Case Details: Managing Director vs. PM.T. Kamgar Sangh (INTUC) - [2026] 184 taxmann.com 648 (Bombay)

Judiciary and Counsel Details

• Amit Borkar, J.
• Mrs A.P. Purav, Girish B. Badiger, A. S. Rao, Shivram A. Gawade, Deepak K. More, Rakesh R. Bhatkar, Mohan N. Devkule, Mohit Dalvi & Ms Sakshi Kamble for the Appearing Parties.

Facts of the Case

In the instant case, the petitioner-company, engaged in public transport, was formed upon the merger of Pune Municipal Transport (PMT) and Pimpri Chinchwad Municipal Transport (PCMT), with employees absorbed with continuity of service.

In 1999, the respondent-union raised a charter of demands, and Clause 15 of the settlement dated 20-5-1999 recorded that the pension scheme may be extended to all PMT employees, subject to Government approval.

On failure to implement the said clause, the union filed a complaint alleging unfair labour practice. The Industrial Court allowed the complaint and directed implementation of the settlement.

High Court Held

The High Court held that the petitioner, being a successor-in-interest employer, was bound by Clause 15 of the settlement, and refusal to extend pensionary benefits amounted to unfair labour practice under Items 5 and 9.

Further, the Industrial Court’s direction to implement the settlement was within its jurisdiction. The petitioner was liable to implement Clause 15 and extend pensionary benefits, subject to statutory compliance.

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Punit Agarwal – [2026] 185 taxmann.com 97 (Article)

1. Introduction

Employee Stock Option Plans (“ESOPs”) have emerged as a powerful tool for talent acquisition and retention, particularly in India’s burgeoning start-up and technology ecosystem. However, the income tax framework governing ESOPs creates a peculiar practical difficulty i.e. the perquisite arising on exercise of stock options is taxable as salary under Section 17(2)(vi) of the Income-tax Act, 1961 and the employer is obligated to deduct TDS under Section 192. The fundamental problem arises when the perquisite value is disproportionately large relative to the employee’s cash salary, leaving the employer with an insufficient salary pool from which to effect TDS recovery.

This article examines the legal provisions, practical challenges, and available solutions when an employer faces the classic question: “How do I deduct TDS of Rs. 30 lakhs when the monthly salary is only Rs. 3 lakhs?”

2. Taxability of ESOPs

ESOPs are taxed at two distinct points in time:

2.1 Stage 1—At the Time of Exercise (Perquisite Under “Salary”)

Under Section 17(2)(vi) read with Rule 3(8) and 3(9) of the Income-tax Rules, 1962, the difference between the Fair Market Value (“FMV”) of the shares on the date of exercise and the exercise price paid by the employee is treated as a perquisite taxable under the head “Salaries.” The employer is required to deduct TDS on this perquisite under Section 192 in the month of exercise.

For listed shares, the FMV is the average of the opening and closing price on the date of exercise on the recognised stock exchange. For unlisted shares, the FMV must be determined by a Category-I Merchant Banker as on the exercise date or a date not earlier than 180 days before the exercise date.

2.2 Stage 2—At the Time of Sale (Capital Gains)

On subsequent sale of the shares, capital gains arise with the FMV at the exercise stage serving as the cost of acquisition. For listed shares with STT, LTCG (holding period > 12 months) is taxable at 12.5% under Section 112A on gains exceeding Rs. 1.25 lakh, and STCG at 20% under Section 111A. For unlisted shares, the LTCG threshold is 24 months, taxable at 12.5% under Section 112, with STCG at slab rates.

3. The Core Problem

Consider the following scenario, which is increasingly common in Indian companies:

Particulars	Amount (Rs.)
Monthly Salary	Rs. 3,00,000
Annual Salary	Rs. 36,00,000
ESOPs Exercised — FMV	Rs. 1,00,00,000
Exercise Price Paid	Rs. 10,00,000
Perquisite Value (FMV – Exercise Price)	Rs. 90,00,000
Total Income (Salary + Perquisite)	Rs. 1,26,00,000
Approximate Tax Liability (Old Regime)	Rs. 38–40 Lakhs
Tax Attributable to ESOP Perquisite	Rs. 28–30 Lakhs (approx.)

The employer’s dilemma is immediately apparent. Even if the employer were to withhold the entire remaining salary of the employee for the balance of the financial year (approximately Rs.33 lakhs), it would barely cover the TDS on the ESOP perquisite alone, leaving the employee with zero take-home pay for 11 months. This is neither commercially feasible nor practically sustainable.

