Circular No. IFSCA/13/2026-Capital Markets/1, Dated 01.04.2026

The International Financial Services Centres Authority (IFSCA) has amended its circular on Key Managerial Personnel (KMP) applicable to Fund Management Entities (FMEs), streamlining the approval framework for KMP appointments and changes.

1. Removal of Prior Review Timeline

The amendment omits the provision requiring the Authority to provide comments within 7 working days on:

• Appointment of KMPs
• Changes in KMP positions

This effectively removes the earlier time-bound review mechanism.

2. Withdrawal of Consideration Requirement

Earlier, FMEs were required to consider the comments provided by the Authority on such appointments or changes.
With this amendment:

• The requirement to consider such comments has been withdrawn
• FMEs now have greater operational autonomy in KMP-related decisions

3. Impact of the Amendment

As a result:

• The prior approval/review-based approach is relaxed
• The framework shifts towards a more self-regulated and disclosure-driven regime
• Administrative timelines and dependencies are reduced

4. Continuity of Existing Provisions

All other provisions of the circular dated 20th February 2025:

• Remain unchanged
• Continue to be fully applicable and in force

5. Conclusion

The amendment simplifies the KMP governance framework for FMEs by removing procedural constraints, enhancing ease of doing business, and allowing entities to manage leadership changes with greater flexibility, while retaining the core regulatory structure.

Click Here To Read The Full Circular

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Hitesh Kumar & Avinash K – [2026] 185 taxmann.com 1 (Article)

1. Introduction

Presumptive taxation was introduced to simplify tax compliance for small businesses by allowing income to be declared at a minimum prescribed percentage of turnover without maintaining detailed books of account. Under the Income-tax Act, 1961, Section 44AD largely functioned as a simplified taxation mechanism intended to reduce compliance burden for small taxpayers while improving tax administration.

Prior to the amendments introduced by the Finance Act 2016, taxpayers declaring profits below the prescribed percentage were generally required to maintain books of account and undergo audit where their total income exceeds the basic exemption limit. The Finance Act, 2016 introduced a five-year lock-in condition, under which taxpayers who opted for the presumptive scheme but subsequently opted out within five years by declaring income below the prescribed rate were required to maintain books of account and get their accounts audited if their total income exceeded the basic exemption limit.

The Income-tax Act, 2025 significantly restructures this framework by replacing Sections 44AD and 44AB with Sections 58 and 63. While the prescribed percentage and turnover thresholds largely remain unchanged, the new law establishes a structure where taxpayers effectively face two alternatives—either accept the presumptive income prescribed under Section 58 or maintain books of account and undergo audit when declaring lower profits.

Against this background, this article analyses the major changes introduced in the presumptive taxation regime for businesses under Section 58 of the Income-tax Act, 2025 (corresponding broadly to Section 44AD of the 1961 Act). The article also examines several interpretational issues and controversies arising from the revised provisions.

This article only focuses on Presumptive taxation for Business assessee covered u/s 58 (2) Sl.no 1 (Earlier section 44AD)

2. Key Provisions

2.1 Section 58 – Presumptive Taxation

Section 58(2) (A) deems profits at 8% of gross receipts or turnover (6% for receipts through specified banking/online modes) during the tax year or before the due date specified in section 263(1) in respect of that tax year for eligible assessee,

(B) Profit claimed to have been actually earned, whichever is higher.

Section 58(2) applies where the total turnover:

(a) does not exceed Rs. 2 crore; or

(b) does not exceed Rs. 3 crore where aggregate of cash receipts does not exceed 5% of total turnover or gross receipts.

Section 58(3) mandates that where an assessee claims actual profits below the prescribed percentage and total income exceeds the basic exemption threshold (Rs. 4,00,000 in case of new tax regime), books of account must be maintained and audited under Section 63.

Section 58(4) provides:

“Any loss, allowance or deduction allowable under the provisions of this Act shall not be allowed against the income computed under sub-section (2).“

Section 58(7) Where an eligible assessee declares profit for any tax year as per the provisions of sub-section(2) and he declares profit for any of the five tax years succeeding such tax year in contravention of the provisions of sub-section(1), then he shall not be eligible to claim the benefit of the provisions of this section for five tax years subsequent to the tax year in which the profit has not been declared as per the provisions of the said sub-section.

