Notification No. F. No. IBBI/2025-26/GN/REG133., Dated 22.12.2025

For years, the Indian insolvency landscape has wrestled with a ‘shadow’ problem – Who is really behind the wheel? While the Insolvency and Bankruptcy Code (IBC) was designed to rescue distressed assets, it occasionally faced the risk of being gamed by opaque structures or ineligible entities hiding behind complex layers of shell companies. Without knowing the ‘Ultimate Beneficial Owner’ (UBO), the system remained vulnerable to back-door entries by unscrupulous promoters or entities that shouldn’t legally be at the table.

To address these gaps in accountability and eligibility, the Insolvency and Bankruptcy Board of India (IBBI) issued a critical update on December 22, 2025. The Seventh Amendment Regulations, 2025, marks a significant shift toward absolute transparency in the resolution process.

1. The Core Mandate – What has Changed?

The amendment introduces two mandatory requirements for every resolution plan submitted under Regulation 38:

• The Beneficial-Ownership Statement – Resolution applicants must now provide a detailed statement disclosing all natural persons who ultimately own or control the applicant. This includes a complete map of the shareholding structure and the jurisdiction of every intermediate entity involved.
• Section 32A Eligibility Affidavit – Applicants must provide a formal affidavit stating whether they are eligible for the benefits of Section 32A of the Code. This section typically provides immunity to the corporate debtor and its assets from prior offenses, provided there is a change in management to an unrelated party.
  

  2. Impact – Why This Matters

This amendment isn’t just a paperwork exercise; it is a strategic move to fortify the integrity of the IBC.

1. Stripping Away the Corporate Mask – By demanding the details of the ‘natural persons’ at the top of the chain, the IBBI is effectively ending the era of anonymous bidding. Resolution Professionals (RPs) and the Committee of Creditors (CoC) can now see exactly who is funding the rescue, ensuring that the spirit of Section 29A (which bars certain ineligible persons from bidding) is upheld.
2. Jurisdictional Clarity – Requiring the disclosure of jurisdictions for intermediate entities is a direct hit at tax havens and ‘round-tripping’. It allows regulators to track if funds are being routed through questionable corridors, bringing the IBC in line with global Anti-Money Laundering (AML) standards.
3. Streamlining Section 32A Immunity – The requirement for a specific affidavit regarding Section 32A forces applicants to be upfront about their legal standing. This prevents future litigation where the ‘clean slate’ principle might be challenged because the new management was secretly related to the old, defaulting promoters.

3. Conclusion

With these regulations coming into force immediately upon their publication in the Official Gazette, the IBBI has sent a clear message – The privilege of acquiring a distressed asset comes with the price of total transparency. For investors, this means more due diligence; for the Indian economy, it means a cleaner, more robust insolvency framework.

Click Here To Read The Full Notification

The post IBBI Mandates Beneficial Ownership and Section 32A Disclosure in Resolution Plans appeared first on Taxmann Blog.

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CA Aakansha Tuteja & Vedansh Gupta – [2025] 181 taxmann.com 814 (Article)

“Your money may not talk but if it is unexplained the department will make it sing”

1. Introduction

Traditionally, income means any money arising out of known source like business, salary, or investments. But this leaves a gap that what if a person is found with cash, assets or heavy spending that cannot be traced to any source? If the law ignored such cases then the concealed wealth would easily escape taxation. To prevent this, the legislature had introduced “deeming fictions”. The sections 68 to 69D of ITA, 1961 deal with such unexplained income, investments, assets, and expenditure. The logic is simple that – if you have it and cannot explain it, it is taxable. The burden of proof lies entirely on the assessee, and the law imposes higher tax rates on such deemed incomes to discourage evasion.

The Income Tax Act, 2025 makes a wild card entry, assented to by the President on 21st August, 2025, introduced significant changes to such deeming fictions i.e. Section 68 to 69D of the ITA 1961. These provisions have been the most litigative provisions and with the enactment of the new act these provisions have undergone substantial restructuring.

This article is structured as a journey, which will first take you to the relevant provisions under the old law, then providing a comparative overview of the restructuring done, and finally taking through the key changes brought in by the Income-tax Act, 2025.

So let’s start with what these provisions said as per the ITA, 1961:

2. Section 68 (Cash Credits)

Where any sum is found credited in the books and the explanation offered by assessee is not satisfactory in the opinion of the AO, such sum may be charged to income-tax as income of that previous year.

3. Section 69 (Unexplained Investments)

If the assessee has made investments not recorded in the books of account and doesn’t offer satisfactory explanation to AO, the value of investments may be deemed income for that financial year.

4. Section 69A (Unexplained Money)

Unrecorded money, bullion, jewellery, or valuables found in an assessee’s ownership can be taxed as deemed income if the source of acquisition isn’t satisfactorily explained.

5. Section 69B (Investments Not Fully Disclosed)

If actual amount spent on investments, bullion, jewellery, or valuables exceeds the amount recorded in books and the difference can’t be satisfactorily explained, the excess may be treated as deemed income.