Click Here To Read The Full Article

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Case Details: Hasmukhbhai Jayantibhai Patel vs. Income-tax Officer - [2026] 184 taxmann.com 725 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• Siddhartha Nautiyal, Judicial Member & Smt. Annapurna Gupta, Accountant Member
• Chirag Shah, AR for the Appellant.
• Girish Parihar, Sr. DR for the Respondent.

Facts of the Case

The assessee is a purchaser of immovable property from multiple co-owners. The AO observed that no TDS under section 194-IA was deducted, even though the total consideration for the property exceeded Rs. 50 lakhs. The AO held that TDS at 1% under section 194-IA was required, and for failure to deduct, treated the assessee as an assessee in default under section 201(1) and levied interest under section 201(1A).

On appeal, the assessee argued that the Rs. 50 lakhs threshold applied to each co-owner’s share; the CIT(A) rejected the appeal, stating that when a single property is transferred through a common agreement, the threshold should be considered for the property as a whole, and upheld the treatment under section 201(1) and the levy of interest under section 201(1A).

ITAT Held

The aggrieved assessee filed the instant appeal before the Tribunal. The Ahmedabad Tribunal held that the assessee purchased the property from multiple co-owners, and the consideration attributable to each co-owner’s share was below the prescribed threshold of Rs. 50 lakhs. The provisions of section 194-IA, as applicable to the year under consideration, did not contain any stipulation for aggregating consideration in respect of multiple transferors. The amendment providing for such aggregation has been introduced only by the Finance Act, 2024, with effect from 01.04.2024 and is prospective in nature and not applicable to the year under consideration.

Further, the issue was no longer res integra and stood squarely covered in favour of the assessee by a series of decisions of the coordinate benches of the Tribunal. It has been categorically held that where the consideration paid to each co-owner is less than Rs. 50 lakhs, the provisions of section 194-IA are not attracted, and the aggregate consideration cannot be considered for the purpose of determining the threshold, particularly for the period before the insertion of the proviso by the Finance Act, 2024.

Accordingly, the assessee could not be treated as an assessee-in-default under section 201(1), and the demand raised under section 201(1) was deleted.

List of Cases Reviewed

• Aakash Pursottambhai Vaghela v. ITO [2025] 176 taxmann.com 372 (Ahmedabad – Trib.)
• Bhikhabhai Hirabhai Patel v. Dy. CIT [2023] 155 taxmann.com 87 (Ahmedabad – Trib.)
• Archanaben Rajendrasingh Deval v. ITO [2025] 173 taxmann.com 722/212 ITD 414 (Ahmedabad – Trib.)[Para 14] Followed

List of Cases Referred to

• CIT v. Anjum M.H. Ghaswala [2001] 119 Taxman 352/252 ITR 1 (SC) (para 5)
• Aakash Pursottambhai Vaghela v. ITO [2025] 176 taxmann.com 372 (Ahmedabad – Trib.) (para 10)
• Bhikhabhai Hirabhai Patel v. Dy. CIT [2023] 155 taxmann.com 87 (Ahmedabad – Trib.) (para 11)
• Archanaben Rajendrasingh Deval v. ITO [2025] 173 taxmann.com 722/212 ITD 414 (Ahmedabad – Trib.) (para 12).

The post No TDS Default u/s 194-IA Without Aggregation Pre-2024 | ITAT appeared first on Taxmann Blog.

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F. No. IFSCA-PLNP/80/2024-Capital Markets dated: 02.04.2026

The International Financial Services Centres Authority (IFSCA) has mandated a certification requirement for professionals associated with Capital Market Intermediaries (CMIs) operating in IFSCs.

1. Specified Certification Course

The prescribed certification is titled: “Regulatory Framework for Capital Market Intermediaries in IFSC”

• The course is offered by the Institute of Company Secretaries of India (ICSI)
• It is aimed at enhancing regulatory understanding and compliance capabilities

2. Applicability of the Requirement

The certification is mandatory for:

• Key Managerial Personnel (KMPs)
• Employees engaged in core activities of CMIs

3. Compliance Deadline

• The certification must be completed by 30th September 2026

4. Responsibility for Compliance

• CMIs and their controlling persons are responsible for ensuring compliance
• They must ensure that all relevant personnel complete the certification within the prescribed timeline

5. Objective of the Mandate

The requirement seeks to:

• Strengthen regulatory awareness and expertise
• Improve governance and compliance standards
• Enhance investor confidence in IFSC market intermediaries

6. Conclusion

This initiative reinforces IFSCA’s focus on building a well-informed and competent ecosystem, ensuring that key personnel in capital market intermediaries are equipped with the necessary regulatory knowledge and skills.