Section 58(8) Irrespective of anything contained in foregoing provision of this section, where provisions of sub-section (7) are applicable to an eligible assessee and his total income exceeds the maximum amount which is not chargeable to income-tax, he shall be required to keep and maintain such books of account and other documents as required under section 62 and get them audited and furnish a report of such audit as required under section 63

2.2 Section 63 – Audit Thresholds

Section 63 prescribes audit requirements based on turnover thresholds:

(a) Rs. 1 crore for businesses;

(b) Rs. 10 crore where aggregate cash receipts does not exceed 5% of total sales, turnover or gross receipts and cash payments does not exceed 5% of total payments; and

Critically, Section 63 also mandates audit where actual profits are claimed below prescribed percentage as specified under Section 58 (2), creating a separate audit trigger independent of turnover thresholds.

Click Here To Read The Full Article

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RBI/2026-27/03 A.P. (DIR Series) Circular No. 02; dated 01.04.2026

Click Here To Read The Full Circular

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Case Details: V.V.Iron Steel Company (P.) ltd. vs. Assistant Commissioner [2026] 184 taxmann.com 629 (Madras)

Judiciary and Counsel Details

• Krishnan Ramasamy, J.
• S. Silambannan, Sr. Counsel & T. Bashyam for the Petitioner.
• R. Gowrishankar for the Respondent.

Facts of the Case

The petitioner filed a writ petition seeking the unblocking of input tax credit (ITC) in its electronic credit ledger to enable utilisation towards GST liabilities. The electronic credit ledger had been blocked by the jurisdictional officer under CGST on the ground of alleged transactions with non-existing dealers and the use of fake invoices during an ongoing investigation. The petitioner submitted a representation seeking unblocking, which remained pending consideration, and relied upon a Division Bench ruling contending that reasons for blocking must be communicated and a speaking order must be passed. The jurisdictional officer under CGST sought time to decide the representation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that prior notice was not mandatory for initial blocking of the electronic credit ledger under Rule 86A read with Rule 86 of the CGST Rules and the Tamil Nadu GST Rules. It was held that the jurisdictional officer under CGST is required to record reasons in writing for such blocking and communicate the same to the assessee, enabling filing of objections. The Court further held that upon receipt of objections, the authority must grant an opportunity of personal hearing and pass a reasoned speaking order either sustaining or revoking the blocking. Applying these principles, the Court directed that since the representation was pending, the petitioner be permitted to file additional materials within one week. Accordingly, the writ petition was disposed of with directions.

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Case Details: Vikram Bhuwalka vs. Assistant Commissioner of State Tax [2026] 184 taxmann.com 626 (Calcutta)

Judiciary and Counsel Details

• Om Narayan Rai, J.
• Vinay Kumar Shraff, Dev Kumar Agarwal, Ms Ritika Prasad & Prithwijit Sharma for the Petitioner.
• Tanoy Chakraborty & Saptak Sanyal for the Respondent.

Facts of the Case

The petitioner challenged the adjudication order denying input tax credit (ITC) on the grounds of the retrospective cancellation of suppliers’ registrations and the reversal of credit notes. A notice was issued alleging multiple discrepancies, to which the petitioner submitted a reply. At adjudication, one ground relating to exempt supplies was dropped, while liability was confirmed on the remaining grounds. The petitioner contended that the reply and supporting documents evidencing the movement of goods were not properly considered, and that reliance was placed on statements of vehicle owners without furnishing those statements or granting an opportunity for cross-examination. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that reliance on third-party statements without furnishing them or allowing cross-examination constituted a violation of principles of natural justice. It was observed that the jurisdictional officer failed to demonstrate how the petitioner’s documents were evaluated or why they were insufficient under Section 16 read with Section 75 of the CGST Act and the West Bengal GST Act. The Court held that absence of reasoning and denial of opportunity vitiated the adjudication process. Accordingly, the impugned order was set aside and the matter was remanded for fresh adjudication with an opportunity of hearing.

List of Cases Referred to

• Shiva Chemicals v. Asstt. Commissioner of Revenue, State Tax [2024] 165 taxmann.com 13/105 GST 615/89 GSTL 118 (Calcutta) (para 11).

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Circular No. DCM (FNVD)/G-1/16.01.05/2026-27, Dated 01.04.2026

The Reserve Bank of India (RBI) has issued a Master Direction on Counterfeit Notes – Detection, Reporting and Monitoring, consolidating and updating existing guidelines applicable to banks under the Banking Regulation Act, 1949.

