Press Release, dated 07-02-2026

The Central Board of Direct Taxes (CBDT) has released the draft Income-tax Rules, 2026 for public consultation. Stakeholders and members of the public have been invited to submit their feedback and comments on the draft rules and forms.

1. Timeline for Submission of Comments

• Last date to submit comments – 22 February 2026

The consultation process is intended to ensure stakeholder participation before finalisation of the new rules.

2. Philosophy and Approach Behind the Draft Rules

The drafting of the Income-tax Rules, 2026 and the associated forms follows the same guiding philosophy as the Income-tax Act, 2025, with a strong focus on simplification and usability.

Key drafting principles include:

• Use of simple and clear language
• Incorporation of formulas and tables wherever required to improve clarity
• Logical structuring of provisions to enhance readability

3. Elimination of Redundancy and Consolidation

CBDT has sought to eliminate redundancies present in the Income-tax Rules, 1961.

The draft rules aim to simplify and consolidate provisions, resulting in a significant reduction in volume:

• Number of rules reduced – from 511 to 333
• Number of forms reduced – from 399 to 190

This consolidation is intended to make the tax framework more streamlined and easier to navigate.

4. Alignment with the Income Tax Act, 2025

While preserving the overall policy intent, the draft rules incorporate necessary changes aligned with amendments introduced under the Income-tax Act, 2025.

The intent is to ensure consistency between the Act and the Rules without altering substantive policy outcomes.

5. Simplification and Standardisation of Forms

The draft rules place significant emphasis on simplifying tax compliance through improved form design:

• Forms have been simplified to a large extent to make them more taxpayer-friendly
• Standardisation of common information across forms has been implemented to reduce repetitive disclosures
• Forms are designed to:

1. 1. Enable automated reconciliation
   2. Support prefill of data
   3. Make filing more intuitive and less error-prone

These changes aim to reduce the compliance burden on taxpayers and improve the overall filing experience.

6. Key Takeaway

The draft Income-tax Rules, 2026 represent a major step towards:

• Simplified tax administration
• Reduced compliance complexity
• Greater use of automation and standardisation

Stakeholders are encouraged to review the draft rules and submit comments by the stipulated deadline.

Click Here To Read The Full Press Release

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Case Details: Bhola Nath vs. State of Jharkhand [2026] 183 taxmann.com 59 (SC)

Judiciary and Counsel Details

• Vikram Nath & Sandeep Mehta, JJ.
• Kumar Shivam, Nishant Kumar, Aors, Pradeep Kumar Tripathi, Gaurav Prakash Pathak, Aashish Kumar, Advs., Saurabh Mishra & K. Parameshwar, Sr. Advs. for the Petitioner.
• Ms Ruchira Gupta, Nilesh Kumar, Ms Adya Shree Dutta, Ms Pooja Tripathi, Mohtisham Ali, Ms Dorjee Ongmu Lachungpa, Areen Gulati, Aniruddha Saha, Mangaljit Mukherji, Karma Dorjee, Anil Kumar, Gunjesh Ranjan, Prakash Kumarmangalam, Manoneet Dwivedi, Abhishek Kumar Gupta, Advs., Jayant Mohan & Shantanu Sagar, Aors for the Respondent.

Facts of the Case

In the instant case, the appellants were appointed by the respondent-State against sanctioned posts of Junior Engineers (Agriculture), with engagement being described from inception as contractual in nature. The terms and conditions governing engagement stipulated that appointment would be for an initial period of one year, extendable thereafter subject to satisfactory performance.

The Respondent-State accordingly granted extensions to the appellants from time to time until 2023, when it was expressly clarified that the extension granted would be the last. It was only towards the end of the year 2022 that respondents communicated that no further extension of the appellants’ engagement was likely to be granted.

It was noted that the abrupt discontinuance of such long-standing engagement solely based on contractual nomenclature, without either recording cogent reasons or passing a speaking order, was manifestly arbitrary and violative of Article 14 of the Constitution of India.

Further, the contractual stipulations purporting to bar claims for regularisation could not override constitutional guarantees.

Supreme Court Held

The Supreme Court held that the State, as a model employer, could not rely on contractual labels or the mechanical application of Umadevi (State of Karnataka v. Uma Devi (2006) 4 SCC 1) to justify prolonged ad hocism or to discard long-serving employees in a manner inconsistent with fairness, dignity, and constitutional governance.

In view of the foregoing discussion, the respondent-State was to forthwith regularise the services of all appellants against sanctioned posts to which they were initially appointed.