Click Here To Read The Full Notification

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Circular No. RBI/2026-27/06 IDMD.RETL.No.S23/13.01.300/2026-27, Dated 02.04.2026

The Reserve Bank of India (RBI) has reviewed and revised the operational guidelines for Floating Rate Savings Bonds, 2020 (Taxable), exercising powers under Section 29(2) of the Government Securities Act, 2006.

1. Effective Date and Applicability

The revised guidelines are effective from the date of the circular and supersede the earlier operational guidelines issued in June 2020.

2. Comprehensive Framework for Issuance and Servicing

The updated guidelines provide a detailed framework for issuance and servicing of bonds through designated Receiving Offices, covering:

• Receipt and processing of applications
• Opening and maintenance of Bond Ledger Accounts (BLA)
• Nomination facilities
• Interest payments
• Premature encashment provisions
• Repayment on maturity

3. Handling of Special Cases

The guidelines also lay down procedures for:

• Recognition of claims in case of death of the investor
• Handling of unpaid or unclaimed amounts
• Processing of reimbursement claims

This ensures clarity and uniformity in dealing with exceptional situations.

4. Audit, Compliance, and Reporting Requirements

The framework includes provisions relating to:

• Audit and compliance checks
• Reconciliation and reporting obligations
• Ensuring accuracy and accountability in operations

5. Investor Services and Grievance Redressal

To enhance customer experience, the guidelines specify:

• Investor service standards
• Grievance redressal mechanisms

6. Operational Provisions for Receiving Offices

Additional provisions cover:

• Remuneration to Receiving Offices
• Penalties for non-compliance
• Preservation and maintenance of records

7. Conclusion

The revised guidelines provide a comprehensive and structured operational framework for Floating Rate Savings Bonds, ensuring efficient administration, improved investor protection, and enhanced regulatory oversight.

Click Here To Read The Full Circular

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Consultation paper dated 02.04.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper inviting comments from the public and stakeholders on a proposal to reintroduce buy-back of shares through the open market via stock exchange as an additional method under the SEBI (Buy-Back of Securities) Regulations, 2018.

1. Background – Discontinuation of Open Market Method

The open market buy-back method was discontinued with effect from 1st April 2025 due to:

• Concerns over equitable treatment of shareholders
• Issues arising from the then-prevailing taxation framework, which created disparities

2. Change in Taxation Framework

Subsequent changes in tax laws have addressed earlier concerns:

• Buy-back proceeds are now taxed as capital gains in the hands of shareholders
• This removes the tax arbitrage and inequity issues that existed earlier

3. Rationale for Reintroduction

Stakeholders have represented that the open market route:

• Enhances market efficiency
• Improves liquidity
• Facilitates better price discovery

Considering these benefits, SEBI has proposed to reintroduce this method.

4. Proposed Mechanism

• Buy-back through open market will be conducted via a separate window on stock exchanges
• It will be subject to existing regulatory safeguards and provisions under the Buy-Back Regulations

5. Call for Public Comments

SEBI has invited comments and feedback from stakeholders on the proposal, indicating a consultative approach before finalising the regulatory framework.

6. Conclusion

The proposal reflects SEBI’s intent to balance investor protection with market efficiency, by reconsidering the open market buy-back route in light of the evolved taxation regime and stakeholder feedback.

Click Here To Read The Full Update

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RBI/2026-27/05 A.P. (DIR Series) Circular No. 04 dated 02.04.2026

Click Here To Read The Full Circular

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Case Details: DGAP vs. IJM Raintree Park (P.) Ltd. - [2026] 185 taxmann.com 102 (GSTAT-NEW DELHI)

Judiciary and Counsel Details

• Justice Mayank Kumar Jain, Judicial Member

Facts of the Case

The applicant filed an application for Advance Ruling to seek clarification on whether the GST would be applicable on the recovery of expenses from the employees. The applicant is a company engaged in the business of providing IT services to its clients. It incurs various expenses on behalf of its employees and recovers such expenses from its employees on a monthly basis.

AAR Held

The Authority for Advance Ruling, Maharashtra held that the recovery of expenses from the employees would be considered as a supply of services as the same is done in the course or furtherance of business and for a consideration in the form of deduction from the salary of the employees. Thus, the applicant was required to pay GST on the recovery of expenses from the employees.

