Press Release 2026-2027/208, Dated 05.05.2026

The Reserve Bank of India (RBI) has issued draft guidelines on Prudential Norms for Specified Non-Financial Assets (SNFAs), permitting regulated entities to acquire certain non-financial assets in settlement of stressed exposures.

1. Purpose of the Framework

The draft norms aim to:

• Facilitate recovery of Non-Performing Assets (NPAs)
• Provide a structured mechanism where conventional recovery options are not viable

2. Acquisition of Non-Financial Assets

• Regulated entities may acquire specified non-financial assets, including immovable property
• Such acquisition can be:

1. 1. In full settlement, or
   2. Partial settlement of NPAs

3. Treatment of Residual Exposure

Where settlement is partial remaining exposure shall be treated as restructured exposure

4. Timeline for Disposal

• Banks are required to sell properties acquired for NPA recovery
• Within 7 years from acquisition

5. Valuation and Accounting Norms

• SNFAs must be valued at the lower of Net Book Value (NBV) or applicable valuation amount
• Appropriate disclosures must be made in the financial statements

6. Objective of the Draft Guidelines

The framework seeks to:

• Improve recovery flexibility for lenders
• Ensure prudent handling of non-financial assets acquired during recovery
• Maintain transparency and prudential discipline

7. Conclusion

The proposed SNFA framework provides a regulated mechanism for acquisition and management of non-financial assets in NPA settlements, balancing recovery objectives with safeguards relating to valuation, disclosure, and timely disposal.

Click Here To Read The Full Press Release

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Consultation Paper Dated 05.05.2026

The Securities and Exchange Board of India (SEBI) has proposed an amendment to the regulatory framework governing Online Bond Platform Providers (OBPPs) to align compliance requirements with those applicable to stock brokers.

1. Existing Requirement

Currently, Online Bond Platform Providers are required to appoint a Company Secretary as the Compliance Officer

2. Proposed Change

SEBI proposes to:

• Align the requirement with the framework applicable to stock brokers
• Move towards a principle-based compliance framework

3. Objective of the Proposal

The amendment aims to:

• Promote regulatory harmonisation across intermediaries
• Enhance ease of doing business
• Provide greater operational flexibility to OBPPs

4. Regulatory Impact

The proposed framework would:

• Reduce rigid role-specific requirements
• Allow entities greater flexibility in structuring compliance functions
• Maintain regulatory accountability while simplifying implementation

5. Conclusion

The proposal reflects SEBI’s broader approach towards streamlined and harmonised regulation, balancing effective compliance oversight with operational practicality for online bond platform providers.

Click Here To Read The Full Update

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Ashish Chadha – [2026] 186 taxmann.com 44 (Article)

1. Introduction

The concept of a permanent establishment (‘PE’), as embodied in Article 5 of most tax treaties, was developed in an economic context dominated by traditional, asset-heavy business models. These provisions were framed at a time when commercial presence was largely synonymous with physical presence i.e., premises, personnel and tangible infrastructure.

The rapid evolution of the digital economy has far outpaced corresponding developments in international tax frameworks. In response to this structural lag, Indian tax authorities have sought to expand the scope of taxation of foreign enterprises operating in digital and technology-enabled business models. One such attempt has been the invocation of the relatively novel and controversial concept of a “virtual permanent establishment”.

This article reviews key judicial developments relating to the concept of virtual PE, with specific reference to India, where the tax authorities have consistently sought to test the limits of Article 5 through expansive interpretation.

2. Virtual PE as a BEPS – Era Construct

The Organisation for Economic Co-operation and Development (‘OECD’), in its Base Erosion and Profit Shifting (‘BEPS’) Action Plan, specifically Action Plan 1 addressing the tax challenges of the digital economy, has acknowledged the conceptual underpinnings of a “virtual PE”. However, the OECD has been clear in its position that the introduction of such a concept would require explicit tax treaty amendments.

To date, notwithstanding the Multilateral Instrument (‘MLI’) and ongoing Pillar One discussions, meaningful treaty-level adoption of a virtual PE framework remains limited. Consequently, in the absence of express treaty language, the legal sustainability of unilateral interpretations by tax authorities of a jurisdiction remains open to challenge.

3. Judicial Evolution of the Virtual PE Debate in India

The Indian tax authorities began exploring expansive interpretations of PE concepts well before the BEPS initiative. In an early ruling, the Income Tax Appellate Tribunal (‘ITAT’) held that computers installed at the premises of Indian travel agents constituted a fixed place PE of a foreign enterprise providing a computerized reservation system (CRS).