6. Section 69C (Unexplained Expenditure)

If an assessee incurs any expenditure but can’t satisfactorily explain the source of such expenditure, such expenditure may be deemed to be income for that financial year.

7. Section 69D (Borrowing or Repayment on Hundi)

Any amount borrowed or repaid on a hundi otherwise than through an account payee cheque is deemed income of the borrower for that financial year.

Click Here To Read The Full Article

The post [Opinion] Unexplained Income – Sections 68-69D Under ITA 1961 vs ITA 2025 appeared first on Taxmann Blog.

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Case Details: Shriyaa Enterprises vs. State Tax Officer - [2025] 181 taxmann.com 655 (Bombay)

Judiciary and Counsel Details

• M.S. Sonak & Advait M. Sethna, JJ.
• Keval Shah for the Petitioner.
• Himanshu Takke, Amar Mishra, AGPs & Siddharth Chandrashekhar for the Respondent.

Facts of the Case

The petitioners challenged the cancellation of their registration by the jurisdictional officer under the CGST Act on the ground of non-filing of returns for a continuous period of six months. It was submitted that one petitioner had undergone a cardiology-related medical procedure. At the same time, the other faced severe financial constraints, resulting in the non-filing of returns within the prescribed time. It was affirmed that they were ready and willing to discharge the entire tax dues, along with applicable interest and penalties, for the relevant periods within 15 days from the date of intimation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the explanations offered by the petitioners for non-filing of returns did not appear to be mala fide or unreasonable, particularly since the default periods were proximate to and overlapped with the COVID-19 pandemic. The Court submitted that there were no allegations of unlawful activity or revenue fraud by the petitioners. The Court, upon construing Section 29 of the CGST Act held that registration may be restored where sufficient cause exists and compliance is undertaken. It was directed the cancellation orders shall be quashed.

List of Cases Reviewed

• Azaria corp LLP v. Deputy Commissioner of State Tax [2025] 178 taxmann.com 618/112 GST 166 (Bombay) (Para 13) followed

List of Cases Referred to

• Azaria corp LLP v. Deputy Commissioner of State Tax [2025] 178 taxmann.com 618/112 GST 166 (Bombay) (para 6).

The post GST Registration Restored for Non-Malafide Return Defaults | HC appeared first on Taxmann Blog.

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The Prevention of Money Laundering Act, 2002 is a special law enacted to prevent money laundering, prohibit the use of proceeds of crime, and provide for attachment, confiscation, and punishment in respect of property derived from criminal activities. It seeks to combat the conversion of tainted or illegal money into legitimate assets by prescribing criminal liability, civil measures such as attachment and confiscation of property, and regulatory obligations on reporting entities to detect and report suspicious financial transactions.

Table of Contents

1. Need for Special Act on Money Laundering
2. Implementation of Prevention of Money Laundering Act, 2002
3. Scheme of the Prevention of Money Laundering Act
4. Provisions for Prevention of Money Laundering in the Act
5. Definition of ‘Money Laundering’

Check out Taxmann's Money Laundering Law Manual which is a definitive one-stop compendium on the PMLA 2002, including allied rules, notifications, and amendments. Edited by Taxmann, it pairs a section-wise annotated Act with the latest RBI KYC Directions 2016 and a consolidated set of rules and regulations. An expert digest of landmark Supreme Court and High Court rulings distils judicial trends, making complex AML provisions more accessible. Five divisions—Guide, Act, Rules, Notifications, Cases—feature cross-references and subject indexes for effortless navigation. A must-have desktop reference for litigators, compliance officers, academics, and regulators who need quick, authoritative guidance on India's AML regime.

1. Need for Special Act on Money Laundering

Money is generated in a very large scale due to crimes. These crimes cover trade in narcotics, smuggling, trade in banned/prohibited articles, antics, corruption, counterfeiting currency, gambling, trade in prohibited arms/ammunition, selling national secrets etc.

This money is required to be converted into untainted money so that it can be used in big way, as such huge quantum of money cannot be transferred and used without banking channels.

In common terminology, money laundering is understood as converting black money or Number Two money into white money or Number One money.

In brief, converting tainted money into untainted money is called ‘money laundering’.

‘Laundering’ is to switch black money or dirty money into clean money. ‘Clean money’ means money coming from known or legal sources, while ‘dirty money’ means money coming from illegal activities.

As per sub-committee on Narcotics and Terrorism of US Senate Foreign Relations Committee, ‘Money Laundering’ is the conversion of profits from illegal activities into financial assets which appear to have legitimate origins.

As per definition adopted in Interpol General Secretariat Assembly in 1995, money laundering is any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.

Loss of tax revenue is also involved but comparatively that is minor issue.

The major issue is that the tainted money is used for funding terrorist activities. This problem has become more acute in many countries, including India, as our neighbouring countries themselves are involved in such activities.

The menace is at international level at a much larger scale.

One way to prevent serious crime is to make it difficult to convert black money into white money.

