SEBI Consultation Paper Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing a series of ease-of-doing-business (EoDB) measures for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

The proposals aim to provide greater operational flexibility, improve capital efficiency, and support long-term infrastructure and real estate development while maintaining investor protection.

1. Retention of SPVs by InvITs After Concession Expiry

SEBI has proposed allowing InvITs to retain Special Purpose Vehicles (SPVs) even after the expiry of concession agreements, subject to:

• Adequate disclosures to investors
• A time-bound exit mechanism for such SPVs

This proposal seeks to address practical challenges faced during concession closures and facilitate orderly exits without disrupting trust operations.

2. Expanded Investment in Liquid Mutual Funds

It has been proposed to:

• Allow REITs and InvITs to expand their investments in liquid mutual fund schemes
• Subject to the condition that such schemes have a Credit Risk Value (CRV) of 10 or higher

This measure is intended to enhance treasury management flexibility while ensuring prudent risk standards.

3. Investment by Private InvITs in Greenfield Projects

SEBI has proposed permitting private InvITs to:

• Invest up to 10% of their asset value in greenfield infrastructure projects

This change aims to:

• Encourage early-stage infrastructure development
• Enable capital formation in new projects while limiting exposure to developmental risks

4. Widening the Permissible Use of Higher Borrowings

Under the current framework, borrowings beyond 49% of asset value are subject to strict end-use restrictions. SEBI has proposed to widen the permissible use of such borrowings to include:

• Refinancing of existing debt
• Capital expenditure (capex)
• Capacity augmentation
• Major maintenance expenditure, including for road assets

This proposal is expected to improve financial flexibility and asset sustainability for InvITs and REITs.

5. Objective of the Proposals

The consultation paper seeks to:

• Reduce operational and regulatory friction
• Align regulatory norms with market realities
• Strengthen the REIT and InvIT ecosystem
• Support infrastructure growth while safeguarding investor interests

6. Invitation for Public Comments

Considering the potential impact on trusts, sponsors, investment managers, lenders, and investors, SEBI has invited public comments and suggestions on the proposed measures.

Stakeholder feedback will be taken into account before finalising the regulatory framework.

Click Here To Read The Full Update

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Circular No. HO/47/14/12(1)2026-MRD-POD2/I/4229/2026, Dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has issued a circular modifying the framework for the creation and invocation of pledge of securities through the depository system.

The changes are aimed at strengthening contractual compliance, investor protection, and process standardisation.

1. Mandatory Undertakings in Pledge Request Forms

Under the revised framework:

• Pledge request forms must include explicit undertakings by both the pledger and the pledgee.
• These undertakings shall confirm compliance with the provisions of the Indian Contract Act, 1872.

2. Requirement of Reasonable Notice Before Sale

The undertakings must specifically cover:

• The obligation to provide reasonable notice to the pledger
• Prior to the sale or invocation of pledged securities, as required under contract law

This measure reinforces legal safeguards and ensures fair treatment in pledge enforcement.

3. Standardisation of Pledge Request Forms

SEBI has further directed that:

• Depositories shall maintain a standardised pledge request form
• Uniformity in documentation will help ensure:

1. 1. Consistent disclosures
   2. Clear allocation of rights and responsibilities
   3. Reduced scope for disputes and ambiguity

4. Implementation Timeline

• The provisions of this circular shall be implemented on or before 6 April 2026.

Depositories, intermediaries, and market participants are required to align their systems, documentation, and processes within the stipulated timeline.

5. Key Takeaway

The revised framework:

• Strengthens compliance with contractual law
• Enhances transparency and investor protection in pledge transactions
• Promotes standardisation across the depository system

Click Here To Read The Full Circular

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Circular No. HO/47/15/11(2)2025-MRD-TPD1/ I/4226/2026 dated 05.02.2026

The Securities and Exchange Board of India (SEBI) has tightened the margin framework applicable to single-stock derivatives by restricting the availability of calendar spread margin benefits on the expiry day for contracts expiring on that day.

This move aligns the treatment of single-stock derivatives with the existing margin framework for index derivatives and seeks to address potential risks arising on expiry days.