List of Cases Reviewed

• Judgments passed by the High Court of Jharkhand at Ranchi in Bhola Nath v. The State Of Jharkhand [L.P.A No. 390 of 2024, dated 17-09-2024]
• Uday Kant Yadav v.State of Jharkhand [LPA No 356 0f 2024, dated 15-10-2024]
• Prakash Kumar v. State of Jharkhand [LPA No. 368 of 2024, dated 2-12-2024] [Para 15] set aside

List of Cases Referred to

• Bhola Nath v. State of Jharkhand [LPA Nos. 390 of 2024, dated 17-9-2024] (para 3)
• Uday Kant Yadav v. State of Jharkhand [LPA No. 356 of 2024, dated 15-10-2024] (para 3)
• Prakash Kumar v. State of Jharkhand [LPA No. 368 of 2024, dated 2-12-2024] (para 3)
• Secretary, State of Karnataka v. Umadevi 2006 taxmann.com 2495 (SC) (para 6.2)
• Chandra Singh v. State of Rajasthan 2003 taxmann.com 4039 (SC) (para 9.2)
• Basheshar Nath v. Comm. Income Tax 1958 SCC OnLine SC 7 (para 11.6)
• Central Inland Water Transport Corpn. v. Brojo Nath Ganguly 1986 taxmann.com 1221 (SC) (para 12)
• Pani Ram v. Union of India (2021) 19 SCC 234 (para 12.1)
• Army Welfare Education Society v. Sunil Kumar Sharma (2024) 16 SCC 598 (para 13)
• Jaggo v. Union of India 2024 SCC OnLine SC 3826 (para 13.6)
• Vinod Kumar v. Union of India (2024) 9 SCC 327 (para 13.7)
• Shripal v. Nagar Nigam [2025] 1 taxmann.com 9348 (SC) (para 13.7)
• Dharam Singh v. State of U.P. [2025] 177 taxmann.com 556 (SC) (para 13.8).

The post State Cannot Abruptly End Long-Term Contractual Service | SC appeared first on Taxmann Blog.

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MASTER CIRCULAR HO/38/13/(4)2026-MIRSD-POD/I/4298/2026; Dated: 06.02.2026

The Securities and Exchange Board of India (SEBI) has issued a Master Circular for Registrars to an Issue and Share Transfer Agents (RTAs) with the objective of consolidating, updating, and streamlining the regulatory framework applicable to RTAs.

The Master Circular brings together various instructions issued earlier, providing a single reference point to enhance regulatory clarity and compliance.

1. Scope of the Master Circular

The Master Circular covers and updates regulatory provisions relating to the following key areas:

2. Online Registration Process for RTAs

The circular consolidates norms governing the online registration process, including:

• Submission of applications through the designated portal
• Documentation and eligibility requirements
• Processing and grant of registration

3. General Instructions Applicable to RTAs

SEBI has laid down general operational and governance instructions applicable to RTAs, including:

• Code of conduct and professional standards
• Maintenance of records and data confidentiality
• Systems, controls, and internal governance requirements

4. Application and Approval Framework

4.1 Change of Control and Transfer of Business

The Master Circular prescribes:

• The requirement of prior approval from SEBI for any change in control of an RTA
• Regulatory procedures for transfer of business, including documentation and disclosures

5. Net Worth Certification Requirements

RTAs are required to:

• Submit periodic net worth certificates
• Ensure compliance with minimum net worth requirements
• Provide certification from qualified professionals within prescribed timelines

6. Regulatory Compliance and Periodic Reporting

The Master Circular sets out obligations relating to:

• Ongoing regulatory compliance
• Periodic reporting to SEBI
• Timely submission of returns, statements, and disclosures

7. Enhanced Disclosures for Listed Debt Securities

Specific emphasis has been placed on:

• Enhanced disclosure requirements in relation to listed debt securities
• Transparency in servicing, record maintenance, and investor-related information
• Alignment with SEBI’s investor protection and market integrity objectives

8. Rescission of Earlier Circulars

SEBI has clarified that:

• Previous circulars and instructions covered under the Master Circular stand rescinded
• However, actions taken, approvals granted, and compliances completed under the earlier circulars shall remain valid

This ensures continuity and legal certainty, while avoiding duplication and regulatory ambiguity.

9. Key Takeaway

The Master Circular:

• Serves as a single, comprehensive compliance reference for RTAs
• Simplifies regulatory navigation
• Enhances consistency, transparency, and ease of compliance
• Strengthens SEBI’s oversight framework for intermediaries

Click Here To Read The Full Circular

The post SEBI Issues Master Circular to Streamline RTA Registration | Reporting | Disclosures appeared first on Taxmann Blog.