General Assembly of United Nations adopted a political declaration in June 1998, calling upon member States to adopt national money laundering legislation and programme. The present ‘Prevention of Money Laundering Act’ is passed to implement the UN resolution.

UN Security Council Resolution 1373 of 28-9-2001 empowers Security Council to enforce terms of UN Convention for Suppression of the Financing of Terrorism. The convention was proposed in 1999 and became effective from 10-4-2002.

European Union had issued new Money Laundering Directive in 2001 to amend the 1991 directive.

1.1 Why the Term ‘Laundering’

General impression is that ‘money laundering’ term is used as it converts black money into white money. It may be so, but that is not the origin of the word ‘money laundering’.

There is interesting history behind the word ‘laundering’. Al Capone, notorious mafia in USA, obtained lot of money from criminal enterprises. He established laundry machines all over USA at various public places. The machines could be used by public by putting coins.

Since this laundry business was a cash business, he was able to covert his cash into legitimate earnings and hence the name ‘money laundering’.

1.2 Process of Money Laundering

Money laundering involves three stages:

1. Placement (of hot money in financial system or retail economy)
2. Layering (separating money from its source through series of financial transactions i.e. concealing source of ownership of funds by creating layers of transactions to disguise audit trail and provide anonymity. It is now comparatively easy due to electronic funds transfer) and
3. Integrating (of hot money with legitimate money. Money is assimilated with other legitimate assets).

Popular places of money laundering are stock markets, agricultural products (as there is no income tax on agricultural income and transactions are mostly on cash basis), real estate, property market, gold and precious metals, high value consumer goods, bogus imports/exports etc.

Creating of bogus companies, showing loans or investments, false export-import invoices etc. are various methods adopted. The transactions are so large that transactions have to be routed through Banks, Financial Institutions, intermediaries etc.

1.3 Rogue Countries

The menace of money laundering has increased almost beyond control as Governments of some countries like Nigeria, Pakistan, Afghanistan etc. are themselves involved and are supporting money laundering activities and terrorism. Such rogue countries make the control over money laundering very difficult.

1.4 Rogue Banks

Like rouge countries, there are rogue banks also, which support money transfers through questionable means.

In our own country, it is widely believed that Jammu and Kashmir Bank was involved in activities of such money transfers, which had questionable origin. Of course, there are many such banks in India with different degree of ‘roughness’.

2. Implementation of Prevention of Money Laundering Act, 2002

The ‘Prevention of Money Laundering Act, 2002’ was passed on
17-1-2003. The Act was notified and became effective from 1-7-2005.

Directorate of Financial Intelligence Unit, India (FIU-IND), under Ministry of Finance is empowered to implement part of the Act, relating to collecting and processing financial intelligence.

Directorate of Enforcement under FEMA is also empowered to exercise various powers under Prevention of Money Laundering Act, 2002 in respect of confiscation, arrest, punishment etc.

2.1 Amendments to Prevention of Money Laundering Act

The Prevention of Money Laundering Act has been amended from time to time. Latest amendments are made on 1-8-2019 through Finance (No. 2) Act, 2019.

The changes made w.e.f. 1-8-2019 is summarised below:

• Definition of ‘intermediary’ amended to exclude sub-broker – section 2(n) amended
• Definition of ‘person carrying on designated business or profession’ has been amended to include Inspector General of Registration and exclude Registrar and Sub-Registrar appointed under Registration Act – section 2(sa) amended
• Definition of ‘offence of money laundering’ widened to include knowingly concealment, possession, use, projecting/claiming as untainted money etc. It is also clarified that this is a continuing offence – section 3 amended
• Responsibility of reporting entity widened to undertake enhanced diligence in respect of specified transactions beyond prescribed limit, not to undertake suspicious transactions, monitor suspicious specified transactions and keep record of such transactions and their KYC for five years – section 12AA inserted
• Provision of carrying out search of premises only after forwarding a report to Magistrate has been omitted. Thus, search of can be made by authorised officer directly – section 17 amended
• Provision of carrying out search of a person only after forwarding a report to Magistrate has been omitted. Thus, search of a person can be made by authorised officer directly – section 18 amended
• Authority can close complaint even after Special Court has taken cognizance, if Authority finds that no offence has been made out – proviso to section 44(1)(b)
• Trial under scheduled offence and offence under Prevention of Money Laundering Act will be independent. It will not be joint trial – Explanation (i) to section 44(1).
• Subsequent complaint can be added to original complaint is same trial if further evidence found – Explanation (ii) to section 44(1).
• Offence under Prevention of Money Laundering Act is cognizable and non-bailable. Empowered Officer can arrest without warrant – Explanation to section 45(2) [This is given retrospective effect as drafting of section 45 was faulty].
• Formation of inter-ministerial coordination committee for inter-departmental and inter-agency coordination.

3. Scheme of the Prevention of Money Laundering Act

Money Laundering basically is knowingly dealing with proceeds of crime, directly or indirectly.

The Act provides both for civil and criminal liability.