However, this approach did not find consistent judicial support. In a subsequent decision, the ITAT clarified that a website, by itself, does not constitute a fixed place PE, marking an early judicial recognition of the distinction between physical infrastructure and digital interfaces.

Click Here To Read The Full Article

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Case Details: Jigar Sevantilal Shah vs. Income-tax Officer - [2026] 185 taxmann.com 818 (Mumbai-Trib.)

Judiciary and Counsel Details

• Saktijit Dey, Vice President & Makarand Vasant Mahadeokar, Accountant Member
• Rajesh Shah for the Appellant.
• Nayanjoti Nath, Sr. AR for the Respondent.

Facts of the Case

The assessee, an individual, acquired tenancy rights in respect of a flat in 2015. In December 2017, the landlord entered into a redevelopment arrangement with a developer, and the assessee, as a confirming party, executed a tripartite agreement to receive specified permanent alternate accommodation instead of surrendering tenancy rights. Under the terms of this agreement, until the tenant was offered possession of the new premises with amenities, he was to remain a tenant and was not deemed to have surrendered the tenancy. The alternate permanent accommodation was handed over in April 2019.

During the assessment, the Assessing Officer (AO) noted that, for stamp duty purposes, the Stamp Valuation Authority had determined the value at about Rs. 1.49 crores. The AO called upon the assessee to explain why this value should not be taxed as Short Term Capital Gain by invoking section 56(2) read with section 50D. Assessee contended that, under the agreement, surrender would occur only upon taking possession of the alternate accommodation in April 2019; therefore, any capital gain would be long-term and assessable in AY 2020-21. Unsatisfied with the reply, AO computed STCG and added it to the assessee’s income.

On appeal, the CIT(A) sustained the addition. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the reading of the relevant clauses of the agreement made it amply clear that the tenancy rights of the assessee in the existing (old premises) would come to an end only upon the assessee receiving possession of pre-identified alternative permanent accommodation in the new building. It was a fact that possession of alternative permanent accommodation in the new building was handed over to the assessee in April 2019.

Therefore, the taxable event of capital gain arising from the surrender of the tenancy rights could occur only in the financial year 2019-20, and not in the impugned assessment year. When the tripartite agreement between the assessee, the developer, and the landlord specifically provides that the tenancy rights will continue with the assessee until the handing over of possession of alternative permanent accommodation in the newly developed building, the Departmental Authorities cannot interpret the terms of the agreement differently.

Thus, the AO was directed to delete the addition made on account of surrender of tenancy rights in the impugned assessment year, and capital gain, if any, was to be assessed in the year of surrender of tenancy rights.

The post Capital Gain on Tenancy Surrender Taxable on Possession | ITAT appeared first on Taxmann Blog.

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Editorial Team – [2026] 186 taxmann.com 43 (Article)

Taxmann presents Practical Insights on Ind AS and SAs, a weekly series exclusively for Accounts and Audit Module subscribers of Taxmann.com, focusing on the practical application of Indian Accounting Standards and Standards on Auditing through structured, issue-based analysis.

Each week features a focused topic with real-world relevance. This edition moves beyond the conceptual discussion of recognition and measurement and explores how entities actually transition to Ind AS under Ind AS 101, highlighting real-world challenges and reporting practices observed among listed companies.

1. Introduction

Financial reporting under Ind AS is built on robust principles of recognition and measurement. However, a fundamental question arises when an entity transitions from its previous GAAP to Ind AS:

“How should existing balances and past transactions be aligned with Ind AS without distorting financial performance?”

Transitioning to Ind AS is not merely a technical adjustment exercise. It requires entities to revisit historical accounting decisions, reassess measurement bases, and ensure that financial statements reflect economic reality in a consistent and comparable manner.

Ind AS 101 addresses this challenge by prescribing a structured framework for first-time adoption. It ensures that the first Ind AS financial statements provide a reliable starting point while maintaining transparency and comparability for users.

2. Ind AS for First-Time Adoption

Ind AS 101 lays down the procedures that an entity must follow when adopting Ind AS for the first time. Accordingly, it applies to the first set of annual financial statements in which an entity transitions to Ind AS.

As per Appendix A of Ind AS 101, “First Ind AS financial statements” are defined as the first annual financial statements in which an entity adopts Ind AS, accompanied by an explicit and unreserved statement of compliance with Ind AS.

This definition highlights an important point i.e. first-time adoption is not established merely by applying Ind AS principles, but by formally declaring full compliance with Ind AS.