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Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing to reduce the Z-score threshold from 10 to 5 for the inclusion of historical scenarios in standardised stress testing for the commodity derivatives segment.

1. Existing Stress Testing Framework

Under the current framework:

• Historical price scenarios with extreme price movements are included in stress testing
• Such movements are identified using a Z-score threshold of 10, which captures highly extreme and infrequent market events

SEBI has observed that this threshold may result in overly conservative stress outcomes, particularly in the commodity derivatives market.

2. Proposed Change in Z-Score Threshold

Under the proposal:

• The Z-score threshold will be reduced from 10 to 5
• Price movements corresponding to a Z-score of 5 will be considered for stress testing
• Extreme price movements beyond the Z-score of 5 will be replaced by the capped movements at the Z-score 5 level in peak historical returns

This change is intended to strike a balance between prudence and realism in stress testing.

3. Rationale for the Proposal

The proposal is based on:

• Recommendations of the Risk Management Review Committee
• Representations received from market stakeholders highlighting the need for a more calibrated stress-testing approach

SEBI has acknowledged that while stress tests should remain robust, they should also reflect practical market behaviour and avoid undue strain on market participants.

4. Impact on Commodity Derivatives Segment

If implemented, the proposal is expected to:

• Moderate extreme stress test results
• Improve risk calibration without compromising systemic safety
• Enhance operational efficiency for exchanges and clearing corporations

5. Invitation for Public Comments

SEBI has invited public comments and suggestions on the consultation paper, considering its implications for exchanges, clearing corporations, and commodity derivatives market participants.

Stakeholders are encouraged to provide feedback to assist SEBI in finalising the proposed framework.

Click Here To Read The Full Update

The post SEBI Proposes Lower Z-Score for Commodity Derivatives Stress Tests appeared first on Taxmann Blog.

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Press Release: 2025-2026/2053, Dated 06.02.2025

The Monetary Policy Committee (MPC) of the Reserve Bank of India, after assessing evolving macroeconomic and financial developments and the overall economic outlook, has decided to keep the policy repo rate unchanged.

1. Policy Rates Under the Liquidity Adjustment Facility (LAF)

As per the MPC’s decision, the key policy rates are as follows:

• Policy Repo Rate – 5.25%
• Standing Deposit Facility (SDF) Rate – 5.00%
• Marginal Standing Facility (MSF) Rate – 5.50%
• Bank Rate – 5.50%

These rates remain unchanged under the Liquidity Adjustment Facility (LAF) framework.

2. Monetary Policy Stance

The MPC has also decided to continue with a neutral monetary policy stance, while noting that economic growth remains resilient.
This stance allows the MPC flexibility to respond appropriately to evolving inflation and growth dynamics.

3. Publication of MPC Meeting Minutes

• The minutes of the MPC meeting will be published on 20 February 2026.
• The minutes will provide detailed insights into the deliberations and individual views of MPC members.

4. Next MPC Meeting

• Next MPC Meeting – 6-8 April 2026

The MPC will reassess macroeconomic conditions, inflation trends, and growth prospects at its next scheduled meeting.

Click Here To Read The Full Press Release

The post RBI Keeps Repo Rate Unchanged at 5.25% | Maintains Neutral Stance appeared first on Taxmann Blog.

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1. Introduction

Entities operating in the consumer goods sector commonly incur promotional expenditure to enhance brand recognition, introduce products to the market, and expand their distribution network. One such activity involves the free distribution of gifts, such as decorative items bearing the entity’s logo, along with product catalogues to potential distributors. While these activities are intended to generate future economic benefits, determining the appropriate accounting treatment requires a careful assessment of whether such transactions fall within the scope of Ind AS 115 or are governed by other Indian Accounting Standards (Ind AS).

2. Meaning of Customer Under Ind AS 115

Para 6 of Ind AS 115 states that

“A customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.”

3. Scope of Ind AS 115 – Contracts With Customers

Ind AS 115 applies to contracts with customers that create enforceable rights and obligations and involve the transfer of goods or services in exchange for consideration. The existence of a contract is a prerequisite for the application of the standard. A contract may be written, oral, or implied by customary business practices, provided it is legally enforceable.

Further, the standard applies only when an entity transfers goods or services that are outputs of its ordinary activities to a customer for consideration. Transactions that do not involve such an exchange, or where no contractual arrangement exists, fall outside the scope of Ind AS 115.

4. Performance Obligations Under Ind AS 115

A performance obligation arises when an entity promises to transfer a distinct good or service to a customer as part of a contract. Performance obligations are identified only within the context of a contract with a customer and are satisfied when control of the promised good or service is transferred.