3.1 Criminal Liability under Prevention of Money Laundering Act

Crime which results in tainted money is a separate offence
under various laws as specified in Schedule to Prevention of Money Laundering Act. These offences are punishable under those Acts. The punishment is to the person/s who is/are involved in actually committing that offence.

The offence as specified in section 4 of Prevention of Money Laundering Act is a separate offence. The punishment under section 4 of Prevention of Money Laundering Act is not only to those who are actually involved in dealing with tainted money but also on those who are knowingly involved, directly or indirectly, in dealing with proceeds of crime.

This is a criminal offence, which will be tried by special courts designated for this purpose under section 2(z) of Prevention of Money Laundering Act. The trial will be both for charges under the specific Act which is a crime and also offence of money laundering under Prevention of Money Laundering Act. However, it is not ‘joint trial’.

The Special Count is Court of Sessions which is designated as special court under section 43 of Prevention of Money Laundering Act.

Appeal against decision of Special Court lies with High Court as per powers under Code of Criminal Procedure – section 47 of Prevention of Money Laundering Act.

3.2 Civil Liability i.e. Confiscation of Tainted Property

In addition to criminal liability, the property involved in money laundering can be attached and frozen by Central Government and later confiscated.

The procedure is as follows.

Order of provisional attachment or freezing will be issued by Director, Joint Director or Deputy Director empowered under Prevention of Money Laundering Act (who is empowered under the Act) for upto 180 days – section 5(1) of Prevention of Money Laundering Act.

The director will send copy of order of provisional attachment or freezing of assets to Adjudicating Authority – section 5(2) of Prevention of Money Laundering Act.

The procedure to be followed and the forms to be used have been specified in Prevention of Money Laundering (the Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in respect of Survey, to the Adjudicating Authority and its Period of Retention) Rules, 2005.

Adjudicating Authority is appointed under section 6(1) of Prevention of Money Laundering Act.

Final order of attachment or freezing will be issued by Adjudicating Authority under section 8(3) Prevention of Money Laundering Act. This order of seizure or freezing continues till Special Court disposes of the criminal matter.

Appeal against order of Adjudicating Authority will lie before Appellate Tribunal constituted under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 [SAFEMA] – section 26(1) of Prevention of Money Laundering Act.

It is not necessary to wait till appeal period is over to commence proceedings with attachment as order passed by Adjudicating Authority is just like a decree of civil court, which becomes executable moment it is drawn – Syed Akeel Shah v. Directorate of Enforcement (2023) 175 SCL 494 = 145 taxmann.com 532 (J&K and Ladakh HC DB).

Appeal against order of Appellate Tribunal lies before High Court both on question of law and facts – section 42 of Prevention of Money Laundering Act.

3.3 Order of Confiscation by Special Court

After conclusion of Trial of accused, if Special Court finds that offence of money laundering has been committed, it (special court) shall order that property involved in money laundering or which has been used for money laundering, shall be confiscated – section 8(5) of Prevention of Money Laundering Act.

After confirmation of order, some persons may have claims in respect of such confiscated property, if they had acted in good faith but suffered quantifiable loss. Such claims should apply to Special Court. The procedure to be followed has been specified in Prevention of Money Laundering (Restoration of Confiscated Property) Rules, 2016.

After order of confiscation by Special Court, the property shall vest absolutely in Central Government – section 9 of Prevention of Money Laundering Act.

If after conclusion of Trial, if Special Court finds that offence of money laundering has not been committed, it (special court) shall order release of property – section 8(6) of Prevention of Money Laundering Act.

4. Provisions for Prevention of Money Laundering in the Act

Though the Act talks about ‘prevention’ of Money Laundering, actually, there were very few provisions for ‘preventing’ money laundering.

The Prevention of Money Laundering Act mainly provided for civil and criminal punishments in respect of money laundering after the offence is already committed, which is only a deterrent to commit crime.

Provision for informing suspicious transactions was contained only in rule 8 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

However, now section 12AA of Prevention of Money Laundering Act has been inserted to cast responsibility of ‘reporting entity’ to undertake enhanced diligence in respect of specified transactions beyond prescribed limit, not to undertake suspicious transactions, monitor suspicious specified transactions and keep record of such transactions and their KYC for five years.

In addition, the Prevention of Money Laundering Act casts responsibility on ‘reporting entities’ (like banking companies, financial institutions, intermediaries and others) to furnish information. They have to inform all suspicious transactions to Director, Financial Intelligence Unit [FIU-IND], under Ministry of Finance.

The Act provides for KYC norms (Know Your Customer) to ensure identity of their customers, to ensure that they are genuine, identifiable and traceable.

The ‘reporting entity’ is required to undertake ‘client due diligence’ under rule 9 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

5. Definition of ‘Money Laundering’

The related definitions are as follows.

Money Laundering – Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

Explanation – (i) For the removal of doubts, it is hereby clarified that:

(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:

(a) concealment or

(b) possession or

(c) acquisition or

(d) use or

(e) projecting as untainted property or

(f) claiming as untainted property in any manner whatsoever

(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever – Section 3 of Prevention of Money Laundering Act as amended w.e.f. 1-8-2019.

