Author: inavatiq

1. Facts

Tech-Serve Solutions Limited (hereinafter referred to as “the Company”) provides integrated software implementation and annual maintenance services to corporate customers. During the financial year, the company entered into a contract with “Metro Infrastructure Authority”, a government-owned entity, to implement a customised enterprise management system, including one year of post-implementation support.

The total contract price is ₹12,00,000, payable within 60 days of installation. The company has historically entered into similar contracts with government and quasi-government customers. Although contracts specify fixed pricing, past experience indicates that final settlement amounts are frequently renegotiated due to budgetary approvals and administrative delays. In several previous contracts with similar customers, the company accepted reduced payments to secure timely collection. For the current contract, management expects to agree to a reduction of approximately ₹3,00,000 during settlement negotiations, based on past practice.

The company completed the installation of the system and raised an invoice for the full contractual amount. The contract price reflects the company’s standard pricing structure, and the company does not ordinarily offer post-sale discounts at contract inception.

However, Metro Infrastructure Authority is currently facing financial constraints and has a history of delayed payments to vendors. While the customer has acknowledged the liability, payment remains outstanding at the reporting date. Based on past recovery experience with financially stressed government customers, the company estimates that approximately 20% of receivables from such customers may ultimately not be recovered due to collection risk rather than pricing adjustments.

How should the company determine the amount of revenue to be recognised at the time of software implementation under Ind AS 115, particularly in assessing whether the expected reduction in consideration represents an implicit price concession affecting the transaction price or a credit loss to be recognised separately?

2. Relevant Provisions

Ind AS 115 – Revenue from Contracts with Customers

Para 9(e) of Ind AS 115

An entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met:

…

(e) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Para 51 of Ind AS 115

An amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, or other similar items. The promised consideration can also vary if an entity’s entitlement to the consideration is contingent on the occurrence or non-occurrence of a future event.

Para 126AA of Ind AS 115

An entity shall reconcile the amount of revenue recognised in the statement of profit and loss with the contracted price showing separately each of the adjustments made to the contract price, for example, on account of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, etc., specifying the nature and amount of each such adjustment separately.

Para 107 of Ind AS 115

If an entity performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, the entity shall present the contract as a contract asset, excluding any amounts presented as a receivable. A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer. An entity shall assess a contract asset for impairment in accordance with Ind AS 109. An impairment of a contract asset shall be measured, presented and disclosed on the same basis as a financial asset that is within the scope of Ind AS 109.

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Editorial Team – [2026] 183 taxmann.com 722 (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. Sri Lanka Introduces Revised Criteria and Tax Concessions for Strategic Development Projects

Sri Lanka’s Ministry of Finance has issued Regulations under the Strategic Development Projects Act, No. 14 of 2008 (originally published in Gazette No. 2474/66 dated 8 February 2026). The Regulations prescribe the eligibility conditions for recognition as a Strategic Development Project and specify the applicable tax concessions.

The eligibility framework is divided into three categories/sectors, with the corporate income tax holiday (exemption) periods as follows:

Category A – Infrastructure, Services & Utilities, and Tourism and Leisure (excluding casinos and any form of betting and gaming)

• 6-year holiday – Investment exceeding USD 50 million up to USD 150 million and creation of at least 100 local jobs.
• 8-year holiday – Investment exceeding USD 150 million up to USD 300 million and creation of at least 100 local jobs.
• 10-year holiday – Investment exceeding USD 300 million and creation of at least 100 local jobs.

Category B – Manufacturing

• 5-year holiday – Investment exceeding USD 50 million up to USD 100 million and creation of at least 250 local jobs.
• 8-year holiday – Investment exceeding USD 100 million up to USD 150 million and creation of at least 250 local jobs.
• 10-year holiday – Investment exceeding USD 150 million and creation of at least 250 local jobs.

Category C – Agriculture; Educational, Technological Establishments; and Information Communication Technology

• 5-year holiday – Investment exceeding USD 50 million up to USD 100 million and creation of at least 50 local jobs.
• 8-year holiday – Investment exceeding USD 100 million up to USD 150 million and creation of at least 50 local jobs.
• 10-year holiday – Investment exceeding USD 150 million and creation of at least 50 local jobs.

