the previous 5 years. Thus, the China-based firm provided material services to a US firm in issuing the audit report and therefore violated Section 102(a) of the PCAOB Act and PCAOB Rule 2100 by playing a substantial role in the audits without being registered with the board. The board held that the US based firm registered with PCAOB was responsible to reasonably supervising the registration requirements of the China-based firm as per Section 105(c)(6) of the PCAOB Act.

Further, PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants requires that a registered public accounting firm must file with the Board a report on “Form AP” in accordance with the instructions to that form. This form requires the public accounting firm to state the legal name and the extent of participation of the accounting firm that plays a substantial role in the audit. Since the US-based firm failed to disclose about the participation of china China-based firm in its “Form AP”, it violated the PCAOB rule 3211.

Considering the violations made by the public accounting firm, the PCAOB sanctioned the firm by imposing a civil monetary penalty of $1,00,000. Also, the board requires the firm to undertake certain contingent remedial actions.

Source – Public Company Accounting Oversight Board

Click Here To Read The Full Article

The post [Global Financial Insights] Key FASB | PCAOB | IFRS Updates appeared first on Taxmann Blog.

source

Notification No. No. SEBI/LAD-NRO/GN/2025/287, Dated 09.12.2025

1. Overview

SEBI has notified amendments to both the Infrastructure Investment Trusts (InvIT) Regulations, 2014 and the Real Estate Investment Trusts (REIT) Regulations, 2014, revising key investor classifications to ensure greater consistency, transparency, and suitability standards across investment vehicles.

2. Amendments to InvIT Regulations, 2014

2.1 Revised Definition of “Institutional Investor”

The earlier definition of institutional investor has been substituted. Under the amended framework, an Institutional Investor now includes only:

• A family trust, or
• A SEBI-registered intermediary
• Having a net worth exceeding ₹500 crore

This significantly narrows the eligible category, focusing on high-capacity, sophisticated investors, ensuring that only entities with appropriate financial strength participate at the institutional level.

2.2 Substitution of “Qualified Institutional Buyer” (QIB)

The definition of QIB has been revised to align with updated market classifications and ensure uniformity with other SEBI regulations.

This helps standardise eligibility across capital market products and strengthens suitability norms for participation in InvIT issuances.

2.3 Updated Definition of “Strategic Investor”

The definition of Strategic Investor has also been substituted.
Strategic investors typically include:

• Sovereign wealth funds
• Pension funds
• Insurance companies
• Other long-term capital providers

The revised definition aims to:

• Bring clarity on eligibility criteria
• Strengthen governance around cornerstone or anchor investments
• Ensure long-term stability in InvIT ownership structures

3. Amendments to REIT Regulations, 2014

3.1 Introduction of a Definition for “Institutional Investor”

A new definition of institutional investor has been inserted into the REIT Regulations, bringing the REIT framework in line with the revised InvIT norms.

This harmonisation promotes consistency across infrastructure and real-estate investment products.

3.2 Substitution of Related Investor Definitions

Similar to InvIT amendments, the REIT Regulations now contain:

• A revised definition of Qualified Institutional Buyer (QIB)
• A revised definition of Strategic Investor

These changes aim to:

• Provide alignment of investor categories across SEBI’s regulatory ecosystem
• Ensure that investor classifications reflect evolving market sophistication
• Strengthen the regulatory architecture for raising and deploying capital in REITs

4. Regulatory Intent

The amendments collectively seek to:

• Enhance investor quality and suitability for InvITs and REITs
• Promote stability and long-term investment orientation
• Align investor definitions with current market structures and capital depth
• Improve governance and oversight around cornerstone participation
• Ensure harmonisation across SEBI’s alternative fund, listing, and institutional investor frameworks

5. Implications for Market Participants

5.1 For Sponsors and Managers

• Need to reassess investor eligibility when planning issuances
• Updated offering documents and disclosures are required
• Strategic and cornerstone investment arrangements must comply with new definitions

5.2 For Investors

• Higher entry requirements for institutional classification
• Clearer investor categorisation improves risk–return matching

5.3 For Intermediaries

• Must update internal compliance protocols and onboarding standards
• Disclosure templates and marketing materials need alignment with revised definitions

Click Here To Read The Full Notification

The post SEBI Revises Investor Definitions under InvIT and REIT Regulations appeared first on Taxmann Blog.

source

Notification No. G.S.R. 890(E)., Dated 10.12.2025

1. Overview

The Central Government has notified amendments to the Banking Regulation (Companies) Rules, 1949, making changes to several provisions and statutory forms. The amendments streamline reporting requirements, remove obsolete references, and update terminology to reflect the present regulatory and institutional framework of the banking sector.