1. Objective of the Master Direction

The primary objective of the framework is to:

• Ensure uniform practices across banks
• Strengthen detection and reporting mechanisms for counterfeit notes
• Provide a single, comprehensive reference point for regulatory compliance

2. Scope and Coverage

The Master Direction covers:

• Detection of counterfeit currency at bank branches and currency chests
• Reporting requirements to relevant authorities
• Monitoring and control mechanisms to prevent circulation of fake notes

This ensures a consistent and structured approach across the banking system.

3. Consolidation of Existing Guidelines

The Direction consolidates multiple existing circulars and instructions into a unified framework, simplifying compliance for banks and improving regulatory clarity.

4. Withdrawal of Earlier Circulars

All earlier circulars and directions on the subject, as listed in Annex IX, stand withdrawn from the date of issuance of this Master Direction.

5. Conclusion

The issuance of this Master Direction enhances regulatory coherence, operational efficiency, and vigilance in handling counterfeit notes, reinforcing the RBI’s commitment to maintaining the integrity of the currency system.

Click Here To Read The Full Circular

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Case Details: Lt. Col. Pooja Pal vs. Union of India [2026] 184 taxmann.com 584 (SC)

Judiciary and Counsel Details

• Surya Kant, CJI | Ujjal Bhuyan & Nongmeikapam Kotiswar Singh, JJ.
• Ms V Mohana, Ms Rekha Palli, Abhinav Mukerji, Dr. Menaka Guruswamy, Sr. Advs., Santosh Krishnan, Rakesh Kumar, Ms Amrita Panda, Ms Tanya Shree, Aors, Ashwin Joseph, Sudhanshu Shekhar Pandey, Gaichangpou Gangmei, Anish Venkatesh Bindlish, Roshan Kumar, Maitreya Mahaley, Ms Nandita Lal, Ms Bhavya Sharma, Vaidushya Parth, Yimyanger Longkumer, Kamei Bestman Kabui, Chipika Zhimo, Ms Archita Nigam, Ms Khusboo Hora, Vinay Kumar, Ms Amisha Kumari, Sanjay Kumar Yadav, Ruchir Josh, Ms Shaswati Parhi, Arjun Moha, Anmol Gupta, Ms Bhumika Yadav, Advs. Mrs. Aishwarya Bhati, A.S.G., Ms Riddhi Jad, Ms Shreya Jain, Ms Anupriya Srivastava, Nitin Chowdhary P., Chitvan Singhal, Ms Shreya Jain, Bhuvan Kapoor, Ms Agrima Singh, Mrs. Pankhuri Srivastava, Anuj Srinivas Udupa, Ms Shivika Mehra, Rajeshwari Shankar, Santosh Kumar, Indra Sen Singh, Ms Kaberi Sharma, Deepak Thakur, Ms Pushpanjali Singh, Vipul Kumar, Ms Gursimrat Kaur, Manoj Kumar, Advs., Mukesh Kumar Maroria, Anuj Kapoor & Kaustubh Shukla, Aors for the Appearing Parties.

Facts of the Case

In the instant case, the appellants were Short Service Commissioned Women Officers (SSCWOs) from Courses 4 to 7 (2010–2012) considered for Permanent Commission (PC) with their male counterparts by regular No. 5 Selection Boards under 24.02.2012 policy.

The appellants asserted that they were routinely denied criteria appointments and were excluded or not timely detailed for key courses such as Junior Command Course, and that even when posted in sensitive operational roles, this was not accurately reflected in Annual Confidential Reports (ACRs)/Member Data Sheet (MDS); they contended that these disparities depressed their profiles and value judgment scores.

Further, the respondents stated that criterion-based appointments were not a prerequisite for PC and carried no separate marks, and that course marks were merely an average of completed courses, without regard to the number or nature of the courses.

The Armed Forces Tribunal (AFT) recorded that criteria appointments were relevant only later for No. 3 Board (Colonel) and not mandatory for the PC, that ‘Courses’ carried 10 marks on an average basis and the appellants’ course gradings predominantly lay in ‘B’ and ‘C’ bands, and it concluded that such disparities did not affect No. 5 Selection Board results.