Projects that satisfy the prescribed eligibility conditions are also exempt from Customs Import Duty (CID), Value Added Tax (VAT), Ports and Airports Development Levy (PAL), and CESS (under the Sri Lanka Export Development Act) on the import of capital goods and construction materials during the project implementation period.

For this purpose, the “project implementation period” means the period commencing from the date specified in the agreement between the Board of Investment of Sri Lanka and the project enterprise and ending on the date of commencement of commercial operations as certified by the Board of Investment.

Source – The Strategic Development Projects Act, No. 14 of 2008

2. Hong Kong Budget 2026-27 – Key Tax Measures

On 25 February 2026, Hong Kong Financial Secretary Paul Chan presented the 2026-27 Budget, proposing several tax changes. Key measures include:

• A 100% reduction of salaries tax, personal assessment tax, and profits tax for YA 2025/26, capped at HKD 3,000 per case.
• Rates concessions for domestic and non-domestic properties for the first two quarters of 2026/27, capped at HKD 500 per property.
• Increase in basic and single parent allowance to HKD 145,000 and married person’s allowance to HKD 290,000.
• Child allowance raised to HKD 140,000.
• Higher allowances for maintaining dependent parents/grandparents and increased elderly residential care deduction ceiling to HKD 110,000.
• Stamp duty on residential properties above HKD 100 million increased to 6.5%.
• Expanded tax concessions for family offices, funds, REITs, Corporate Treasury Centres, and intra-group restructuring.
• Implementation of the Crypto-Asset Reporting Framework and revised Common Reporting Standard within two years.
• Introduction of preferential tax packages for targeted enterprises and enhanced concessions for the maritime sector.
• Refinement of IP tax regime and exploration of incentives for gold trading institutions.

Additionally, Hong Kong has implemented the Pillar Two global minimum tax, expected to generate about HKD 15 billion annually from 2027-28.

Source – Budget.gov

Click Here To Read The Full Article

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Case Details: Priti Builders vs. Deputy Commissioner of State Tax, Bally and Salkia Charge - [2026] 183 taxmann.com 407 (Calcutta)

Judiciary and Counsel Details

• Om Narayan Rai, J.
• Debasish Ghosh & Tanmay Hazra for the Petitioner.
• Ms Tanmoy Chakraborty & Saptak Sanyal for the Respondent.

Facts of the Case

The petitioner underwent a search and seizure at its business premises, with documents, books, and the CPU confiscated. Despite requesting copies of the seized records and the return of the CPU to prepare a defence, access was denied. A show cause notice (SCN) and personal hearing were issued, but the petitioner missed the hearing and reiterated the request in writing. The jurisdictional officer confirmed the demand without providing the materials or conducting a meaningful hearing, depriving the petitioner of a fair opportunity to contest. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that, under Section 74 read with Sections 67 and 75 of the CGST Act and the West Bengal GST Act, the denial of access to the seized documents and the CPU violated the principles of natural justice. The Court observed that the petitioner was unable to effectively contest the demand or pursue a proper appeal in the absence of these materials. Accordingly, the impugned order was not to be given effect and was to be treated as an additional SCN. The Court directed the authorities to supply the seized records or copies, including the CPU, and to continue the proceedings only after affording a meaningful personal hearing.

The post HC Orders Supply of Seized Records | Treats Order as SCN appeared first on Taxmann Blog.

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Case Details: New India Assurance Co. Ltd. vs. Rekha Chaudhary - [2026] 183 taxmann.com 680 (SC)

Judiciary and Counsel Details

• Aravind Kumar & Prasanna B. Varale, JJ.
• Salil Paul, Sahil Paul, Sandeep Dayal, Ms Kanupriya Mehta, Ms Jyoti, Advs. & Ms Manjeet Chawla, AOR for the Appellant.
• Ashish Pandey, AOR for the Respondent.

Facts of the Case

In the instant case, the deceased employee was a commercial driver employed by the respondent 4/employer. The deceased collapsed and died while driving the employer’s insured vehicle.

The Respondents 1 to 3, legal heirs of the deceased, filed a claim petition before the Commissioner. The Commissioner found an employer-employee relationship, held that death occurred during and in the course of employment, and fixed compensation at about Rs. 7.37 lakhs along with 12% interest from the date of the incident.

