Author: inavatiq

Circular eF.No. IFSCA-DSI/12/2025-Capital Markets, Dated: 12.02.2026

The International Financial Services Centres Authority (IFSCA) has issued a circular specifying the format of the net worth certificate to be submitted by:

• Global Access Providers (GAPs)
• Broker-dealers accessing global markets through GAPs

The circular also provides an indicative checklist for conducting annual audits of such entities.

1. Net Worth Certificate – Format and Certification

IFSCA has prescribed a standardised format for submission of the net worth certificate.

1.1 Certification Requirement

• The certificate must be certified by an independent member of the
  Institute of Chartered Accountants of India (ICAI)

1.2 Frequency and Timeline

• The net worth certificate must be submitted annually
• Deadline for submission: 30 September
• Applicable for the preceding financial year

This requirement ensures regular monitoring of financial soundness of regulated entities operating through the IFSC.

2. Annual Audit Requirement

The circular mandates that:

• Annual audit must be conducted by a peer-reviewed professional
• Eligible professionals include members of:

1. 1. Institute of Chartered Accountants of India (ICAI)
   2. Institute of Company Secretaries of India (ICSI)
   3. Institute of Cost Accountants of India (ICMAI)

Peer review status is required to ensure quality and reliability of the audit process.

3. Indicative Checklist for Annual Audit

IFSCA has provided an indicative audit checklist to guide professionals in conducting annual audits of GAPs and related broker-dealers.

The checklist is intended to:

• Ensure comprehensive verification of regulatory compliance
• Standardise audit procedures
• Enhance consistency in reporting and oversight

4. Regulatory Objective

The circular aims to:

• Strengthen financial and compliance oversight of GAPs
• Ensure standardised reporting of net worth
• Improve audit quality through peer-reviewed professionals
• Enhance transparency and supervisory effectiveness in IFSC

5. Key Takeaway

Global Access Providers and broker-dealers operating through IFSC must submit an annually certified net worth certificate by 30 September and undergo annual audits by peer-reviewed professionals, in line with the format and checklist prescribed by IFSCA.

Click Here To Read The Full Circular

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Case Details: Shree Bharat Motors Ltd. vs. Chief Commissioner of CT & GST, Odisha - [2026] 183 taxmann.com 248 (Orissa)

Judiciary and Counsel Details

• Harish Tandon, CJ. & Murahari Sri Raman, J.
• Rudra Prasad Kar, Sr. Adv. & Asit Kumar Dash, Adv. for the Petitioner.
• Sunil Mishra, Standing Counsel for CT for the Respondent.

Facts of the Case

The petitioner faced audit proceedings alleging non-reversal of ITC related to suppliers’ credit notes and excess ITC compared to Form GSTR-2A, while contending that ITC matched Form GSTR-2A and the reversal was netted off in Form GSTR-9, supported by the purchase register, reconciliation statements, and credit notes ledger. The adjudication order nonetheless raised a demand citing the absence of original credit notes. The petitioner filed a rectification application, asserting that reconciliations and portal data showed no excess ITC, but it was rejected without reasons, verification of portal figures, or a hearing, and the matter was placed before the High Court.

High Court Held

The High Court held that Section 161 of the CGST Act contemplates rectification of mistakes apparent on record and requires reasoned consideration of materials available before the authority. The Court observed that the record disclosed an exhaustive point-wise reply and an ITC reconciliation summary filed by the petitioner, which warranted verification before rejection of the rectification application. It was held that the order of rejection, founded solely on reference to the rectification provision without examining portal data or affording opportunity of hearing, suffered from legal infirmity. Accordingly, the rejection order was set aside.

The post HC Sets Aside ITC Rectification Rejection for Lack of Reasons appeared first on Taxmann Blog.