The ‘Explanation’ has been inserted w.e.f. 1-8-2019. The words ‘in any manner whatsoever’ appearing in Explanation (i) apply to all clauses (a) to (f) of the Explanation (i).

The amendment made w.e.f. 1-8-2019 has been held valid in Vijay Madanlal Choudhary v. UOI [2022] 140 taxmann.com 610 (SC 3 member bench).

Proceeds of Crime – ‘Proceeds of crime’ means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad.

Explanation – For the removal of doubts, it is hereby clarified that ‘proceeds of crime’ include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence – section 2(1)(u) of Prevention of Money Laundering Act. The explanation has been inserted w.e.f. 1-8-2019.

Any Bribe Given With the Requisite Intent Shall Be Considered As ‘Proceeds of Crime’ Under PMLA, 2002, Bribe Giver Can Also Be Prosecuted – Any bribe given with the requisite intent shall be considered as ‘proceeds of crime’ under PMLA, 2002. Bribe-giver can also be proceeded against for offence of money laundering u/s 3 of the PMLA, 2002 – Directorate of Enforcement v. Padmanabhan Kishore [2022] 144 taxmann.com 28 (SC).

Acquisition of bribe money is ‘proceeds of crime’ and hence money laundering – Acquisition of bribe money by a public servant qualifies as an act of money laundering, and illegal gratification represents proceeds of crime. Wherever there are allegations of corruption, there is acquisition of proceeds of crime which itself tantamount to money-laundering, since ‘use’ is one of the six activities mentioned in section 3 – Y Balaji v. Karthik Desari [2023] 150 taxmann.com 329 = 179 SCL 49 (SC).

The post Prevention of Money Laundering Act – Meaning | Scheme | Key Provisions appeared first on Taxmann Blog.

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Editorial Team – [2025] 181 taxmann.com 762 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. UAE Issues VAT Amendments Effective 01-01-2026

The United Arab Emirates (UAE) has issued amendments to its Value Added Tax (VAT) framework. The amendments are intended to simplify tax procedures, ensure transparency, and strengthen governance. These provisions will take effect from 01-01-2026.

The amendments focus on procedural simplifications, treatment of reverse charge transactions, input tax deductions, and time limits for reclaiming excess refundable tax. The Executive Regulation specifies documentation and compliance requirements under these amendments.

Key aspects of this update include:

(a) Relief from issuing self-invoices under reverse charge mechanism – Taxable persons are not required to issue self-invoices when applying the reverse charge mechanism. They must retain supporting documents for supply transactions as specified by the Executive Regulation. This ensures that relevant documentation is available for review while streamlining procedural requirements.

(b) Time limit for reclaiming excess refundable tax – A five-year period is established for submitting requests to reclaim any excess refundable tax following reconciliation. After this period, the right to reclaim expires, regulating the review and processing of refunds.

(c) Denial of input tax deduction in tax-evasion arrangements – The Federal Tax Authority (FTA) may deny input tax deductions if a supply is determined to be part of a tax-evasion arrangement. Taxpayers must verify the legitimacy and integrity of supplies before claiming input tax, in accordance with procedures set by the FTA.

Source – Official Source

2. EU Imposes Anti-dumping Duties on Steel Track Shoes

The European Union (EU) has imposed anti-dumping measures on imports of steel track shoes and screws without heads originating in the People’s Republic of China. The measures follow investigations that determined these products were being imported at dumped prices, causing injury to the EU industries producing the same goods.

The duties aim to restore fair competitive conditions in the EU market and apply to specific categories of steel track shoes and headless screws, as identified by the investigations.

Key aspects of these measures include – Anti-dumping duties on steel track shoes – A definitive anti-dumping duty of 62.5% has been imposed on imports of steel track shoes from China. Provisional duties have been collected since 22-04-2025. Steel track shoes are components used in tracked equipment for the construction and mining sectors, such as bulldozers and excavators. The EU industry producing these products is primarily located in Italy, valued at approximately €30 million, and employs 190 people.

Source – Anti-dumping Duty – Steel Track Shoes

Click Here To Read The Full Article

The post [Global IDT Insights] UAE Issues VAT Amendments Effective 01-01-2026 & Others appeared first on Taxmann Blog.

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Case Details: Oravel Stays Ltd. vs. Deputy Commissioner of Income-tax - [2025] 181 taxmann.com 155 (Delhi-Trib.)

Judiciary and Counsel Details

• Yogesh Kumar U.S., Judicial Member & Avdhesh Kumar Mishra, Accountant Member
• Ajay Vohra, Sr. Adv. & Ms Somya Jain, CA for the Appellant.
• Sumer Singh Meena, CIT-DR & Gouranga Chandra, Sr. DR for the Respondent.

Facts of the Case

The assessee, Oravel Stays Ltd., operated an online platform for booking hotel and guesthouse rooms across India and entered into agreements with various hotels under a Minimum Guarantee Revenue Model (MGRM).