The requirement of an explicit and unreserved statement of compliance creates two important practical scenarios:

• Substance Without Form – An entity may comply with all recognition, measurement, and disclosure requirements of Ind AS. However, if it does not include an explicit statement of compliance, the financial statements cannot be regarded as first Ind AS financial statements, and Ind AS 101 does not apply.
• Form Without Substance – Conversely, if an entity includes the statement of compliance but fails to meet Ind AS requirements fully, the financial statements are still treated as first Ind AS financial statements. In such cases:

1. 1. The auditor is required to issue a modified opinion, and
   2. Any corrections are addressed in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors

Click Here To Read The Full Article

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Editorial Team – [2026] 186 taxmann.com 49 (Article)

World Labour Law News provides a weekly snapshot of labour law developments from around the globe. Here’s a glimpse of the key labour law update this week.

1. Labour Law

1.1 US Department of Labour Launches Website to Build Artificial Intelligence Skills, Expand AI-Focused Registered Apprenticeship Programs

On April 29, 2026, the U.S. Department of Labour announced the launch of its AI in Registered Apprenticeship Innovation Portal, a one-stop resource for organisations looking to build artificial intelligence literacy and develop AI-focused Registered Apprenticeship programs.

Announced during the National Apprenticeship Week event, “Building the AI-Ready Workforce through Registered Apprenticeship,” the website provides practical tools and actionable guidance to help organisations integrate artificial intelligence skills into Registered Apprenticeship programs through skill-building resources, industry-specific training, and flexible program pathways. The initiative builds on the objectives outlined in the department’s AI Literacy Framework, released earlier this year.

“The department is committed to ensuring that every American has the opportunity to thrive in our nation’s workforce, especially in a world that is rapidly being reshaped by artificial intelligence.”

said Acting Secretary of Labour Keith Sonderling.

“Today, we are unveiling a new AI in the Registered Apprenticeship Innovation Portal that provides practical tools and resources to promote the integration of artificial intelligence skills into Registered Apprenticeship programs, marking a major step forward in preparing the American workforce for the jobs of the future.”

The online portal showcases how understanding, using and evaluating AI tools responsibly is essential for improving productivity, work quality and adaptability in today’s economy.

The site’s resources are organised around three key areas:

(a) AI Skills and Literacy in Registered Apprenticeship – Learn what AI literacy is, access general AI training resources, and discover how Registered Apprenticeship can help build AI competency across your organisation.

(b) AI Skills Building by Industry – Explore AI skill-building training modules tailored to specific occupations and industries, including education, finance, healthcare, advanced manufacturing, and more.

(c) Three Options to Integrate AI in Registered Apprenticeship Programs – Join an existing National Registered Apprenticeship program, create a new program for AI-focused roles, or update an existing program to include AI skills.

“The launch reflects this Administration’s commitment to ensuring American workers and businesses are equipped to lead in an AI-driven economy,”

said Assistant Secretary for Employment and Training Henry Mack.

“By providing employers with the resources to develop AI-ready Registered Apprenticeship programs and workers with the skills to thrive in them, the Department is taking concrete action to build the workforce of the future.

Source – Press Release

Click Here To Read The Full Article

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1. Facts

A listed company engaged in manufacturing operations is experiencing significant financial stress during the current financial year. The following conditions exist as of the reporting date:

• The company has incurred negative operating cash flows during the year and in the immediately preceding year.
• The entity is in a net current liability position, with current liabilities exceeding current assets.
• There are significant loan repayments falling due within the next 12 months, including term loans and working capital borrowings.
• The company has defaulted in repayment of certain borrowings, resulting in lenders initiating recovery discussions.
• Access to fresh external financing is restricted, and negotiations with lenders for restructuring are still at a preliminary stage.

Despite the above conditions, management has prepared the financial statements on a going concern basis, primarily relying on the following:

• Letters of financial support from promoters, stating their intention to provide funding as and when required.
• Proposed restructuring plans, including cost rationalisation and disposal of non-core assets.
• Projected improvement in operations, based on expected recovery in demand.

Suggest, whether in the given circumstances, the use of the going concern basis appropriate, and what should be the auditor’s reporting implication?

2. Relevant Provisions under SA 570, Going Concern

Para 6. The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements, and to conclude, based on the audit evidence obtained, whether a material uncertainty exists about the entity’s ability to continue as a going concern. These responsibilities exist even if the financial reporting framework used in the preparation of the financial statements does not include an explicit requirement for management to make a specific assessment of the entity’s ability to continue as a going concern.