It was noted that the vehicle was covered by a valid commercial vehicle insurance policy issued by the appellant-insurance company. Further, the Commissioner allowed the respondent no. 4 to secure indemnification of compensation from the insurer and issued a show-cause notice to the respondent no. 4 proposing a penalty under Section 4A(3)(b) of the Employees’ Compensation Act, 1923, for default in payment within one month of the amount falling due.

Further, it was noted that, as the employer neither appeared nor replied, the Commissioner imposed a 35% penalty of about Rs. 2.58 lakhs on the employer for the delay without justification.

The claimants appealed to the High Court, seeking an enhancement of compensation and challenging the fixation of primary liability on the employer rather than on the insurer. The High Court declined enhancement but set aside the Commissioner’s orders to the extent they imposed primary liability on the employer and fastened liability for compensation, interest, and penalty on the appellant–insurer. Thereafter, an appeal was made before the Supreme Court.

Supreme Court Held

The Supreme Court observed that the liability to pay a penalty under Section 4A(3)(b) of the Employees’ Compensation Act, 1923, is solely on the employer and cannot be fastened upon the insurer.

Further, the Supreme Court observed that the High Court erred in directing the appellant-insurer to bear a penalty in addition to compensation and interest.

The Supreme Court held that the impugned order was to be set aside to the extent it imposed liability to pay a penalty on the appellant-insurer, and that said liability was to be fastened upon the employer.

List of Cases Reviewed

• Order of the Delhi High Court in F.A.O No. 147 of 2021 dated 21.05.2025 (para 25) set aside
• Ved Prakash Garg v. Premi Devi 1997 taxmann.com 2061 (SC)/1997 (8) SCC 1 (para 23) followed

List of Cases Referred to

• Ved Prakash Garg v. Premi Devi 1997 taxmann.com 2061 (SC) (para 10)
• Fulmati Dhramdev Yadav v. New India Assurance Co. Ltd. [2023] 9 taxmann.com 1546 (SC) (para 16)
• Sheela Devi v. Oriental Insurance Company Limited [2025] 4 taxmann.com 2014 (SC) (para 24).

The post Insurer Not Liable for Penalty Under Employees’ Compensation Act | SC appeared first on Taxmann Blog.

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Press Release No.14/2026, Dated: 26.02.2026

The Securities and Exchange Board of India (SEBI) has cautioned investors against unregistered entities offering ‘account handling’ services that promise risk-free profits in demat and trading accounts.

1. Modus Operandi of Unregistered Entities

SEBI has observed that certain individuals and entities are approaching investors with offers to manage their trading accounts and generate assured returns. These entities typically:

• Seek access to investors’ demat and trading account login credentials
• Execute trades on behalf of investors
• Claim a share in the profits generated
• Do not assume any responsibility for losses incurred

Such arrangements expose investors to financial risks, misuse of account credentials, and potential regulatory violations.

2. Risks to Investors

Investors who share their account access details with unregistered entities risk:

• Unauthorised trading and financial losses
• Misuse of personal and financial information
• Lack of legal recourse in case of disputes or losses
• Exposure to fraudulent or manipulative trading practices

SEBI has emphasised that promises of risk-free or guaranteed profits are misleading and should be treated with caution.

3. SEBI Advisory to Investors

SEBI has advised investors to:

• Not share login credentials of demat or trading accounts with any third party
• Deal only with SEBI-registered intermediaries such as brokers and investment advisers
• Use only authentic and verified trading applications
• Verify the registration status of intermediaries on SEBI’s official website before engaging their services

4. Conclusion

The advisory aims to protect investors from fraudulent account-handling schemes and to encourage engagement only with authorised and regulated intermediaries. Investors are urged to remain vigilant and avoid sharing sensitive account information with unregistered or unknown persons.

Click Here To Read The Full Circular

The post SEBI Warns Against ‘Account Handling’ Stock Market Scams appeared first on Taxmann Blog.

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Circular No. HO/ (79)2026-MIRSD-PODMMC; Dated: 26.02.2026

The Securities and Exchange Board of India (SEBI) has directed all regulated entities and their agents to prominently disclose their SEBI-registered name and registration number on social media platforms. The move aims to enhance transparency, strengthen investor awareness, and curb misleading or unauthorised market-related content.