Under this model, the assessee assured hotels of a minimum revenue. In the event of a shortfall in bookings or in the sale of rooms below the agreed tariff, the assessee paid a minimum guarantee fee to the hotels. The assessee did not have any exclusive right to use or occupy the hotel rooms, which were made available to the general public through its platform.

The Assessing Officer (TDS) treated the minimum guarantee fee paid to hotels as rent and held that the assessee was liable to deduct tax at source under section 194-I, thereby raising a demand under section 201. The Commissioner (Appeals) upheld the Assessing Officer’s action. The matter reached before the Delhi Tribunal.

The Tribunal examined the nature of the agreements and observed that the assessee neither had exclusive possession nor any right to use the hotel rooms for its own use. The rooms were booked directly by customers, and the payments made by the assessee were compensation for failure to achieve minimum guaranteed bookings or tariffs, not for the use of any property.

Relying on the decision of the Supreme Court in Japan Airlines Co. Ltd. v. CIT [2015] 60 taxmann.com 71 (SC), the Tribunal held that for the applicability of section 194-I, there must be a payment for the use of land or a building coupled with a lessor-lessee relationship. In the present case, no such relationship existed, and the payments were not for the use of rooms but for a business shortfall under the contractual arrangement.

ITAT Held

Accordingly, the Tribunal held that the minimum guarantee fee paid by the assessee did not constitute rent under section 194-I and that the Assessing Officer was not justified in treating the assessee as an assessee in default. The TDS demands raised were deleted, and the appeals were allowed in favour of the assessee.

List of Cases Reviewed

• Japan Airlines Co. Ltd. v. CIT [2015] 60 taxmann.com 71 (SC)/[2015] 234 Taxman 175 (SC)/[2015] 377 ITR 372 (SC)(para17) – followed.

List of Cases Referred to

• Japan Airlines Co. Ltd. v. CIT [2015] 60 taxmann.com 71 (SC)/[2015] 234 Taxman 175 (SC)/[2015] 377 ITR 372 (SC) (para 9)
• Apeejay Surrendera Park Hotels Ltd. v. Union of India [2016] 67 taxmann.com 291 (Delhi)/[2016] 383 ITR 697 (Delhi) (para 9)
• Krishna Oberoi v. Union of India [2002] 123 Taxman 709 (Andhra Pradesh)/[2002] 257 ITR 105 (Andhra Pradesh) (para 9)
• Sahana Dwellers (P.) Ltd. v. ITO [2016] 67 taxmann.com 202 (Mumbai)/[2016] 158 ITD 78 (Mumbai) (para 9)
• Johnson Watch Company (P.) Ltd. v. ACIT [ITAppeal No. 1738(Del) of 2020. dated 9-11-2022] (para 9)
• Oravel Stays (P.) Ltd. v. ACIT [2024] 159 taxmann.com 423/206 ITD 74 (Delhi – Trib.) (para 22).

The post No TDS on Hotel Guarantee Fee for Unsold Rooms | ITAT appeared first on Taxmann Blog.

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Case Details: Karthik & Co., In re - [2025] 181 taxmann.com 596 (AAR-TAMILNADU)

Judiciary and Counsel Details

• C. Thiyagarajan & B. Suseel Kumar, Member

Facts of the Case

The applicant, a wholesale and retail dealer in paints and related products holding a franchise from principal paint manufacturers, submitted that it received non-monetary benefits, including free gifts, compliments, and tour packages, for itself and its customers who purchased the manufacturers’ products. The applicant stated that the manufacturers had deducted TDS under Section 194R of the Income Tax Act. It contended that the applicant was not required to raise any tax invoice for the benefits received and submitted that such transactions did not constitute a supply under the CGST Act. The matter was placed before the Authority for Advance Ruling (AAR).

AAR Held

The Authority for Advance Ruling (AAR) held that all conditions constituting a supply under the GST law were satisfied and that the non-monetary benefits received by the applicant constituted a supply of services taxable at the rate of 18%. The AAR observed that the applicant provided augmentation, and business support to the manufacturers by achieving the desired actions and targets as expected by the manufacturers. The AAR directed that the applicant shall raise a tax invoice for the benefits received, with the value of services determined based on the benefits recorded in the TDS certificate issued by the manufacturers, in accordance with Section 7 of the CGST Act.

The post Free Gifts and Dealer Tours Taxable as Support Service | AAR appeared first on Taxmann Blog.

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Bill No. 39; Dated: 19.12.2025

1. Legislative Update

The Haryana Legislative Assembly has passed the Haryana Shops and Commercial Establishments (Amendment) Bill, 2025, amending the Haryana Shops and Commercial Establishments Act, 1958.

The amendments introduce significant changes relating to working hours, overtime, registration requirements, and employer obligations, with the stated objective of improving operational flexibility while retaining statutory safeguards for employees.

2. Increase in Daily Working Hours

• Daily working hours increased from 9 hours to 10 hours
• Weekly cap of 48 hours remains unchanged

This allows establishments to distribute working hours more flexibly across the week without increasing the total weekly workload.