Transfers of goods that occur independently of any contractual promise, and which are not contingent upon the satisfaction of performance obligations, are not within the recognition and measurement framework of Ind AS 115.

Click Here To Read The Full Story

The post Promotional Giveaways to Distributors | Revenue or Expense under Ind AS appeared first on Taxmann Blog.

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Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing to extend the standing instruction facility for Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) to mutual fund units held in demat form.

1. Existing Framework and Issue Identified

At present:

• The standing instruction facility for SWP/STP is available only for mutual fund units held in Statement of Account (SOA) mode.
• Investors holding mutual fund units in demat form are required to provide separate instructions for each SWP or STP transaction.

SEBI has noted that this differential treatment:

• Creates operational inconvenience for investors
• Increases compliance and processing effort for intermediaries
• Leads to inconsistency in processes across holding modes

2. Objective of the Proposal

The proposal seeks to:

• Align the process for mutual fund units held in demat form with those held in SOA mode
• Facilitate ease of doing business for investors and market participants
• Improve operational efficiency and standardisation in mutual fund transactions

3. Proposed Extension of Standing Instruction Facility

Under the proposed framework:

• Investors holding mutual fund units in demat form would be allowed to provide standing instructions for SWP and STP
• Once registered, such instructions would enable automatic execution of transactions without the need for repeated authorisations

4. Phased Implementation Approach

SEBI has further proposed that:

• The regulatory framework for standing instructions for SWP/STP mandates for demat-held mutual fund units be implemented in two phases
• A phased rollout would help address operational, system, and coordination challenges among market intermediaries

5. Invitation for Public Comments

In view of the implications for:

• Investors
• Mutual funds
• Depositories
• Stock exchanges and other intermediaries

SEBI has invited public comments and suggestions on the proposals outlined in the consultation paper.

6. Timeline for Submission of Comments

• Last date to submit comments – 26 February 2026

Stakeholders are encouraged to provide their feedback within the stipulated timeline to assist SEBI in finalising the framework.

Click Here To Read The Full Update 

The post SEBI Proposes SWP/STP Standing Instructions for Demat MF Units appeared first on Taxmann Blog.

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Consultation Paper Dated 05.01.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing measures to streamline the processes for winding up of Alternative Investment Fund (AIF) schemes and surrender of AIF registration.

The proposals seek to address practical challenges faced by AIFs that have completed their tenure but continue to exist for limited residual purposes.

1. Background and Regulatory Concerns

SEBI has observed that certain AIFs:

• Continue to retain liquidation proceeds beyond the permissible fund life
• Are unable to achieve a NIL bank balance, which is a prerequisite for surrender of registration

This situation commonly arises due to:

• Pending litigation
• Tax demands
• Outstanding operational or statutory liabilities

As a result, such AIFs face regulatory uncertainty despite having otherwise completed their fund lifecycle.

2. Objective of the Proposals

The consultation paper aims to:

• Provide regulatory clarity for AIFs that have completed their tenure
• Enable an orderly winding-up process where funds continue to exist only for limited residual purposes
• Address operational difficulties in surrendering registration due to unavoidable pending obligations

3. Key Proposals

3.1 Framework for AIFs Retaining Funds Beyond Permissible Life

SEBI has proposed a clearer regulatory framework for AIFs that:

• Have completed their permissible fund life, but
• Continue to retain funds solely to meet pending legal, tax, or operational requirements

This would help align regulatory expectations with practical realities.

3.2 ‘Inoperative’ Status for Certain AIFs

It has also been proposed that:

• AIFs that have not retained any monies beyond the permissible fund life
• May apply for an ‘inoperative’ status, instead of remaining fully operational or being compelled to surrender registration

This measure is intended to reduce unnecessary compliance burden on inactive funds.

4. Invitation for Public Comments

Considering the potential impact of these proposals on AIFs, fund managers, investors, and other market participants, SEBI has invited public comments and suggestions on the consultation paper.

5. Timeline for Submission of Comments

• Last date to submit comments – 26 February 2026

Stakeholders are encouraged to provide feedback within the prescribed timeline to aid SEBI in finalising the regulatory framework.

Click Here To Read The Full Update 

The post SEBI Proposes Flexibility for AIFs During Winding Up appeared first on Taxmann Blog.

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Press Release: 2025-2026/2055, Dated 06.02.2026

The Reserve Bank of India (RBI) has issued a Statement on Developmental and Regulatory Policies, setting out a series of key policy measures aimed at strengthening consumer protection, improving credit access, and further developing India’s financial markets.