1. Mandatory Display on Social Media Platforms

Regulated entities and their agents must ensure that:

• Their SEBI-registered name and registration number are clearly displayed on the home page of social media handles used for market-related communication.
• The registration details are also disclosed at the beginning of each securities market-related post or content published on social media platforms.

This requirement applies to all content relating to the securities market disseminated through social media.

2. Norms for Entities with Single SEBI Registration

Where an entity holds a single SEBI registration, the following must be ensured:

• The SEBI-registered name and registration number must be displayed on the home page of the social media handle.
• These details should appear prominently near the name of the handle used for hosting, broadcasting, publishing, uploading, or posting content.

3. Norms for Entities with Multiple SEBI Registrations

Where an entity holds multiple SEBI registrations, it must:

• Provide a weblink on the home page of the social media handle.
• The link should direct users to the intermediary’s official website listing all SEBI-registered names and registration numbers associated with the entity.

This ensures comprehensive disclosure while maintaining clarity for investors.

4. Applicability and Effective Date

The circular will come into force from 1 May 2026.

The disclosure requirements will apply to all securities market-related content uploaded, published, or shared on or after the effective date.

5. Objective of the Circular

The directive seeks to:

• Improve transparency and authenticity of market-related communications
• Help investors identify registered intermediaries
• Prevent misuse of social media by unregistered or impersonating entities
• Strengthen regulatory oversight in digital communications

Regulated entities and their agents are required to ensure full compliance with the disclosure norms within the prescribed timeline.

Click Here To Read The Full Circular

The post SEBI Mandates Registration Details Disclosure on Social Media appeared first on Taxmann Blog.

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Press Release no. 15/2026; Dated: 26.02.2026

The Securities and Exchange Board of India (SEBI) has issued a cautionary note highlighting instances of fraudsters sending fake notices demanding payment of outstanding Securities Transaction Tax (STT).

1. Modus Operandi of Fraudsters

SEBI has observed that fraudsters are:

• Circulating fake notices using forged SEBI letterheads
• Impersonating SEBI officials and its offices
• Creating and using fake or spoofed email IDs resembling those of SEBI officials
• Demanding payment of alleged outstanding STT amounts

These fraudulent communications are designed to mislead investors and extract money under the guise of regulatory compliance.

2. Risk to Investors

Unsuspecting investors are being deceived into believing these fraudulent communications and are transferring funds to unauthorised accounts, resulting in financial losses. SEBI has cautioned investors to remain vigilant and verify the authenticity of any such communication.

3. SEBI Clarification

SEBI has clarified the following:

• It does not issue notices to investors or entities for remittance of outstanding STT amounts.
• It does not coordinate with the Reserve Bank of India (RBI) for recovery or collection of STT through such notices.
• Any communication claiming otherwise should be treated as fraudulent.

4. Advisory to Investors

Investors are advised to:

• Exercise caution when receiving unsolicited notices or payment demands
• Verify communications claiming to be from SEBI through official channels
• Avoid transferring funds based on suspicious or unverified instructions

This advisory is aimed at protecting investors from financial fraud and ensuring awareness about impersonation and phishing attempts misusing SEBI’s name.

Click Here To Read The Full Press Release

The post SEBI Warns Investors Against Fake STT Payment Notices appeared first on Taxmann Blog.

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Circular No. DoR.GOV.REC.No.414/18.10.008/2025-26; Dated: 26.02.2026

The Reserve Bank of India (RBI) has issued a direction permitting the National Urban Co-operative Finance and Development Corporation Limited (NUCFDC) to undertake private placement of equity shares to more than 200 persons in a financial year.

This permission is restricted to placements made exclusively to:

• Urban Co-operative Banks (UCBs), and
• National Co-operative Development Corporation (NCDC),

subject to compliance with specified regulatory conditions.

1. Key Conditions Prescribed by RBI

The approval granted by RBI is subject to the following conditions:

1.1 Board-Approved Resource Planning Policy

NUCFDC must have in place a Board-approved policy for resource planning to ensure structured and prudent capital raising aligned with its operational requirements.

