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

1. Regulatory Background

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

2. Relaxation for Customers With Exposure Below ₹10 Crore

Under the amended directions:

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

2.3 Significance

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

3. Time Limit for Transfer From Collection Accounts

The amended framework mandates tighter fund movement controls:

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

3.1 Objective

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

4. Restriction on Use of Accounts

RBI has reiterated that banks must ensure:

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

4.1 Compliance Focus

This measure strengthens:

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

5. Regulatory Intent

The amendments seek to:

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

6. Implications for Banks

Banks should:

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

Non-compliance may attract supervisory observations or regulatory action.

7. Impact on Customers

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

Click Here To Read The Full Press Release

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

Judiciary and Counsel Details

• Dipankar Datta & Aravind Kumar, JJ.
• Ms Chitrangda Rastravara, AOR, Anirudh Singh, Abhijeet Singh, Aishwary Mishra, Dhananjai Shekhawat, Ms Sakshi Aggarwal, Ms Pearl Pundir, Dashrath Singh, Advs. & Yuvraj Singh, Adv, for the Appellant.
• Raghvendra P. Shankar, A.S.G., Amit Sharma II, Raman Yadav, Advs. & Arvind Kumar Sharma, AOR for the Respondent.

Facts of the Case

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

Supreme Court Held

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

List of Cases Referred to

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

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

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

Judiciary and Counsel Details

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

Facts of the Case

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

High Court Held

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

List of Cases Reviewed

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

List of Cases Referred to

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

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

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

1. Overview

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

2. Insertion of Definition – “Ineligible Director”

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

2.1 Purpose of the Definition

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

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

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

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

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

3.1 Key Features of Rule 5-A

1. Grouping of Directors by Tenure

Directors must be grouped based on:

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

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

2. Drawing of Lots

If directors need to be removed or rotated out:

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

3. Rules for Exclusion

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

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

These exclusions maintain compliance integrity and continuity of governance.

4. Amendments to Forms I and IX

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

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

4.1 Purpose of Amendments

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

5. Regulatory Intent

The amendments aim to:

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

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

6. Implications for Co-operative Banks

Banks must:

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

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

Click Here To Read The Full Notification

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

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

Judiciary and Counsel Details

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

Facts of the Case

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

High Court Held

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

List of Cases Reviewed

• Shyam Sunder Strips v. Union of India [2025] 180 taxmann.com 414 (Punj & Har) (para 12) followed

List of Cases Referred to

• Samay Alloys India (P.) Ltd. v. State of Gujarat [2022] 135 taxmann.com 243/91 GST 338/ 61 GSTL 421 (Guj) (para 5)
• Best Crop Science (P.) Ltd. v. Principal Commissioner, CGST Commissionerate, Meerut [2024] 166 taxmann.com 654/ 106 GST 440/90 GSTL 131 (Delhi) (para 5)
• Kings Security Guard Services (P.) Ltd. v. Deputy Director, Directorate General of GST Intelligence, DZU [2024] 169 taxmann.com 409/[2025] 108 GST 490/95 GSTL 92 (Delhi) (para 5)
• Karuna Rajendra Ringshia v. Commissioner of CGST [2024] 168 taxmann.com 249/[2025] 107 GST 164 (Delhi) (para 5)
• Deputy Director, Directorate General of GST Intelligence, DZU v. Kings Security Guard Services (P.) Ltd [SLP (C) No. 14493 of 2025, dated 17-5-2025] (para 5)
• Commissioner of Central GST v. Karuna Rajendra Ringshia [SLP (C) No. 17723 of 2025, dated 9-7-2025] (para 5)
• Shyam Sunder Strips v. Union of India [2025] 180 taxmann.com 414 (Punj & Har) (para 5)
• Laxmi Fine Chem v. Asstt. Commissioner [2024] 161 taxmann.com 270/104 GST 245/87 GSTL 197 (Telangana) (para 9)
• Rawman Metal & Alloys v. Dy. CST [2025] 179 taxmann.com 387 (Bom) (para 9)
• Basanta Kumar Shaw v. Asstt. Commissioner of Revenue, Commercial Taxes and State Tax [2022] 141 taxmann.com 528/94 GST 259/65 GSTL 436 (Cal) (para 9)
• R.M. Dairy Products LLP v. State of Uttar Pradesh [2021] 129 taxmann.com 37/88 GST 650/55 GSTL 524 (All) (para 9)
• Sugna Sponge & Power (P.) Ltd. v. Superintendent of Central Tax [2025] 170 taxmann.com 521/95 GSTL 421 (AP) (para 9).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Click Here To Read The Full Notification

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

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

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

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

1. What Does the 2025 OECD Update State?

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

Key factors to consider

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

2. Practical Illustrations by the OECD

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

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

Click Here To Read The Full Article

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

Judiciary and Counsel Details

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

Facts of the Case

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

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

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

High Court Held

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

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

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

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

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

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

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

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

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

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

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

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

Effective Date

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

Source – Financial Accounting Standard Board

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

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

2.1 Definitions

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

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

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

2.2 Recognition Criteria

An entity shall not recognise a government grant until:

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

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

ii. The government grant will be received.

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

2.3 Disclosures

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

2.4 Effective Date

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

Source – Financial Accounting Standard Board

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

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

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

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

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

Source – Public Company Accounting Oversight Board

Click Here To Read The Full Article

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

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

1. Overview

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

2. Amendments to InvIT Regulations, 2014

2.1 Revised Definition of “Institutional Investor”

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

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

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

2.2 Substitution of “Qualified Institutional Buyer” (QIB)

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

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

2.3 Updated Definition of “Strategic Investor”

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

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

The revised definition aims to:

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

3. Amendments to REIT Regulations, 2014

3.1 Introduction of a Definition for “Institutional Investor”

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

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

3.2 Substitution of Related Investor Definitions

Similar to InvIT amendments, the REIT Regulations now contain:

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

These changes aim to:

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

4. Regulatory Intent

The amendments collectively seek to:

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

5. Implications for Market Participants

5.1 For Sponsors and Managers

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

5.2 For Investors

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

5.3 For Intermediaries

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

Click Here To Read The Full Notification

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