1. Withdrawal of Calendar Spread Margin Benefit on Expiry Day

Under the revised norms:

• Calendar spread margin benefits will not be available on the expiry day for positions involving the contract expiring on that day.
• The restriction applies only to calendar spreads that include the current expiry contract.
• The measure is aimed at mitigating heightened volatility, settlement risk, and sharp price movements typically observed on expiry days.

2. Margin Treatment for Other Calendar Spreads Remains Unchanged

SEBI has clarified that:

• Margin calculations remain unchanged for calendar spread positions involving expiries other than the current expiry.
• Calendar spread benefits will continue to apply to such positions, even on the day of the nearest expiry.

3. Illustrative Example

Assume monthly expiries fall on:

• 29th – Current month expiry
• 30th – Next month expiry
• 31st – Far month expiry

3.1 On 29th (Current Month Expiry Day):

3.1.1 Calendar Spread Benefit Not Available

• Positions involving 29th & 30th
• Positions involving 29th & 31st

3.1.2 Calendar Spread Benefit Continues

• Positions involving 30th & 31st

Accordingly, only calendar spreads that include the expiring contract lose the margin benefit on its expiry day.

4. Effective Date

• The circular shall come into force three months from the date of issuance.

Market participants are expected to update their margin systems and trading strategies in line with the revised framework.

5. Key Takeaway

The change:

• Harmonises margin treatment across single-stock and index derivatives
• Reduces expiry-day risk concentration
• Preserves margin benefits for non-expiring calendar spread positions

Click Here To Read The Full Circular

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Case Details: Asst. CIT, Circle 3.3.1 vs. Shapoorji Pallonji Solar Holdings (P.) Ltd. [2026] 182 taxmann.com 788 (Mumbai-Trib.)

Judiciary and Counsel Details

• Saktijit Dey, Vice President & Jagadish, Accountant Member
• Dharmesh Shah & Ms Mitali Parekh, Advs. for the Appellant.
• Arun Kranti Datta, CIT DR for the Respondent.

Facts of the Case

The assessee company was engaged in the business of generating and supplying power and energy. Along with its holding company, the assessee decided to sell its entire shareholding in four group companies to a Singapore-incorporated company, part of the KKR group in the USA. The assessee received a total consideration of Rs. 39.25 crores, as against the purchase cost of shares at Rs. 202.19 crores. This resulted in a long-term capital loss (LTCL) of around Rs. 183 crores.

The assessee furnished voluminous documentary evidence to justify its claim of LTCL on the sale of shares, including a valuation report determining the valuation of the shares as on the date of sale. However, the Assessing Officer (AO) rejected the assessee’s claim of LTCL primarily on the reasoning that the assessee failed to furnish the requisite documentary evidence. On appeal, the CIT(A) allowed the LTCL claim. Aggrieved by the order, the AO filed the instant appeal before the Tribunal.

ITAT Held

The Mumbai Tribunal held that the assessee had sold shares to a completely unrelated foreign entity. Therefore, it cannot be said that the sale of shares was made to generate a loss as part of a premeditated arrangement. When transactions are between unrelated parties, the cost of such transactions is determined through negotiation, taking into account various factors, including the net worth and profitability of the entity whose shares are transacted.

In this case, a careful analysis of the chart clearly demonstrated that the sale value per share of the companies exceeds their Net Asset Value (NAV) as of the date of sale. Further, the AO had not made any adverse observations with reference to the value determined by the independent valuer appointed by the assessee. Although the department had ample opportunities to challenge the assessee’s share valuation at various stages, it failed to do so. Even the department had not furnished any material to demonstrate what, according to the department, would have been the value of shares as on the date of sale.

Without doing his homework, the AO cannot summarily reject the valuation of the assessee and the LTCL arising out of the sale of shares. Therefore, the impugned LTCL claim of the assessee was to be allowed.

The post AO Cannot Reject Share Valuation and LTCL Without Basis | ITAT appeared first on Taxmann Blog.