Para 10. When performing risk assessment procedures as required by SA 315, the auditor shall consider whether events or conditions exist that may cast significant doubt on the entity’s ability to continue as a going concern. In so doing, the auditor shall determine whether management has already performed a preliminary assessment of the entity’s ability to continue as a going concern, and:

(a) If such an assessment has been performed, the auditor shall discuss the assessment with management and determine whether management has identified events or conditions that, individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern and, if so, management’s plans to address them; or

(b) If such an assessment has not yet been performed, the auditor shall discuss with management the basis for the intended use of the going concern basis of accounting, and inquire of management whether events or conditions exist that, individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern.

Para 12. The auditor shall evaluate management’s assessment of the entity’s ability to continue as a going concern.

Para 16. If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall obtain sufficient appropriate audit evidence to determine whether or not a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereinafter referred to as “material uncertainty”) through performing additional audit procedures, including consideration of mitigating factors. These procedures shall include: (Ref: Para. A16)

(a) Where management has not yet performed an assessment of the entity’s ability to continue as a going concern, requesting management to make its assessment.

(b) Evaluating management’s plans for future actions in relation to its going concern assessment, whether the outcome of these plans is likely to improve the situation and whether management’s plans are feasible in the circumstances. (Ref: Para. A17)

(c) Where the entity has prepared a cash flow forecast, and analysis of the forecast is a significant factor in considering the future outcome of events or conditions in the evaluation of management’s plans for future actions: (Ref: Para. A18–A19)

(i) Evaluating the reliability of the underlying data generated to prepare the forecast; and

(ii) Determining whether there is adequate support for the assumptions underlying the forecast.

(d) Considering whether any additional facts or information have become available since the date on which management made its assessment.

(e) Requesting written representations from management and, where appropriate, those charged with governance, regarding their plans for future actions and the feasibility of these plans. (Ref: Para. A20)

Para 22. If adequate disclosure about the material uncertainty is made in the financial statements, the auditor shall express an unmodified opinion and the auditor’s report shall include a separate section under the heading “Material Uncertainty Related to Going Concern” to: (Ref: Para. A28–A31, A34)

(a) Draw attention to the note in the financial statements that discloses the matters set out in paragraph 19; and

(b) State that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the auditor’s opinion is not modified in respect of the matter.

Para 21. If the financial statements have been prepared using the going concern basis of accounting but, in the auditor’s judgment, management’s use of the going concern basis of accounting in the preparation of the financial statements is inappropriate, the auditor shall express an adverse opinion.

Para 23. If adequate disclosure about the material uncertainty is not made in the financial statements, the auditor shall: (Ref: Para. A32–A34)

(a) Express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705 (Revised)4; and

(b) In the Basis for Qualified (Adverse) Opinion section of the auditor’s report, state that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the financial statements do not adequately disclose this matter.

Para A3. The following are examples of events or conditions that, individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern. This listing is not all-inclusive nor does the existence of one or more of the items always signify that a material uncertainty exists.

Financial

• Net liability or net current liability position.
• Fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment; or excessive reliance on short-term borrowings to finance long-term assets.
• Indications of withdrawal of financial support by creditors.
• Negative operating cash flows indicated by historical or prospective financial statements.
• Adverse key financial ratios.
• Substantial operating losses or significant deterioration in the value of assets used to generate cash flows.
• Arrears or discontinuance of dividends.
• Inability to pay creditors on due dates.
• Inability to comply with the terms of loan agreements.
• Change from credit to cash-on-delivery transactions with suppliers.
• Inability to obtain financing for essential new product development or other essential investments.

Click Here To Read The Full Story

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Case Details: King Enterprises vs. Commissioner of Commercial Taxes - [2026] 185 taxmann.com 560 (Karnataka)

Judiciary and Counsel Details

• Ms Jyoti M, J.
• R.M. Javed, Adv. for the Petitioner.
• Smt. Nandini B. Somapur, AGA for the Respondent.

Facts of the Case

The petitioner challenged the cancellation of its GST registration by the jurisdictional officer under CGST based on a show cause notice (SCN) issued in FORM GST REG-17, alleging violation under Section 29(2)(e) of the CGST Act and the Karnataka GST Act on the ground that registration had been obtained by fraud. It contended that the SCN was vague, defective in format, and contained only a bald allegation of fraud without furnishing any material particulars or adequate reasons, thereby disabling an effective response. It was further submitted that despite such deficiencies, the registration was cancelled and the appellate authority affirmed the cancellation without addressing the absence of specific allegations. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the SCN issued in FORM GST REG-17 was not in conformity with the statutory requirements prescribed under Section 29 of the CGST Act and the Karnataka GST Act read with Rule 22 of the CGST Rules and the Karnataka GST Rules, as it contained only a bald allegation of fraud without disclosing any material particulars or reasons. It was observed that a valid notice under the aforesaid provisions must set out sufficient details to enable the assessee to effectively respond, and absence of such particulars renders the notice vague and legally unsustainable. Orders passed pursuant to such a defective notice, including the cancellation of registration and its affirmation by the appellate authority, cannot be sustained in law. The Court concluded that the impugned actions were untenable. Accordingly, a writ was issued quashing the cancellation order and the appellate order, and directing the restoration of the GST registration.