Further, a policy dated 15.01.1991 fixed an annual cap of 250 PC vacancies, with a 60% minimum cut-off and competitive selection if eligible officers exceeded the cap, and a 22.01.1991 File Noting explained the proportional allotment of vacancies among batches and the non-transferability of unfilled slots.

In 2020, alongside a Special No. 5 Selection Board pursuant to Babita Puniya, a regular No. 5 Selection Board considered SSCWOs-4/SSCWOs-5 with SSC-90/SSC-91.

Also, the appellants argued that the 250-cap was outdated, had historically been breached, and operated to indirectly disadvantage SSCWOs; they further claimed that vacancies were miscomputed by apportioning between batches considered in a calendar year rather than between March/September courses of the same commissioning year, resulting in withholding of vacancies from the September 2010 course.

The Respondents maintained that 250-cap was a cadre-management necessity applied in a gender-neutral manner, that past breaches were exceptional, and that since 1991, vacancies had been apportioned between two batches considered in the same calendar year (with 2020 being a COVID-driven exception); they asserted September 2010 and March 2011 courses were properly clubbed for vacancy apportionment in December 2020.

The AFT held 1991 cap continued to govern PC considerations, had been observed save for sanctioned exceptions, was gender-neutral in operation, and vacancies were correctly apportioned between two batches considered within the same calendar year, rejecting claim of miscalculation and indirect discrimination.

On appeal, the matter was considered by the Supreme Court.

Supreme Court Held

The Supreme Court noted that the ACRs of the appellant-SSCWOs were graded casually without adjudging their suitability for career progression, and such grading adversely affected their overall comparative merit.

Further, it was noted that the ACRs of the appellant-SSCWOs were not graded with due diligence and fairness to determine their suitability for PC.

Furthermore, the Supreme Court noted that when evaluative frameworks were applied to assess their performance under various parameters, they often lacked depth and rigour compared to those applied to their male counterparts. These assessments have inevitably influenced their service records, comparative merit, and career progression.

Further, the differential treatment of the appellant-SSCWOs in respect of criteria appointments and additional/optional courses had adversely impacted their overall scores in the No. 5 Selection Board.

It was observed that since the appellant-SSCWOs, who did not meet merit-wise cut-offs in their respective assessments, had lost out on the grant of PC by small margins, even a minor distortion in the value judgment became determinative of the outcome.

The denial of PC to SSCWOs was not merely an outcome of individual assessments, but a consequence of a systemic framework rooted in assumptions that entrenched disadvantages in career progression.

Further, the Supreme Court observed that the inclusion of the SSCWOs in the zone of consideration for PC was not a matter of discretion, but of constitutional obligation and, therefore, any expectation to the contrary was inherently illegitimate.

The Supreme Court held that the finding of the AFT to the effect that differential treatment of the SSCWOs on aspects of optional courses and criteria appointments had no impact on the results of No. 5 Selection Boards was patently erroneous and untenable.

Since the apportionment of vacancies was in line with provisions of policy circular dated 15.01.1991 and sustained standard practice of the Army, there was no merit in the appellants’ claim that vacancies available for their batches were computed incorrectly or arbitrarily.

It was appropriate to invoke powers under Article 142 of the Constitution of India to grant such relief which was moulded towards doing complete justice between parties.

Further, the Supreme Court held that the appeals preferred by the Appellant-SSCWOs were to be allowed and those filed by the Appellant-male SSCOs were to be dismissed, and the claim made by the appellant-male SSCOs that they ought not to be considered alongside SSCWOs was liable to be outrightly and decisively rejected.

List of Cases Reviewed

• Order of Armed Forces Tribunal, Principal Bench at New Delhi in OA-28-2022, dated 03.07.2024 (para 67) modified

List of Cases Referred to

• Babita Puniya v. Secretary 2010 SCC Online Del 1116 (para 4.11)
• Ministry of Defence v. Babita Puniya (2020) 7 SCC 469 (para 4.17)
• Lt. Col. Nitisha v. Union of India [Writ Petition (C) No. 1109 of 2020] (para 4.22)
• K. Purushottam Reddy v. Union of India (2025) 9 SCC 722 (para 63).

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Case Details: Piyush Mafatlal Shah vs. Income-tax Officer [2026] 184 taxmann.com 641 (Gujarat)

Judiciary and Counsel Details

• A.S. Supehia & Pranav Trivedi, JJ.
• Dhinal A Shah for the Petitioner.
• Karan G Sanghani, Senior Standing Counsel for the Respondent.