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Venkatesh Pani, J V Kodhandapani & K Chakrapani – [2026] 183 taxmann.com 346 (Article)

1. Background, Legislative Intent and Context

In the Budget Speech for 2026, the Hon’ble Finance Minister noted that under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“Black Money Act”), no penalty is leviable for non-disclosure of non-immovable foreign assets where the aggregate value is below Rs. 20 lakh, and proposed to extend immunity from prosecution in such cases with retrospective effect from 1 October 2024. The Memorandum explaining the Finance Bill, 2026 candidly acknowledges widespread legacy and inadvertent non-disclosures by small taxpayers, including ESOPs and RSUs earned during foreign employment, dormant foreign bank accounts of former students, savings and insurance policies of returning non-residents, social security accumulations, and assets held during overseas deputation. Information received under the Automatic Exchange of Information (AEOI) framework further evidences substantial non-compliance.

Against this backdrop, a time-bound disclosure scheme (“the Scheme”) is introduced to facilitate voluntary compliance through payment of tax or fee, coupled with limited immunity from penalty and prosecution under the Black Money Act. However, the design and mechanics of the Scheme raise significant interpretational, procedural and constitutional issues.

A transitional enforcement-backed disclosure window, using global data flows as leverage, aimed at converting non-compliance into revenue and regularisation before stricter action begins.

2. Revenue Orientation of a Compliance Scheme

Although styled as a compliance-facilitation measure, the Scheme is revenue-oriented in structure. It mandates tax at a flat rate of 30 per cent on undisclosed foreign income or assets, together with an additional levy equal to 100 per cent of such tax in specified cases. The effective fiscal burden often approaches 60 per cent of the asset value, without any provision for instalment or deferred payment. This structure raises doubts as to whether the Scheme genuinely encourages voluntary disclosure or primarily seeks accelerated tax collection.

3. Charging Provision and Scope of Declaration

Section 116 permits any person to make a declaration for any previous year in respect of income or assets referred to in section 117 where a return was not furnished, where assets or income were not disclosed in a furnished return, or where such income or asset has escaped assessment under section 147 of the Income-tax Act, 1961. While declaratory in form, the Scheme imports assessment-like elements by requiring explanation of sources and satisfaction of the Assessing Officer, thereby diluting its professed non-adjudicatory character.

4. Applicability to Residents, Non-Residents and RNORs

The definition of “assessee” extends the Scheme not only to residents but also to non-residents and not-ordinarily-resident individuals, provided they were residents either in the year of earning the income or in the year of acquisition of the foreign asset. This extension creates substantial confusion. Statutorily, disclosure of foreign assets in the return of income is required only for residents. Non-residents with no Indian income, or income below the basic exemption limit, are not otherwise required to file returns. Extending the Scheme to such persons indirectly imposes a disclosure obligation where none existed under the Income-tax Act.

Even among residents below the filing threshold, CBDT FAQs require filing of returns solely for foreign asset disclosure, failing which such persons are treated as defaulters. This position appears inconsistent with the Scheme’s stated objective of easing compliance for small taxpayers and warrants reconsideration.

5. Interaction with Return Filing and Remedial Provisions

Assessees who omitted disclosure may theoretically cure defects through belated returns under section 139(4), revised returns under section 139(5), or updated returns under section 139(8A). The FAQs are silent on whether an updated return cures the default of non-disclosure of foreign assets, particularly in light of the third proviso to section 139(8A), which bars updated returns where information under the Black Money Act has already been communicated. Section 116(b), however, appears to override this restriction by permitting declaration even where returns were furnished but assets were not disclosed. Clear guidance is therefore required on the preferred remedial route.

Click Here To Read The Full Article

The post [Opinion] Foreign Assets Disclosure Scheme 2026 | A Critical Appraisal appeared first on Taxmann Blog.

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THE INDUSTRIAL RELATIONS CODE (AMENDMENT) BILL, 2026; Dated: 10.02.2026

The Industrial Relations Code (Amendment) Bill, 2026 has been introduced in the Lok Sabha.

The Bill proposes amendments to the Industrial Relations Code, 2020, specifically to clarify the legal basis of repeal of certain earlier labour laws.