The post GST Cancellation Quashed Due to Vague Fraud SCN | HC appeared first on Taxmann Blog.

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Case Details: Big Peat Company vs. State Tax Officer - [2026] 185 taxmann.com 582 (Madras)

Judiciary and Counsel Details

• D. Bharatha Chakravarthy, J.
• S. Karunakar for the Petitioner.
• R. Suresh Kumar, Addl. Govt. Pleader for the Respondent.

Facts of the Case

The petitioner challenged the rejection of its application seeking a waiver under Section 128A of the CGST Act and the Tamil Nadu GST Act pursuant to the GST Amnesty Scheme, 2025. It was submitted that the assessment proceedings culminated in an adjudication order in which tax, interest, and penalty were quantified separately, and an appeal against such order remained pending. It was contended that upon the introduction of the scheme, it paid the tax dues and withdrew the appeal. The application was rejected on the ground that in the summary assessment the entire demand was treated as ‘penalty’ with nil tax and interest. The petitioner contended that this was an apparent clerical mistake, as the original order clearly included tax, interest, and penalty components, and hence the benefit under the scheme could not be denied. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the original adjudication order clearly quantified tax, interest, and a limited penalty, and mere misclassification of the entire demand as ‘penalty’ in the summary proceedings was an apparent clerical error. It held that such an error could not be perpetuated while considering an application under Section 128A of the CGST Act and the Tamil Nadu GST Act. The Court observed that the jurisdictional officer under CGST ought to have correctly appreciated the original order and treated the amounts under the appropriate heads while examining the claim. It was held that the denial of the benefit of the amnesty scheme solely on account of such a clerical mistake was unsustainable. Accordingly, the matter was remanded to the authority for fresh consideration.

The post GST Amnesty Benefit Can’t Be Denied for Clerical Error | HC appeared first on Taxmann Blog.

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Case Details: United Commercial Bank vs. Union of India - [2026] 185 taxmann.com 442 (HC-Jharkhand)

Judiciary and Counsel Details

• Anubha Rawat Choudhary, J.
• Nipun Bakshi, Shubham Sinha & Sushawan Bhowmik, Advs. for the Petitioner.
• S. K. Laik, Adv. for the Respondent.

Facts of the Case

In the instant case, On a reference under section 10(1)(d), Industrial Tribunal found that workman had completed more than 240 days of work in a calendar year and was not being paid proper wages prescribed for casual workmen – Tribunal held demand for regularisation was justified and directed that he would be entitled to regularisation on permanent basis as and when permanent vacancy arose in bank, and further directed payment of wages as prescribed for casual workmen – Whether merely because workman had completed 240 days of work in a calendar year, same would not automatically entitle him for regularisation on permanent basis in absence of any available vacancy to which he could be regularised.

High Court Held

Held, yes – Whether direction that workman would be entitled for regularisation on permanent basis as and when permanent vacancy arose was beyond terms of reference, perverse and unsustainable – Held, yes – Whether while exercising jurisdiction under articles 226/227 of Constitution, Court could not direct creation of any post – Held, yes – Whether, however, direction to treat workman as casual workman and to pay wages as prescribed for casual workmen did not call for interference – Held, yes – Whether where no such norms existed in bank, workman would at least be entitled to minimum wages under law.

List of Cases Reviewed

• Dharam Singh v. State of U.P. [2025] 177 taxmann.com 556 (SC)/2025 SCC OnLine SC 1735 (para 22) distinguished
• G.M. O.N.G.C., Shilchar v. O.N.G.C. Contractual Workers Union 2008 taxmann.com 11208 (SC)/2008 AIR SCW 3996 (para 25) followed

List of Cases Referred to

• M.P. State Agro Industries Development Corpn. Ltd. v. S.C. Pandey [2006] 2 SCC 716 (para 6)
• Gangadhar Pillai v. Siemens Ltd. [2007] 2006 taxmann.com 3098 (SC) (para 6)
• G.M. O.N.G.C., Shilchar v. O.N.G.C. Contractual Workers Union 2008 taxmann.com 11208 (SC (para 8)
• Dharam Singh v. State of U.P. [2025] 177 taxmann.com 556 (SC) (para 9).

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