2. Omission of Provisions in Rule 2 and Rule 2A

2.1 Omitted Clauses in Rule 2

Certain provisions of Rule 2, which deals with definitions and interpretative elements for banking companies, have been omitted.

This removes outdated regulatory references and aligns the Rules with the amended Banking Regulation Act and modern supervisory practices.

2.2 Omission of Rule 2A

Rule 2A, which contained specific operational or reporting requirements, has also been omitted.

The omission reflects changes in statutory reporting models and simplifies compliance for banking companies by eliminating requirements that are no longer relevant under the updated regulatory framework.

3. Omission of Rule 15B

Rule 15B, which previously dealt with reporting or procedural obligations for banks, has been deleted entirely.

This removes antiquated provisions and reduces unnecessary administrative burden.

4. Amendments to Form VIII

Form VIII—used for reporting of certain statutory returns by banking companies—has been significantly revised.

4.1 Key Changes

Replaces references to “alternate Friday” with:

• “15th day of the month”, or
• “last day of the month”

This change aligns the form with modern accounting periods and the broader removal of fortnightly-based calculation systems.

Updates items relating to subsidiary banks and development financial institutions (DFIs)

These updates reflect structural changes in India’s financial sector, including:

• Merger or restructuring of subsidiary banks
• Transformation of DFIs into banks or other financial entities
• Removal of outdated institutional references

The revised Form VIII supports uniform and contemporary reporting formats for banking companies.

5. Amendments to Form X

Form X, which governs additional disclosures and reporting obligations, has also been updated.

5.1 Key Modifications

1. Omission of specified sub-items – Obsolete content and data fields that are no longer required under current RBI regulations have been removed.
2. Terminology updates

• • References to “Friday” are substituted with “day” or “last day of a month”
  • This change is consistent with the broader regulatory transition away from fortnightly reporting cycles.

These amendments ensure that reporting timelines in Form X are aligned with monthly or daily compliance frameworks, improving clarity and easing operational compliance.

6. Regulatory Intent

The amendments aim to:

• Modernise outdated statutory language
• Remove references that no longer match today’s supervisory environment
• Rationalise reporting timelines across banking legislation
• Align banking returns with standard monthly accounting practices
• Reduce administrative complexities for banks
• Support the transition away from legacy “alternate Friday” timelines after recent amendments to the Banking Regulation Act and RBI Act

7. Implications for Banking Companies

Banks must:

• Update internal reporting manuals and compliance workflows
• Revise automated reporting systems to reflect new dates (15th / last day of month)
• Ensure staff discontinuation of all “alternate Friday”-based computations
• Review and update documentation formats for Forms VIII and X
• Train compliance and finance teams on the revised procedures

Failure to update reporting processes could lead to incorrect filings or supervisory observations.

Click Here To Read The Full Notification

The post Govt. Amends Banking Regulation (Companies) Rules | Updates Forms VIII & X appeared first on Taxmann Blog.

source

Circular No. HO/38/30/12(1)2025 MIRSD SEC FATF, Dated 10.12.2025

1. Background

SEBI has issued amendments to the Master Circular on Know Your Customer (KYC) to streamline the re-KYC process for Non-Resident Indians (NRIs). The revision responds to industry feedback regarding practical challenges faced by NRIs when undergoing re-KYC due to location-based restrictions in digital onboarding and verification.

2. Relaxation of Physical Location Requirement

Earlier, digital KYC procedures required clients to be physically located in India during certain verification steps. SEBI has now relaxed this requirement for existing NRI clients undergoing re-KYC through digital mode.

2.1 What Changes?

• Existing NRIs can complete re-KYC digitally from outside India.
• The earlier condition that a client must be physically within India at the time of re-KYC will not apply to NRI clients.

This significantly improves convenience and reduces compliance friction for NRIs who cannot travel to India merely for KYC renewal.

3. Revised Para 51 – Geo-Tagging and System Checks Continue

Although the physical-presence requirement is relaxed, risk-mitigation controls remain mandatory.

Under the revised Para 51:

3.1 Geo-Tagging Remains Compulsory

• The system must capture GPS coordinates of the NRI client.
• These coordinates must match the Proof of Address (PoA) submitted.

3.2 Anti-Spoofing and IP-Verification Measures Required

• Regulated entities must ensure no spoofed, masked, or manipulated IP connections are used during re-KYC.
• Systems must be able to detect and prevent VPN masking or fake geo-location attempts.