1. Proposed Amendment to Section 104(1)

The Bill seeks to substitute Section 104(1) of the Industrial Relations Code, 2020.

The amendment clarifies that the following enactments stand repealed:

• Trade Unions Act, 1926
• Industrial Employment (Standing Orders) Act, 1946
• Industrial Disputes Act, 1947

2. Clarification on Nature of Repeal

The proposed substitution makes it explicit that:

• The repeal of the above Acts operates by statutory mandate, and
• Not by delegated executive power

This clarification reinforces that the repeal flows directly from the legislative enactment of the Industrial Relations Code and does not depend on any separate executive notification beyond the commencement provision.

3. Effective Date and Retrospective Operation

The Bill provides that:

• The amendment shall be deemed to have come into force on 21 November 2025
• This aligns with the appointed date under Section 1(3) of the Industrial Relations Code, 2020

The retrospective deeming provision ensures legal continuity and removes any ambiguity regarding the status of the repealed enactments from the date of commencement.

4. Legislative Objective

The amendment seeks to:

• Remove interpretational uncertainty regarding repeal provisions
• Ensure legislative clarity in the transition from legacy labour laws to the consolidated Labour Codes
• Reinforce the statutory foundation of the repeal mechanism

5. Key Takeaway

The Industrial Relations Code (Amendment) Bill, 2026 strengthens the legal clarity surrounding the repeal of the earlier labour enactments by expressly affirming that the repeal operates through statutory authority, deemed effective from 21 November 2025.

Click Here To Read The Full Update

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NOTIFICATION NO. S.O. 700(E), Dated: 10.02.2026

The Central Government of India has amended its earlier delegation of powers relating to the allotment of Director Identification Number (DIN) under the Companies Act, 2013.

The amendment revises the authority responsible for exercising powers under Sections 153 and 154 of the Act.

1. Background – Sections 153 and 154 | DIN Allotment

• Section 153 mandates that every individual intending to be appointed as a director must apply for a Director Identification Number (DIN).
• Section 154 empowers the Central Government to allot such DIN upon receipt of application.

These powers are exercised through delegated officers.

2. Change in Delegated Authority

Earlier:

• The authority for allotment of DIN was vested in officers posted in the Office of the Regional Director at Noida.

Now:

• The powers have been delegated to officers in the Regional Director, Northern Region Directorate-I, Headquarters, New Delhi.

This represents an administrative reallocation of authority within the Ministry’s regional structure.

3. Effective Date

• The amendment is effective from 16 February 2026.

All applications and matters relating to DIN allotment from the effective date shall fall within the jurisdiction of the newly designated office.

4. Key Takeaway

The notification effects a jurisdictional shift in administrative authority for DIN allotment, transferring powers from the Regional Director’s office at Noida to the Northern Region Directorate-I at New Delhi, effective 16 February 2026.

Click Here To Read The Full Notification

The post Govt Shifts DIN Allotment Powers to RD Northern Region-I appeared first on Taxmann Blog.

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Notification No. F.No. 30/03/2016-Insolvency; Dated: 11.02.2026

The Central Government of India has appointed Ashutosh Mishra, Additional Secretary, as an ex officio member of the Insolvency and Bankruptcy Board of India (IBBI).

1. Representation of Ministry of Law and Justice

Shri Ashutosh Mishra will serve on the IBBI Board as the representative of the Ministry of Law and Justice

The appointment ensures continued representation of the Ministry on the Board in accordance with the statutory framework governing IBBI.

2. Nature of Appointment

• The appointment is in an ex officio capacity
• The membership is linked to the office held by the appointee (Additional Secretary)
• It reflects inter-ministerial representation within the regulatory structure of IBBI

3. Regulatory Context

The IBBI is the statutory regulator responsible for implementing and overseeing the insolvency framework under the Insolvency and Bankruptcy Code, 2016, and its Board composition includes representatives from key ministries and regulatory authorities.