3. Extension of Continuous Working Period

The Bill enhances the permissible span of uninterrupted work:

• Earlier limit: 5 hours without rest
• Revised limit: 6 hours without rest

This provides employers greater scheduling flexibility, especially in high-footfall or service-intensive operations.

4. Enhanced Overtime Limit

To help establishments manage peak business requirements, the Bill increases overtime limits:

• Earlier overtime cap: 50 hours per quarter
• Revised overtime cap: 156 hours per quarter

This substantial enhancement enables shops and commercial establishments to respond more effectively to seasonal demand, sales events, and operational surges—subject to compliance with overtime wage provisions.

5. Rationalisation of Registration Requirements

5.1 Establishments With Fewer Than 20 Workers

• No longer required to obtain a registration certificate
• Required only to intimate the authorities about commencement of business
• Upon intimation, the employer will be issued a Basic Information Performa (BIP) ID Number

This reduces compliance burden for small establishments and promotes ease of doing business.

5.2 Establishments With 20 or More Workers

• Mandatory registration continues
• Application must be submitted online, along with prescribed particulars, including:

1. 1. Name of employer and manager
   2. Name of the establishment
   3. Number of persons employed
   4. Nature of business
   5. Any other prescribed details

6. Verification and Registration Certificate

The Inspector is required to:

• Verify the correctness of the application and supporting documents
• Issue an online registration certificate

6.1 Validity of Registration

• The certificate remains valid indefinitely
• It may be:

1. 1. Amended upon change in particulars
   2. Cancelled upon closure of the establishment
   3. Revoked by the Inspector after verification, if required

7. Mandatory Appointment Letters and Identity Cards

The Bill strengthens documentation and worker identification requirements:

• Every employer must issue:

1. 1. A letter of appointment to each employee, with the employee’s photograph affixed
   2. Obtain an acknowledgement of the appointment letter

• Every employer must also provide an identity card to each worker, containing prescribed particulars

These measures enhance transparency, employment security, and traceability.

8. Regulatory Intent

The amendments seek to:

• Improve operational flexibility for employers
• Support business scalability during peak demand
• Reduce regulatory burden on small establishments
• Strengthen documentation, accountability, and worker protection
• Align labour regulation with contemporary business practices

9. Implications for Employers

Employers in Haryana should:

• Review and update working-hour policies and shift schedules
• Reassess overtime planning and wage compliance
• Determine whether registration or only intimation is required based on workforce size
• Implement robust systems for:

1. 1. Issuing appointment letters
   2. Maintaining employee identity cards

• Update HR and compliance documentation to align with the amended Act

10. Key Takeaway

The Haryana Shops and Commercial Establishments (Amendment) Bill, 2025 introduces greater flexibility in working hours and overtime, simplifies compliance for small establishments, strengthens employment documentation requirements, and modernises the regulatory framework—while preserving the 48-hour weekly cap and core labour protections.

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Case Details: LS Dinamani vs. Management of Canara Bank - [2025] 181 taxmann.com 314 (HC-Karnataka)

Judiciary and Counsel Details

• R. Nataraj, J.
• R. Nagendra Naik, Adv. for the Petitioner.
• J. Pradeep Kumar, Adv. for the Respondent.

Facts of the Case

In the instant case, the petitioner was an employee of Canara Bank. He was convicted for offences punishable under section 120B read with sections 468, 471, 420 of the IPC and was dismissed from service.

The Respondent-bank forfeited gratuity and provident fund payable to the petitioner consequent to his dismissal from service. The petitioner filed writ petition challenging the order of the respondent forfeiting gratuity as well as provident fund.

The petitioner contended that in the order dismissing him from service, there was no ascertainment of loss suffered by the bank and hence, the respondent was not justified in forfeiting the gratuity.

He also contended that the respondent had initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and recovered a sum of Rs.1.90 crores and hence, the bank did not suffer any loss.

It was noted that the petitioner was not entitled to any gratuity in view of Section 4(6) of the Payment of Gratuity Act, 1972. Further, in so far as provident fund to which the petitioner was entitled to, Regulation 19 of Canara Bank Staff Provident Fund Regulations enabled the bank to deduct any amount contributed by it to adjust any loss caused by the act of the employee. However, it did not authorize the bank to forfeit the amount contributed by the employee.

High Court Held

The High Court held that the respondent was directed to release the petitioner’s contribution to provident fund along with interest as applicable for delayed payment of provident fund from date of dismissal of the petitioner from service till date of payment.

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CA Arpit Gokhroo – [2025] 181 taxmann.com 761 (Article)

1. Introduction and Understanding

1.1 Traditional Internal Audit

Traditional Internal Audit is a method where the auditor primarily verifies compliance—ensuring that the organisation’s rules, procedures, and controls are being correctly followed. The main focus is on adherence to established standards and documented policies. This approach relies heavily on routine checklists and procedural adherence, often with minimal emphasis on anticipating future problems or identifying emerging risks.