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Case Details: Tamil Nadu Auto Parts vs. Deputy Commissioner (CT) [2026] 182 taxmann.com 874 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• S. Rajasekar for the Petitioner.
• TNC Kaushik, Additional Government Pleader for the Respondent.

Facts of the Case

The petitioner challenged the assessment order issued in Form GST DRC-07, alleging that the show cause notice (SCN) in Form GST DRC-01 was not uploaded on the GST portal due to a portal glitch, resulting in no effective opportunity to respond. The petitioner received an intimation in Form GST ASMT-10, furnished a partial reply, and uploaded Form GST DRC-06, while departmental records showed the SCN in Form GST DRC-01 for the same period. The petitioner filed a statutory appeal against the DRC-07 order, which was rejected on the ground of limitation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the portal glitch and non-uploading of the SCN in Form GST DRC-01 amounted to a tacit admission of violation of the principles of natural justice. Since the petitioner had deposited 10% of the disputed tax at the time of filing the appeal, the impugned DRC-07 assessment order was to be quashed. The matter was remitted to the adjudicating authority for fresh adjudication on merits expeditiously. The petitioner was directed to file a reply to the SCN in Form GST DRC-01, treating the impugned assessment order as an addendum to the SCN.

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Markus Susilo & Nimesh Malik – [2026] 183 taxmann.com 147 (Article)

The UAE’s introduction of an Advance Pricing Agreement (‘APA’) framework marks a significant milestone in the country’s corporate tax evolution. With the release of the Federal Tax Authority’s Corporate Tax Guide on Advance Pricing Agreements (CTGAPA1), taxpayers now have a structured mechanism to obtain prospective certainty on transfer pricing outcomes. Beginning with domestic unilateral APAs from December 2025 and cross‑border applications expected in 2026, the framework arrives at a pivotal moment, offering businesses a forward‑looking tool for risk management, planning, and governance.

Many businesses are encountering, for the first time, the formal expectation that related‑party transactions adhere to the arm’s‑length standard outlined in Article 34 of the Corporate Tax Law, while Article 59 provides statutory authority for APAs. The ability to agree in advance on transfer pricing methodology can be invaluable—reducing uncertainty, preventing disputes, and supporting multi‑year commercial strategies. In this context, the APA programme represents not only a procedural advancement but an important step toward cultivating a predictable and collaborative tax environment.

A topic that has naturally generated interest is the AED 100 million materiality threshold in the APA Guide. While the APA Guide sets this threshold for the value of controlled transactions proposed for coverage per tax period, it also clarifies that lower‑value transactions may still be considered where arrangements are complex or raise material transfer pricing uncertainty. This balance—clear criteria paired with administrative flexibility—reflects the diverse nature of UAE business models, where complexity does not always correlate with the size of the transaction.

One aspect that warrants careful reflection is the nature of the APA Guide itself. As a non‑binding administrative guide, it mirrors global practice for early‑stage APA regimes. This approach enables the tax authority to refine processes, incorporate feedback, and build internal capability before formalising elements through legislation. Over time, however, many jurisdictions choose to introduce more defined legislative backstops—such as codified access thresholds or procedural timelines—to enhance long‑term predictability for taxpayers.

Click Here To Read The Full Article

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Case Details: Heinen and Hopman Engineering (I) (P.) Ltd. vs. State of West Bengal [2025] 181 taxmann.com 964 (HC-Calcutta)

Judiciary and Counsel Details

• Shampa Dutt (Paul), J.
• Barnamoy Basak for the Petitioner.
• Tamal Taru Panda, Saurabh Sankar Sengupta, Richik Rakshit & Biswabrata Basu Mallik, AGP for the Respondent.

Facts of the Case

In the instant case, the petitioner-employer maintained a non-contributory pension scheme through a trust. By a later Deed of Variation, the employer sought to restrict benefits to employees retiring at age sixty with at least twenty years’ continuous service, except for certified total invalidity; approval was granted with effect from July 2022, and employees were informed. The employee thereafter resigned, was relieved, and received full-and-final settlement and gratuity, with superannuation benefits noted as remaining due as per an earlier circular.