1.2 Restricted Offerees

The offer or invitation for private placement of equity shares must be made only to UCBs and NCDC. No other category of investors is permitted under this relaxation.

1.3 Compliance by UCBs

The offer document must clearly state that participating Urban Co-operative Banks (UCBs) are required to ensure compliance with all applicable statutory and regulatory requirements issued by the RBI.

1.4 Prohibition on Lending Against Own Shares

NUCFDC must not extend any loan, advance, or other financial accommodation against the security of its own shares.

1.5 End-Use of Funds

The proceeds raised through share capital under these guidelines must be utilised strictly for purposes consistent with the mandate of NUCFDC, as approved by the Reserve Bank.

1.6 Compliance with Securities Regulations

NUCFDC must ensure compliance with all applicable statutory and regulatory requirements relating to private placement of securities, including relevant corporate and financial regulations.

1.7 Quarterly Reporting to RBI

NUCFDC is required to submit a quarterly statement to the Department of Regulation, RBI (Central Office), within 15 days from the close of each quarter, detailing:

• The amount of equity raised
• The number and category of subscribers
• The subscription amounts

2. Regulatory Significance

This direction provides NUCFDC with operational flexibility in raising capital from co-operative sector institutions, while ensuring robust regulatory oversight, restricted investor participation, and transparency through reporting obligations.

Click Here To Read The Full Circular

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Case Details: Prajith Enterprises vs. State Tax Officer [2026] 183 taxmann.com 404 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• Sanskar Samdaria S for the Petitioner.
• Mrs K. Vasanthamala, Government Adv. for the Respondent.

Facts of the Case

The petitioner challenged the assessment order passed under Form GST DRC-07, which was preceded by a show cause notice (SCN). The impugned assessment had levied both a general penalty and a late fee for the delayed filing of returns under the CGST Act. It was submitted that a separate assessment order had already been passed for the same tax period, wherein a general penalty of Rs. 50,000 had been imposed, thereby resulting in duplication of penalty for the same tax period. It was contended that such a double imposition of penalty was impermissible. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that under Section 125 read with Section 47 of the CGST Act and the Tamil Nadu GST Act, imposing both a general penalty and a late fee for the same tax period was not permissible, as it created overlapping liability. It was observed that since two assessment orders had already been passed for the same tax period, the general penalty of Rs. 50,000 should be dropped. The liability was limited solely to the late fee, payable within 30 days. The Court concluded that, upon payment of the late fee, the impugned order was set aside, the recovery proceedings were to be dropped, and the appellate authority was directed to proceed to pass a final order on the merits.

List of Cases Referred to

• Ms Kandan Hardware Mart v. Asstt. Commissioner (ST) (FAC) [2026] 182 taxmann.com 632 (Madras) (para 6).

The post General Penalty and Late Fee for Same Period Not Permissible | HC appeared first on Taxmann Blog.

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Case Details: DG Anti Profiteering, Director General of Anti- Profiteering, DGAP vs. Prateek Infraprojects India (P.) Ltd. [2026] 183 taxmann.com 405 (GSTAT-NEW DELHI)

Judiciary and Counsel Details

• Anil Kumar Gupta, Technical Member

Facts of the Case

The applicant filed a reference alleging profiteering in respect of construction services supplied during the period from 01-07-2017 to 29-10-2018. The DGAP (Director General of Anti-Profiteering) submitted an initial investigation report, which was remanded for re-investigation by the High Court. The re-investigation found that the ITC-to-purchase value ratio post-GST had not increased compared to the pre-GST period, and no additional ITC benefit had accrued. The matter was accordingly placed before the GSTAT (Goods and Services Tax Appellate Authority).

GSTAT Held

The GSTAT held that DGAP’s re-investigation report was acceptable. The Court observed that, as the ITC-to-purchase value ratio had not increased post-GST, no additional ITC benefit was realised. Consequently, allegations of profiteering under Section 171 of the CGST Act and Delhi GSTAT were unsustainable. Therefore, the court concluded that there was no contravention of Section 171 and decided the matter accordingly.

The post No Profiteering Without Increase in ITC Ratio | GSTAT appeared first on Taxmann Blog.

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