4. Key Takeaway

The appointment of Shri Ashutosh Mishra as an ex officio member strengthens the Ministry of Law and Justice’s representation on the IBBI Board, ensuring coordination and oversight within India’s insolvency regulatory framework.

Click Here To Read The Full Notification

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Case Details: Srikant Das vs. Joint Commissioner of State Tax [2026] 182 taxmann.com 867 (Orissa)

Judiciary and Counsel Details

• Harish Tandon, CJ. & Murahari Sri Raman, J.
• Pranaya Kishore Harichandan, Adv. for the Petitioner.
• Sunil Mishra, Standing Counsel (for State CT & GST) for the Opposite Parties.

Facts of the Case

The petitioner was a works contractor who had ceased business and did not possess any GST registration, yet the assessing officer generated a temporary GSTIN and issued ASMT-14 initiating assessment proceedings under Section 63 of the CGST Act, based on data indicating turnover and returns, and passed an ex parte order treating the petitioner as an unregistered person. The petitioner remained unaware of the proceedings and did not participate, and the appellate authority dismissed the appeal and confirmed the demand. The petitioner filed a writ petition challenging both the assessment order and the appellate affirmation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the assessment and appellate orders suffered from a fundamental error of fact, as the standing counsel admitted that the assessment was based on mistaken identity, the returns and turnover data relied upon pertained to another registered person bearing an identical name. It was observed that the assessment under Section 63 could not be sustained when the basic premise of the proceedings was conceded to be incorrect, and the appellate order confirming the demand likewise lacked legal validity. Consequently, the appellate orders were quashed, holding that the proceedings under Section 63, read with Section 107 of the CGST Act and the Odisha GST Act, were vitiated by mistaken identity, and the writ petition was allowed.

The post GST Assessment Quashed Due to Mistaken Identity | HC appeared first on Taxmann Blog.

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Case Details: Sahara India Ltd vs. Income-tax Appellate Tribunal [2026] 183 taxmann.com 179 (Delhi)

Judiciary and Counsel Details

• Dinesh Mehta & Vinod Kumar, JJ.
• Percy J. Pardiwala, Sr. Adv., Satyen Sethi, Arta Trana Panda, Sanjeeva Ku. Gupta & Naresh Kapila, Advs. for the Petitioner.
• Ruchir Bhatia, SSC, Anant Mann, Pratksh Gupta, JSCs & Ms Lopamudra Mahapatra, Adv. for the Respondent.

Facts of the Case

The assessee had filed an appeal before the Tribunal, Lucknow Bench, against an order passed by the Commissioner (Appeals). Pursuant to a notice issued under section 127(2), the cases of the Sahara Group pending before various authorities were transferred to Delhi for administrative convenience. Consequently, the President of the Tribunal, in exercise of powers under rule 4 of the Income-tax (Appellate Tribunal) Rules, transferred the assessee’s appeal from the Lucknow Bench to the Delhi Bench.

Thereafter, the Delhi Bench dismissed the appeal as well as the corresponding cross-objection on the ground that it lacked territorial jurisdiction to hear and decide the matter, while granting liberty to the parties to file fresh appeals before the Lucknow Bench. Aggrieved, the assessee filed writ petitions before the Delhi High Court challenging the dismissal of the appeals.

High Court Held

The High Court held that the Delhi Bench was fully aware that the appeals had been transferred pursuant to the President of the Tribunal’s administrative order. It held that once a matter is transferred from one Bench to another, no statutory authority, including the Tribunal, can overturn such an administrative order except a competent court examining its legality.

The Court further held that even if the Delhi Bench was of the view that it lacked territorial jurisdiction, it ought to have placed the matter before the President for appropriate directions, rather than dismissing the appeals and directing the parties to institute fresh proceedings. Such action amounted to setting the President’s administrative order at nought and was unsustainable in law.

Accordingly, the High Court set aside the orders passed by the Tribunal and restored the matters to the file of the Delhi Bench to be decided on merits. The writ petitions were allowed in favour of the assessee.