3.3 Other KYC Validations Remain Unchanged

• Facial verification (where applicable)
• Document authentication
• System-driven checks mandated by SEBI and KRA

The intention is to allow flexibility without compromising security, authenticity, or anti-fraud safeguards.

4. Purpose and Regulatory Intent

SEBI’s modification aims to:

• Facilitate easier compliance for NRIs who face geographical constraints
• Maintain robust KYC integrity and fraud prevention controls
• Align regulatory practice with digital transformation trends
• Ensure that intermediaries can onboard and maintain NRI clients without disruption

This balances user convenience with risk management and supervisory oversight.

5. Implications for Market Intermediaries

REs (brokers, depositories, RTAs, RIAs, etc.) must:

• Update internal KYC workflows to remove the “must be in India” check for NRI re-KYC
• Continue geo-tagging and ensure GPS data matches PoA
• Implement tools to detect IP spoofing or VPN-based masking
• Train staff on revised requirements and update customer communication templates
• Modify backend KYC logic and reporting formats in line with changes to Para 51

6. Implications for NRI Clients

• Re-KYC can now be completed seamlessly from abroad
• No need for travel to India solely for verification
• Must ensure GPS-based address matches documentation during digital re-KYC
• Should avoid using VPNs during verification to prevent rejection

Click Here To Read The Full Circular

The post SEBI Eases Re-KYC for NRIs | Updates Geo-Tagging and KYC Controls appeared first on Taxmann Blog.

source

Deepak Kakkar, Sushil Sharma & Ayush Rawat – [2025] 181 taxmann.com 276 (Article)

Real Estate or Equity—Same Asset, Different Tax Fate. Why Classification Matters?

1. Introduction

The world of finance is full of complex interpretations and debatable classifications, and few issues are as enduring and contentious as distinguishing a business asset from a capital asset. This classification has significant implications across taxation, accounting, financial reporting, and business valuations. A misclassification can result in incorrect tax treatment, disallowance of deductions, or unintended capital gains, making it both practically important and technically complex.

At its core, the challenge arises because many assets possess dual characteristics—an asset used in business may also appreciate in value, while a capital asset may occasionally be deployed for business purposes. This overlap creates room for interpretation, dispute, and litigation. An asset may be purchased for business purposes, held like an investment, and later sold for a profit, making classification far from straightforward.

The tax implications of classification are significant. Business assets allow the assessee to claim expenses such as depreciation, repairs, and maintenance, reducing taxable income, whereas capital assets do not permit such deductions, with only capital gains taxed upon sale. As a result, assessee may prefer to treat assets as business assets to maximise deductions and reduce immediate tax liability. However, such preferences often trigger disputes with tax authorities, as aggressive classification without clear justification on intention, usage, and transaction characteristics can lead to scrutiny, reassessment, and litigation.

This ambiguity is further compounded by the Income Tax Act, which defines capital assets under Section 2(14) but does not formally define business assets. Business assets, on the other hand, are generally understood as assets used for carrying on a business or profession, such as stock-in-trade, machinery, or other operational assets.

This is where legal principles intersect commercial realities. Before examining the broader guidelines and judicial tests that help resolve classification disputes, it is essential to ground the discussion in two foundational statutory concepts:

• What qualifies as a “capital asset”, and
• How the term “business” is defined under the Act.

These statutory definitions form the starting point for any analysis, as they help differentiate between assets held with an intention to earn long-term appreciation and activities carried out with a profit-making motive in the ordinary course of trade.

2. Legal Framework

2.1 Capital Asset

As per the Section 2(14) of Income Tax Act,1961,”capital asset” means—

(a) property of any kind held by an assessee, whether or not connected with his business or profession.

(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).

However, some assets are excluded from the definition. These exceptions include: stock-in-trade, consumable stores, or raw materials held for business purposes; personal effects used by the taxpayer or their family for personal use (other than jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art); agricultural land located in rural areas (i.e., land outside specified municipal limits or population criteria); and certain bonds issued by the Central Government, such as Gold Bonds or Special Bearer Bonds. These exclusions ensure that assets held for business trading, daily personal use, or located in non-urban agricultural regions are not subjected to capital gains taxation under the Act.

2.2 Business

As per the Section 2(14) of Income Tax Act,1961,”business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.

Therefore, the definition of the term “capital asset” is very wide and any kind of property except those falling in the excluded category is a capital asset.