The employee filed a Form-N claim under the West Bengal Shops and Establishment Rules; the employer objected to maintainability, asserting that the Shops & Establishment Act has no provision to address superannuation.

After hearing the parties, the Referee and Controlling Authority held that the pension under the company’s superannuation plan formed part of the terms and conditions of employment and was to be treated as “wages” under Section 2(vi) of the Payment of Wages Act, overruled the jurisdictional objection, and decided to proceed with the claim.

On writ petition before the High Court, the employer challenged the Controlling Authority’s jurisdiction, contending that Section 2(vi)(3) of the Payment of Wages Act excludes employer contributions to pension/provident fund and interest thereon from “wages” and that the employee’s remedy lay in a civil court. It was also argued that, as the employee resigned and a pension is payable only on superannuation, no pension was due.

High Court Held

The High Court noted that where the petitioner-employer had created a non-contributory pension scheme for its employees and the respondent No. 3, being an employee of the petitioner, resigned from service, the respondent No. 3 was entitled to receive pension benefits as per the scheme.

The High Court held that since the claim for pension was well within the definition of ‘wages’, as it was a sum payable to a person employed in respect of his employment for work done in such employment, in the manner as ‘wages’ are paid.

Therefore, the prayer for ‘pension’ being within the definition of ‘wages’ under Section 2(vi) of the Act, is not covered under Section 2(vi)(3) of the Act, and the Controlling Authority under the West Bengal Shops & Establishment Act, 1963 had jurisdiction to entertain the claim.

List of Cases Reviewed

• Order of the Referee and Controlling Authority under the West Bengal Shops & Establishment Act, 1963, Barrackpore in S.P.-01/2024, dated 18.11.2024 (para 22) affirmed

List of Cases Referred to

• Sudhir Chandra Sarkar v. Tata Iron and Steel Co. Ltd. 1984 taxmann.com 1282 (SC) (para 5)
• Inspector, Railway Protection Force v. Mathew K Cherian 2025 SCC OnLine SC 51 (para 5)
• Union of India v. Elphinstone Spinning and Weaving Co. Ltd. (2001) 4 SCC 139 (para 5)
• Balaram Abaji Patil v. M. C. Ragojiwalla [Special Civil Appln. No. 1322 of 1959, dated 22-3-1960] (para 6)
• Bridge and Roof Co. (India) Ltd. v. Union of India (1963) 3 SCR 978 (para 7).

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Circular no. HO/47/11/16(2)2025-MRD-POD2/I/4113/2026; Dated: 04.02.2026

The Securities and Exchange Board of India (SEBI) has eased the order-to-trade ratio (OTR) framework applicable to algorithmic trading by expanding the exemption limits for equity option contracts. The move is aimed at facilitating efficient price discovery while reducing compliance burden for market participants.

1. Revised Exemption for Algorithmic Orders in Equity Options

Under the revised norms, algorithmic orders in equity options will be exempt from penalties imposed for higher OTR, provided such orders are placed within:

• ±40% of the Last Traded Price (LTP) premium, or
• ₹20,

whichever is higher.

Orders falling within this revised threshold will not be considered for penal action under the OTR framework.

2. Exclusion of Market-Making Orders from OTR Computation

SEBI has further clarified that:

• Algorithmic orders placed by Designated Market Makers (DMMs) for the purpose of market-making
• Shall not be counted toward the computation of the order-to-trade ratio

This exclusion recognises the role of market makers in providing liquidity and maintaining orderly markets.

3. Applicability of the OTR Framework

The OTR framework continues to apply to:

• Orders placed in the cash segment, and
• Orders placed in the derivatives segment

The relaxations are specific to the computation and exemption parameters under the framework and do not dilute overall regulatory oversight.

4. Effective Date

• Effective from – 6 April 2026

Market participants are required to align their algorithmic trading systems and compliance processes with the revised norms from the effective date.

Click Here To Read The Full Circular

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PR No.11/2026, Dated: 04.02.2026

The Securities and Exchange Board of India (SEBI), in collaboration with Market Infrastructure Institutions BSE and NSE, has inaugurated a PAN-India Bond Issuer Outreach Program at Mumbai.