1.2 Risk-Based Internal Audit (RBIA)

Risk-Based Internal Audit (RBIA) is a strategic and proactive approach that prioritises areas presenting the highest risk to the organisation’s objectives. Instead of applying uniform checks everywhere, RBIA identifies, assesses, and manages critical risks that could negatively affect the achievement of organisational goals. This framework ensures that audit resources are allocated where they are most critically needed, focuses on comprehensive monitoring of key risks, and provides actionable recommendations to prevent potential problems. By integrating auditing with risk management, RBIA shifts the organization from a purely compliance-focused model to a strategic governance framework.

Thus, Traditional audits protect the past, RBIAs guards the future.

1.3 Illustrative Example – Sales Verification

• Traditional IA uses uniform procedures on all sales invoices to ensure compliance, regardless of transaction size. This systematic approach catches procedural lapses but may inefficiently allocate effort to low-risk, routine transactions.
• RBIA strategically targets high-value clients and discount-heavy deals using data analytics. It concentrates resources on areas where the financial impact is most significant, allowing minimal attention to low-risk transactions and preventing major revenue leakage where the impact is highest.

2. Traditional vs Risk-Based Internal Audit – Key Change Drivers

The transition from Traditional Internal Audit to Risk-Based Internal Audit involves fundamental shifts across three critical dimensions:

2.1 Audit Planning

Traditional Internal Audit Planning – In traditional internal audit, planning follows a predefined structure, focusing on routine tasks across all departments without accounting for the risk significance of each area. This rigid approach often results in a one-size-fits-all strategy that overlooks emerging risks and fails to adapt to changing business conditions. Audit resources are distributed equally, leading to an inefficient use of both time and expertise.

Risk-Based Internal Audit Planning – In contrast, the Risk-Based approach tailors the audit plan based on a comprehensive risk assessment, ensuring that attention is focused on the most critical and high-risk areas. Rather than following a fixed procedure, audits are dynamic and adjusted in real-time as new risks arise, allowing organisations to address the most pressing challenges. Resources are allocated based on the risk profile of each area, ensuring a more strategic approach to audit planning.

The planning process becomes more strategic, flexible, and focused on key areas of the organisation.

Practical Scenario – HR Audit Planning

In the traditional model, HR audits are based on a predetermined, annual checklist that covers routine tasks, such as verifying employee files, attendance, and payroll accuracy. This approach offers limited flexibility, as the audit plan is fixed and does not adapt to changing circumstances. Resources are allocated equally across all HR areas, regardless of their risk significance, often leading to inefficient use of audit resources. The primary outcome of this method is basic compliance verification, with little focus on addressing emerging or critical HR challenges.

The Risk-Based Approach (RBIA), however, takes a more strategic and dynamic route. The audit plan is developed based on a detailed risk assessment, in collaboration with HR and management, which prioritises high-risk areas that are likely to have the greatest impact on the organisation. Rather than following a static checklist, the audit hones in on key issues, such as staff turnover, hiring delays, or compliance deficiencies. This approach allows auditors to focus resources where they are most needed and adjust quickly in response to shifting risks. As a result, the RBIA delivers more than just compliance checks; it provides actionable insights that can help the organisation improve HR strategy, reduce risks, and enhance overall workforce management.

2.2 Resource Allocation

Traditional Internal Audit Resource Allocation – In traditional internal audit, resources are allocated uniformly across all organisational areas. Similar time, effort, and auditor expertise are devoted to each department or function, regardless of its actual risk profile or organisational importance. This uniform approach can result in the over-auditing of low-risk, stable areas, under-resourcing high-impact, complex risk zones, inefficient use of experienced auditor expertise, and the missed detection of critical emerging risks.

Risk-Based Internal Audit Resource Allocation – RBIA allocates resources proportionally to risk severity and organisational impact. This approach assigns more time and experienced auditors to high-risk areas and employs deeper testing and specialised expertise where risks are most significant. Conversely, it assigns minimal attention to low-risk areas that have mature, stable controls and uses data analytics tools and advanced techniques in high-complexity risk zones. This risk-proportionate allocation ensures audit efforts generate maximum protective value for the organisation.

Practical Scenario – Finance Audit Resource Allocation

In the Traditional Approach, resources for a finance audit are allocated uniformly. Auditor time is divided equally across functions like payments, receipts, and ledger entries, and the seniority of auditors remains consistent across all areas. Testing involves a standardised checklist for all processes, using only basic audit procedures. The expected outcome is simply uniform compliance verification.

In contrast, the Risk-Based Approach (RBIA)allocates resources proportionally to risk. For example, 60% of auditor time might be directed to high-risk payment systems (like new vendor on boarding), while only 20% goes to receipts and 20% to ledger entries. Senior auditors are assigned to complex payment systems, and junior auditors handle low-risk ledger entries. Testing is intensive in high-error vendor payment areas but uses sampling in low-risk areas. This approach uses specialised tools like data analytics and machine learning for fraud indicators. The goal is targeted assurance in high-impact payment areas and fraud prevention

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