List of Cases Reviewed

• Reckitt Benckiser India (P.) Ltd. v. UOI [2024] 158 taxmann.com 675/102 GST 495/82 GSTL 344 (Delhi) (para 68), followed

List of Cases Referred to

• Reckitt Benckiser India (P.) Ltd. v. UOI [2024] 158 taxmann.com 675/102 GST 495/82 GSTL 344 (Delhi) (para 7)
• DGAP v. Ireo (P.) Ltd. [Order No. NAPA/73/PB/2025, dated 28.10.2025] (para 18)
• Sudarshan Theatre v. UOI [2024] 164 taxmann.com 331/105 GST 418/88 GSTL 293 (Telangana) (para 24).

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Editorial Team – [2026] 185 taxmann.com 57 (Article)

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

1. Financial Reporting Council Issues Guidance on Use of Generative and Agentic AI in Audits

The Financial Reporting Council (FRC) has released new guidance to support audit firms in the responsible use of generative and agentic AI tools during audit engagements, balancing innovation with the need to safeguard audit quality.

The guidance provides a structured framework to help firms assess and build appropriate confidence in AI-generated outputs, while recognising that the extent of safeguards will depend on professional judgement, the nature of the tool, and its intended use. It also highlights the potential of AI to enhance audit efficiency and quality when used appropriately.

Importantly, the FRC clarifies that accountability remains firmly with the human auditor, and the use of AI does not alter existing responsibilities under auditing standards. Firms are therefore expected to integrate AI usage within their broader quality management frameworks, particularly in line with ISQM (UK).

As the first guidance of its kind issued by a global audit regulator, it aims to promote consistent practices, build confidence in emerging technologies, and support firms in adopting AI responsibly.

Source – Financial Reporting Council

2. IASB March 2026 Update – Focus on IFRS 16 Costs, Equity Method, and SMEs

The International Accounting Standards Board (IASB), in its March 2026 meetings, discussed key areas including the post-implementation review of IFRS 16, re-deliberations on the Equity Method, and amendments to the IFRS for SMEs Standard.

2.1 IFRS 16 – Addressing Cost Concerns

Acknowledging concerns over the high ongoing costs for lessees, the IASB decided to undertake a research project to explore simplifications in areas such as lease liability re-measurements and discount rates. However, it chose not to make changes to disclosures, recognition exemptions, or guidance on key judgements, indicating that the existing framework remains largely effective.

2.2 Equity Method – Consistency with Practical Relief

The Board reaffirmed that changes in ownership interests, while retaining significant influence, should follow purchase and disposal principles. It also introduced optional relief from fair value measurement for additional acquisitions, subject to materiality, while retaining a principles-based approach without adding detailed guidance.

2.3 IFRS for SMEs – Proposed Consolidation Exemption

To address an application issue, the IASB plans to introduce a consolidation exemption for certain intermediate parent entities. An exposure draft is expected shortly, with a proposed effective date of 1st January 2027 and early adoption permitted.

Source – IFRS Foundation

Click Here To Read The Full Article

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Circular No. A.P. (DIR Series) Circular No. 03, Dated 01.04.2026

The Reserve Bank of India (RBI) has issued directions imposing restrictions on foreign exchange (FX) derivative transactions by Authorised Dealers (ADs), with immediate effect, to strengthen risk management and curb speculative activities.

1. Restriction on INR Non-Deliverable Derivatives

Authorised Dealers are prohibited from offering INR non-deliverable derivatives to any user.

This move aims to limit exposure to offshore speculative instruments and ensure greater control over currency risk.

2. Disallowance of Rebooking of Cancelled Contracts

The RBI has disallowed the rebooking of cancelled FX derivative contracts.

This prevents misuse of derivative products for speculative gains arising from frequent cancellations and re-entries.

3. Prohibition on Related Party Transactions

Derivative transactions with related parties have been prohibited, ensuring:

• Elimination of potential conflicts of interest
• Prevention of circular or non-arm’s length transactions

4. Permissibility of Deliverable Derivatives

Deliverable FX derivatives may continue to be used for genuine hedging purposes, subject to:

• Compliance with prescribed conditions
• Availability of supporting documentation

5. Effective Date and Applicability

These directions are:

• Effective immediately
• Applicable until further review by the RBI

6. Conclusion

The RBI’s measures reinforce a prudential and risk-sensitive approach to FX derivatives, promoting genuine hedging, transparency, and market discipline, while curbing speculative and related-party exposures.

Click Here To Read The Full Circular

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