1. Proposed Instructions on Advertising and Sale of Financial Products

The RBI has proposed to issue detailed instructions governing the advertising, marketing, and sale of financial products by regulated entities.
These measures are intended to:

• Ensure fair and transparent communication with customers
• Prevent mis-selling and misleading claims
• Strengthen consumer confidence in the financial system

2. Review of Customer Liability in Unauthorised Electronic Transactions

The RBI has decided to review the existing framework on limiting customer liability in cases of unauthorised electronic banking transactions.

The review aims to:

• Assess the adequacy of current consumer protection safeguards
• Address evolving risks in digital payment systems
• Strengthen clarity and consistency in liability norms

3. Enhancement of Collateral-Free Loan Limit for MSEs

To improve access to formal credit, the RBI has announced an enhancement of the collateral-free loan limit for Micro and Small Enterprises (MSEs):

• Existing limit –  ₹10 lakh
• Revised limit – ₹20 lakh

This measure is expected to:

• Support small business growth
• Encourage bank lending to MSEs
• Reduce dependence on informal sources of credit

4. Development of Credit Derivatives and Corporate Bond Market

The RBI has also decided to issue, shortly, a regulatory framework for public consultation to enable:

• Introduction of derivatives on credit indices, and
• Total Return Swaps (TRS) on corporate bonds

These instruments are intended to:

• Improve risk management options
• Enhance liquidity and depth in the corporate bond market
• Support market-based credit risk transfer

5. Changes Relating to Voluntary Retention Route (VRR) for FPIs

The RBI has announced two key decisions relating to Foreign Portfolio Investors (FPIs) under the Voluntary Retention Route (VRR):

5.1 Reckoning of VRR Investments

• Investments made under the VRR shall now be reckoned within the overall limit for FPI investments under the General Route.

5.2 Additional Operational Flexibilities

• Certain additional operational flexibilities will be provided to FPIs investing under the VRR, with a view to encouraging stable, long-term foreign capital inflows.

6. Overall Policy Objective

The Statement reflects RBI’s focus on:

• Enhancing consumer protection
• Supporting MSME credit growth
• Deepening financial markets
• Promoting stable and efficient capital flows

Click Here To Read The Full Press Release

The post RBI Announces Consumer Protection | MSE Credit | Market Reforms appeared first on Taxmann Blog.

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Editorial Team – [2026] 183 taxmann.com 199 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. OECD Releases Revised Manual on Effective Mutual Agreement Procedures 2026 Edition

The OECD has announced the release of the Manual on Effective Mutual Agreement Procedures (MEMAP) 2026 Edition, updated under the Inclusive Framework on BEPS. The revised manual aims to improve tax certainty by supporting tax administrations and taxpayers in resolving cross-border tax treaty disputes efficiently, effectively, and in a timely manner.

The 2026 MEMAP serves as a practical roadmap for navigating the Mutual Agreement Procedure (MAP) and includes structured guidance, templates and best practices to promote consistent and effective international tax dispute resolution. While it builds on the 2007 edition, the revised version adopts a new structure shaped by the real-world experience of competent authorities. It contains 59 aspirational best practices, drawing on inputs from both tax administrations and business, as well as insights from more than a decade of BEPS Action 14 peer reviews and discussions on MAP cases.

The manual provides practical guidance across the full MAP lifecycle, structured around four key areas:

(a) Dispute prevention and competent authority organisation, including pre-MAP consultations and measures to prevent disputes early;

(b) Access to MAP and unilateral relief, covering eligibility, the structure of MAP requests, and circumstances where unilateral relief may resolve issues without bilateral negotiation;

(c) Bilateral discussions and MAP arbitration, including advice on position papers, meetings and, for the first time, detailed guidance and best practices on MAP arbitration; and

(d) Capacity building and templates, including support for low-capacity jurisdictions and practical tools such as templates for MAP requests and position papers.

Source – Announcement

2. Canada Issues Updated Guidance on Global Minimum Tax Filing Requirements

The Canadian Government has released updated guidance (dated 30 January 2026) to help taxpayers prepare for Global Minimum Tax filings. The guidance outlines the required filing schemas, due dates, and information to be collected in advance, including for the GloBE Information Return (GIR), the Global Minimum Tax Return, and the GIR Notification.

The filing deadline is 18 months after the last day of the fiscal year in which an entity of a qualifying MNE group is first subject to the rules, and 15 months after the fiscal year-end in all other cases. For fiscal years beginning on or after 31 December 2023 and ending on or before 31 December 2024, the due date for the prescribed returns or notification is 30 June 2026.

All filings must be submitted electronically through an API. The GIR must be filed using an XML schema, while the Global Minimum Tax Return and the GIR Notification must be filed using a JSON schema.

Source – Official Website

Click Here To Read The Full Article

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