Facts of the Case

The assessee was a trader in gold, silver, diamonds, and bullion, and filed its return for the relevant assessment year. The Assessing Officer (AO) issued a show cause notice under Section 148A(1) alleging income escapement based on flagged high-risk transactions and a GST show cause notice proposing registration cancellation for ineligible ITC.

GST registration was cancelled, but on appeal, the Appellate Authority restored it, citing denial of hearing, non-consideration of the assessee’s reply, lack of adjudication to prove fraudulent ITC, and supporting returns and banking records. AO issued a notice under Section 148. The aggrieved assessee filed a writ petition with the Gujarat High Court.

High Court Held

The High Court held that the reopening of the assessment was based on the cancellation order passed by the GST Authorities, which the Appellate Authority had set aside in the petitioner’s favour. The petitioner was subjected to scrutiny by the GST department, alleging that it had availed ITC from non-genuine suppliers and issued or received invoices without the actual supply of goods. Accordingly, the registration was cancelled. The Appellate Order specifically holds that the petitioner had not claimed any fraudulent ITC, nor had it violated the GST Law under Section 73 or Section 74 of the CGST Act. Thus, this was a very vital aspect that the AO was required to consider while passing the impugned order under Section 148A(3).

Apart from this, the AO had no other material to prove that income had escaped. Therefore, reopening the assessment was unjustified, and the notice under section 148 was quashed and set aside.

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Circular No. IFSCA/13/2026-Capital Markets/1, Dated 01.04.2026

The International Financial Services Centres Authority (IFSCA) has introduced a mandatory certification requirement for professionals associated with Fund Management Entities (FMEs) operating in IFSCs.

1. Specified Certification Course

The Authority has prescribed a certification titled:

“Regulatory Framework for Fund Management in IFSC – AIFs and Retail Schemes”

• The course is offered by the Institute of Company Secretaries of India (ICSI)
• It is designed to enhance understanding of the regulatory framework governing fund management activities

2. Applicability of the Requirement

The certification is mandatory for:

• Key Managerial Personnel (KMPs)
• Employees engaged in core fund management activities of FMEs

3. Compliance Deadline

• The certification must be completed by 30th September 2026

4. Responsibility for Compliance

• FMEs and persons in control are responsible for ensuring compliance with this requirement
• They must ensure that relevant personnel complete the certification within the prescribed timeline

5. Encouragement for Wider Ecosystem

While mandatory for specified personnel, the Authority has also:

• Encouraged other ecosystem participants to undertake the certification
• Aimed to promote broader regulatory awareness and professional competence

6. Conclusion

This initiative strengthens the IFSC regulatory ecosystem by ensuring that key professionals possess adequate regulatory knowledge and expertise, thereby enhancing governance standards and investor confidence in fund management activities.

Click Here To Read The Full Circular

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RBI/2026-27/02 | A.P. (DIR Series) Circular No. 01 dated 01.04.2026

The Reserve Bank of India (RBI) has introduced a standardised reporting mechanism for guarantees under the Foreign Exchange Management (Guarantees) Regulations, 2026, issued under FEMA, 1999, effective from 1st April 2026.

1. Introduction of Structured Reporting Forms

The RBI has prescribed specific forms for reporting guarantee-related transactions:

• Form GRN Issue – for reporting issuance of guarantees
• Form GRN Modification – for reporting any changes or amendments
• Form GRN Invocation – for reporting invocation of guarantees

This structured format ensures consistency and completeness in reporting.

2. Submission Through CIMS Portal

Authorised Dealer (AD) banks are required to:

• Submit guarantee-related returns through the CIMS (Centralised Information Management System)
• File returns within 30 days from the end of each quarter

3. Unique Guarantee Transaction Number (UTN)

Each guarantee reported must be assigned a Unique Guarantee Transaction Number (UTN), enabling:

• Tracking and monitoring of guarantees
• Improved data integrity and audit trail

4. Objective of the Framework

The revised mechanism aims to:

• Enhance transparency and traceability in guarantee transactions
• Strengthen regulatory oversight under FEMA
• Ensure uniform reporting practices across AD banks

5. Conclusion

The standardised reporting framework marks a significant step towards digitised, structured, and efficient monitoring of guarantee transactions, ensuring better compliance and regulatory control in foreign exchange operations.

Click Here To Read The Full Circular

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