List of Cases Reviewed

• Pr. CIT v. ABC Papers Ltd. [2022] 141 taxmann.com 332/289 Taxman 150/447 ITR 1 (SC) (para 19) Distinguished.

List of Cases Referred to

• Pr. CIT v. ABC Papers Ltd. [2022] 141 taxmann.com 332/289 Taxman 150/447 ITR 1 (SC) (para 7).

The post Delhi ITAT Had No Power to Dismiss Transferred Appeal | HC appeared first on Taxmann Blog.

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The Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) has issued a Practitioner’s Guide on Drafting of Modified Opinions in Independent Auditor’s Reports.

The Guide is intended to assist auditors in effectively drafting modified opinions in accordance with applicable auditing standards.

1. Coverage Under SA 705 (Revised)

The Guide focuses on reporting requirements under SA 705 (Revised) – Modifications to the Opinion in the Independent Auditor’s Report.

It provides practical guidance on drafting:

• Qualified Opinions
• Adverse Opinions
• Disclaimer of Opinions

The objective is to ensure that modifications are expressed clearly, appropriately, and in full compliance with the Standards on Auditing.

2. Key Features of the Guide

2.1 Practical Guidance

• Step-by-step considerations for determining the nature of modification
• Guidance on evaluating materiality and pervasiveness
• Clarification on structure and placement of modified opinion paragraphs

2.2 Illustrative Formats and Suggested Wording

• Model formats for different types of modified opinions
• Suggested wording aligned with SA 705 (Revised)
• Illustrations covering common practical scenarios

These examples aim to enhance consistency in reporting across audit engagements.

3. Continuity with Earlier Implementation Resources

The Practitioner’s Guide builds upon earlier implementation resources issued by ICAI and integrates practical experience gained in applying SA 705 (Revised).

It serves as a complementary reference to the Standards rather than a substitute.

4. Nature of Illustrations and Professional Judgment

The AASB has clarified that:

• The examples provided in the Guide are illustrative in nature
• They do not replace professional judgment
• They do not override the mandatory requirements of the Standards on Auditing

Auditors remain responsible for applying professional judgment based on the facts and circumstances of each engagement.

5. Relevance for Practitioners

The Guide is particularly useful for:

• Statutory Auditors of companies
• Audit practitioners dealing with reporting complexities
• Engagement partners and quality reviewers
• Audit trainees and professionals seeking clarity on modified reporting

6. Key Takeaway

The Practitioner’s Guide strengthens audit quality by providing structured and practical support for drafting modified opinions under SA 705 (Revised), promoting clarity, consistency, and compliance in auditor reporting.

Click Here To Read The Full Story

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Editorial Team – [2026] 183 taxmann.com 345 (Article)

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. 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. PCAOB Issues Inspection Reports for 10 Global Audit Firms Across Multiple Jurisdictions

The Public Company Accounting Oversight Board (PCAOB) has released 10 new inspection reports covering audit firms in the Netherlands, Greece, China, Thailand, Colombia, Italy, and the United States, including firms affiliated with EY, PwC, Forvis Mazars, and other mid-sized networks. The inspections relate to selected issuer audits and assess compliance with PCAOB auditing and quality control standards.

Across the reports, the PCAOB identified instances where firms failed to obtain sufficient appropriate audit evidence in key risk areas such as revenue recognition, accounting estimates, internal control over financial reporting (ICFR), and other significant judgmental areas. In certain cases, the Board also reported quality control deficiencies, indicating areas requiring strengthening in engagement supervision, monitoring, and firm-level quality management systems.

These inspection findings reinforce the PCAOB’s continued focus on audit quality and global oversight of registered firms auditing issuers accessing U.S. capital markets. The reports provide important insights for audit committees, investors, and practitioners regarding recurring themes in audit deficiencies and areas warranting heightened professional skepticism and documentation rigor.

Source – Public Company Accounting Oversight Board

Click Here To Read The Full Article

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