Click Here To Read The Full Article

The post Capital Asset vs Business Asset – Why Classification Matters in Taxation appeared first on Taxmann Blog.

source

Working Paper No. P-24029/34/2025-IPR-VII, Dated: 08.12.2025

1. Background

The Department for Promotion of Industry and Internal Trade (DPIIT) has constituted a Committee to examine the interface between Generative Artificial Intelligence (GenAI) and copyright law in India. Rapid adoption of AI models—particularly those trained using large datasets containing copyrighted material—has raised questions on legality, ownership, consent, liability, and compensation mechanisms.

Given the global debate on whether AI training constitutes fair use, infringement, or permitted data mining, the Committee has been tasked with reviewing the adequacy of India’s current copyright regime.

2. Scope of Examination

The Committee will assess:

• Whether the existing Copyright Act and related jurisprudence adequately address the use of copyrighted works in AI training
• The implications of:

1. 1. Text and data mining (TDM)
   2. Replicative output
   3. Derivative content generated by AI
   4. Attribution and authorship

• The need for new carve-outs, exceptions, or licensing mechanisms that can balance:

1. 1. Innovation incentives
   2. Copyright protection
   3. Commercial exploitation safeguards

The objective is to examine whether India’s legal framework provides sufficient clarity for creators, platform developers, dataset curators, and AI enterprises.

3. Need for Possible Legislative Amendments

The Committee has been asked to determine whether:

• Existing copyright exceptions, including those relating to research, transient storage, or fair dealing, are sufficient in the context of AI training
  or
• Legislative amendments, regulatory guidance, or model licensing frameworks are required to:

1. 1. Protect rights holders
   2. Enable lawful and scalable AI innovation
   3. Provide certainty to market participants

The review also covers ownership of AI-generated works, originality thresholds, and attribution responsibilities.

4. Working Paper Released for Consultation

As part of its consultative process, Part I of the Working Paper has been released for public and stakeholder feedback.

Stakeholders such as:

• Technology companies
• AI developers and research institutions
• Publishers, authors, and content creators
• IP lawyers, civil society bodies, and policy experts

are invited to submit comments to help shape the future regulatory and legislative position around generative AI and copyright compliance.

5. Policy Significance

The initiative aims to:

• Reduce uncertainty surrounding use of copyrighted material in large-scale dataset training
• Provide predictable legal norms for AI development and monetisation
• Strengthen creator rights and attribution safeguards
• Enable a balanced ecosystem that protects innovation without undermining original copyright

India’s approach may influence market models, licensing practices, and global data-sharing norms, given the increasing scale of AI development and cross-border technology operations.

Click Here To Read The Full Update

The post DPIIT Reviews Copyright Rules for Generative AI Training appeared first on Taxmann Blog.

source

Case Details: Pristine Industries Ltd., In re [2022] 142 taxmann.com 583 (AAR–RAJASTHAN)

Judiciary and Counsel Details

• J.P. Meena, Member (Central Tax) & M. S. Kavia, Member (State Tax)
• Rohit Jain, CA for the Applicant.

Facts of the Case

The applicant, a registered manufacturer of PP/HDPE woven sacks, initiated installation of a rooftop solar power generating plant of more than 620 kW on the roof of its factory for captive consumption through a work order covering design, supply, storage, civil work, erection, testing, and commissioning. It procured solar panels, transformers, meters, wiring, and related items, and treated the plant as plant and machinery to be capitalised. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the rooftop solar power generating plant, though immovable as it is fastened to structures attached to the earth, falls within ‘plant and machinery’ as defined in the explanation to Section 17(5) of the CGST Act/Rajasthan GST Act, which includes apparatus, equipment, and machinery fixed to earth by foundation or structural support while excluding land, building, telecom towers, and pipelines outside the factory premises. The authority held that Section 16 of the CGST Act/Rajasthan GST Act permits input tax credit subject to prescribed conditions and that the restriction in Section 17(5)(d) of the CGST Act/Rajasthan GST Act concerning construction of immovable property on own account does not apply to plant and machinery. It further held that the solar plant was used for captive generation in the manufacturing process and therefore the bar on blocked credit was not attracted. The authority concluded that input tax credit on inputs, capital goods, and input services used for setting up the plant is admissible subject to compliance with Section 16 and capitalisation requirements.

The post ITC Allowed on Rooftop Solar Plant Used for Captive Consumption | AAR appeared first on Taxmann Blog.

source

PR no. 2025-2026/1666; Dated: 09.12.2025

1. Regulatory Context

The Reserve Bank of India (RBI) has released a draft circular proposing enhanced disclosure requirements on transaction costs associated with foreign exchange (FX) transactions undertaken by retail users. The proposal is part of RBI’s ongoing efforts to improve transparency, pricing clarity and consumer protection in India’s retail FX market.