The initiative underscores SEBI’s continued efforts to strengthen and deepen India’s corporate bond market ecosystem.

1. Objective of the Outreach Program

The program is designed to:

• Enhance engagement with bond issuers and investors
• Promote efficient capital formation through the corporate bond market
• Encourage wider participation and awareness across regions
• Support the long-term development of a robust and transparent bond market

2. Launch of Bond Market Documentary and Awareness Content

As part of the initiative, SEBI also:

• Launched a documentary on the development of India’s bond market, highlighting its evolution and role in capital markets
• Released investor awareness and investor protection videos, aimed at improving financial literacy and informed participation

These efforts are aligned with SEBI’s broader mandate of investor protection and market development.

3. Strengthening India’s Corporate Bond Ecosystem

The PAN-India outreach program reflects SEBI’s focus on:

• Broadening the issuer base in the corporate bond market
• Improving market access for companies seeking debt financing
• Deepening liquidity and resilience in the bond market

By working closely with BSE and NSE, SEBI aims to build a more inclusive, efficient, and well-functioning corporate bond ecosystem across the country.

Click Here To Read The Full Press Release

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Editorial Team – [2026] 183 taxmann.com 148 (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. IASB Update – January 2026 | Key Highlights

The International Accounting Standards Board (IASB) held its January 2026 meetings to discuss a range of research, standard-setting, and maintenance matters, with several projects progressing to the next stage. A key highlights of the meetings are discussed herewith:

(a) IFRS 16 Leases – Post-implementation Review – The IASB discussed feedback received on its request for information for the Post-implementation Review of IFRS 16 Leases and outlined plans for the next phase of the review. No decisions were made. The Board expects to finalise its conclusions in the third quarter of 2026 and plans to publish a project report and feedback statement before the end of 2026.

(b) Intangible Assets – The IASB considered test cases and key principles for a workstream exploring possible changes to the definition and recognition of intangible assets. No decisions were taken. The next step is to discuss findings focused on users’ information needs.

(c) Statement of Cash Flows – The IASB decided to move the project on the Statement of Cash Flows and related matters from the research programme to its standard-setting work plan. Any future consultation will be through an exposure draft. The Board also decided not to establish a consultative group for this project. All members agreed with these decisions.

(d) Consistent Application and IFRS Interpretations Committee Matters – The IASB reviewed recommendations from the IFRS Interpretations Committee. It agreed to withdraw the agenda decision on income and expenses from financial instruments with a negative yield. However, it deferred a decision on withdrawing the agenda decision on supply chain financing arrangements (reverse factoring) and will carry out targeted outreach before deciding.

Most of the updated and final agenda decisions are expected to be published in January 2026 through an addendum to the IFRIC Update November 2025.

Source – International Financial Reporting Standard

2. ISSB Update – January 2026 | Key Developments

At its meeting on 28 January 2026, the International Sustainability Standards Board (ISSB) advanced its work on both standard-setting and implementation support.

(a) Biodiversity, Ecosystems and Ecosystem Services – The ISSB discussed the objective and scope of its new standard-setting project on nature-related risks and opportunities. The Board agreed to proceed with standard-setting that covers all material nature-related risks and opportunities that could reasonably affect an entity’s prospects, rather than limiting the scope to selected topics.

The project will build on the assumption that entities are already applying IFRS S1 and IFRS S2 and will provide additional disclosure requirements or guidance to complement those standards. All ISSB members supported this decision.

(b) Implementation of IFRS S1 and IFRS S2 – The ISSB also received an update from the November 2025 meeting of the Transition Implementation Group (TIG) for IFRS S1 and IFRS S2. No decisions were made. The Board will receive further updates following the next TIG meeting.

Overall, the discussions signal continued progress in developing comprehensive sustainability reporting requirements, with a growing focus on nature-related risks alongside climate and broader sustainability disclosures.

Source – International Financial Reporting Standard

Click Here To Read The Full Article

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