2. Previous Disclosure Framework (January 2024)

In January 2024, RBI mandated that Authorised Dealers (ADs) must:

• Provide mid-market mark/bid and ask price for:

1. 1. Foreign exchange derivative contracts, and
   2. Foreign currency interest rate derivative contracts

• Communicate this information to retail users before execution, and
• Include the same in the deal confirmation or term sheet

This ensured that retail market participants were able to view reference pricing benchmarks, helping them understand spreads and pricing outcomes more transparently.

3. Proposed Disclosure of Transaction Cost Components

Taking the transparency initiative further, the draft circular proposes that Authorised Dealers must mandatorily disclose all transaction cost elements for:

• Foreign exchange cash transactions, and
• Foreign exchange spot contracts,

offered to retail users

Transaction cost elements may include:

• Remittance fees
• Currency conversion charges
• Foreign exchange rate applied
• Margin or spread components
• Any additional charges or deductions embedded in the exchange rate or settlement amount

The requirement is aimed at enabling retail users to understand the true cost of transacting, rather than relying solely on headline conversion rates.

4. Scope and Target Users

The disclosure framework applies to retail market participants, including individuals and small enterprises, who often lack visibility into embedded spreads or cross-border remittance charges.

The obligation is placed on Authorised Dealers, i.e., banks and other RBI-permitted entities dealing in FX.

5. Market Consultation

RBI has sought public and industry feedback on the draft proposal.

• Comments are invited from banks and market participants
• Last date for submission – January 9, 2026

Stakeholder feedback will assist RBI in refining the disclosure design, operational format and system readiness expectations.

6. Regulatory Intent

The proposal aims to:

• Improve pricing transparency and fairness for retail FX customers
• Increase competitive market pricing and informed decision-making
• Reduce disputes and misunderstandings associated with hidden fees or spreads
• Strengthen trust in market conduct and supervisory oversight

The initiative also aligns with global regulatory practices that emphasise clear disclosure of FX transaction costs to non-institutional consumers.

7. Compliance Considerations for Authorised Dealers

ADs would be required to:

• Build system logic and display standards for transaction cost disclosures
• Provide pre-execution visibility of all fees and embedded charges
• Incorporate cost details into confirmations or payment summaries
• Train client-facing staff on communication protocols and disclosure norms
• Update documentation, product notes and platform interfaces

Failure to comply could lead to supervisory findings, customer disputes or disclosure breach penalties once implemented.

Click Here To Read The Full Press Release

The post RBI Proposes Mandatory FX Transaction Cost Disclosure for Retail Users appeared first on Taxmann Blog.

source

Case Details: Pravin Valya Malavkar vs. Srini Link [2025] 181 taxmann.com 142 (HC-Gujarat)

Judiciary and Counsel Details

• Mrs M.K. Thakker, J.
• Thakkar & Pahwa, Advs. for the Petitioner.
• Dipak R. Dave for the Respondent.

Facts of the Case

In the instant case, the petitioner-workman was terminated from service. The Labour Court passed an award directing the employer to reinstate the petitioner with continuity of service and 100 per cent back wages. On the employer’s challenge, the High Court modified the award to the extent of 50 per cent back wages.

The employer reinstated the petitioner and paid 50 per cent back wages calculated on the last drawn wages, which the petitioner accepted. The petitioner filed an application under Section 33C of the Industrial Disputes Act, 1947, seeking computation and recovery of back wages at Minimum Wages Act rates.

The Labour Court rejected the application on the ground that back wages had been paid as per the last drawn wages and, in the absence of any specific direction in the award to pay at Minimum Wages Act rates, such relief could not be granted under Section 33C of the Act.

It was noted that while granting relief of reinstatement, the Labour Court had not directed to give consequential benefits, nor had it specified that back wages were to be paid as per the Minimum Wages Act, the Labour Court was justified in declining the claim of the petitioner for minimum wages.

High Court Held

The High Court held that the leave encashment as well as bonus, even if said relief was to be given, would be granted at the time of retirement, but not by interpreting the award in terms of continuity of service, as the Reference Court granted no relief of consequential benefit.

Thus, the Labour Court was justified in denying relief, which the petitioner prayed for in the application under section 33C(2), and, therefore, the petition was to be dismissed.

List of Cases Referred to

• Dena Bank v. Kiritkumar T. Patel 1998 AIR SC 511 (para 7).

The post No Minimum Wages or Bonus When Reinstatement Order Gives No Consequential Benefits | HC appeared first on Taxmann Blog.

source