Executive Summary

Income Tax

• Section 37(1)- Enforcement of Section 152 And 153.
• Section 139- Extension of Due Date to file Return of Income to 15^th September, 2025.
• Income Tax Amendments Rules- Substitution of ITR Forms.

Goods And Services Tax (GST)

• Grievance redressal mechanism for processing of application for GST registration, Instruction no. 4/2025 – GST [F.No. CBIC – 20016/24/2025 – GST], dated 02-05-2025
• Timely production of records/information for audit Instruction no. 5/2025 – GST [F. No. Ccb-20015/2/2025 – GST], dated 02-05-2025

Companies Act 2013/ Other Laws

• MCA issued Companies (Indian Accounting Standards) Amendment Rules, 2025
• MCA issued Companies (Cost Records and Audit) Amendment Rules, 2025
• Ministry of Corporate Affairs amends Annual Filing Forms MGT-7, MGT-7A, and MGT-15
• Insolvency and Bankruptcy Board of India amends The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
• Reporting on Firms Portal – Issuance of Partly Paid Units by Investment Vehicles
• Process for appointment, Re-appointment, termination, or acceptance of resignation of specific Key Management
• Personnel (KMPs) of a Market Infrastructure Institution (MII) – Cooling-Off Period for KMPs of an MII joining a Competing MII – Provision relating to re-appointment of Public Interest Directors (PIDs)

A. Section 37(1) of the Income Tax Act, 1961- Enforcement of Section 152 and 153, Dated 06-05-2025

In exercise of the powers conferred by section 151 of the Finance Act, 2017 (7 of 2017), the Central Government hereby appoints the 9th day of May, 2025 as the date on which sections 152 and 153 of the said Act, relating to amendments in the Payment and Settlement Systems Act, 2007 (51 of 2007), shall come into force.

B. Section 139 of the Income Tax Act, 1961 – Extension of Due Date for furnishing Return of Income for A.Y. 2026-27, Dated 27-05-2025

The Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119 of the Income-tax Act, 1961 (‘the Act\ extends the due date of furnishing of Return of Income under sub-section (1) of section 139 of the Act for the Assessment Year 2025-26 in the case of assessees referred in clause (c) of Explanation 2 to sub-section (1) of section 139 of the Act, which is 31st July, 2025 to 15th September, 2025.

C. Income Tax Amendment Rules, 2025 – Substitution of ITR Forms

In exercise of the powers conferred by section 139, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

• Income-Tax Twelfth Amendment Rules, 2025- Substitution of Forms- ITR 1 and ITR 4
• Income-Tax Thirteenth Amendment Rules, 2025- Substitution of Forms- ITR 3
• Income-Tax Fourteenth Amendment Rules, 2025- Substitution of Forms- ITR 5
• Income-Tax Fifteenth Amendment Rules, 2025- Substitution of Forms- ITR 2
• Income-Tax Sixteenth Amendment Rules, 2025- Substitution of Forms- ITR 6
• Income-Tax Seventeenth Amendment Rules, 2025- Substitution of Forms- ITR V
• Income-Tax Eighteenth Amendment Rules, 2025- Substitution of Forms- ITR 7
• Income-Tax Nineteenth Amendment Rules, 2025- Substitution of Forms- ITR U

A. Grievance redressal mechanism for processing of application for GST registration, Instruction no. 4/2025 – GST [F.No. CBIC – 20016/24/2025 – GST], dated 02-05-2025

Grievance Redressal for GST Registration – Central Jurisdiction

As per CBIC Instruction No. 3/2025 dated 17.04.2025:

1. Applicants under Central Jurisdiction facing issues with queries or rejection of GST registration can contact the Zonal Principal Chief Commissioner/Chief Commissioner.
2. For faster grievance redressal:

• Zones must share a dedicated email ID for grievance submission.
• Applicants should email ARN, jurisdiction (Centre/State), and the issue briefly.
• If it concerns State jurisdiction, it will be forwarded to the State authority and the GST Council Secretariat.

3. Chief Commissioners must:

• Ensure timely resolution and inform applicants.
• Advise applicants if queries are valid.
• Send a monthly report to DGGST for Board review.

4. Any implementation issues should be reported to the Board.

B. Timely production of records/information for audit Instruction no. 5/2025 – GST [F. No. CCB-20015/2/2025 – GST], dated 02-05-2025

Submission of Records to the Comptroller and Auditor General of India, Audit Teams

1. Report 7 of 2024 flagged non/partial sharing of records with audit teams.
2. As per Article 149, the Comptroller and Auditor General of India has the authority to audit the government. accounts and entities.
3. Field officers must provide all required records/information to the Comptroller and Auditor General of India’s audit teams without delay.
4. If records are with the taxpayer, send them a request letter and follow up to ensure timely submission. These issues are with the approval of the Chairman, CBIC.

A. MCA Issued Companies (Indian Accounting Standards) Amendment Rules, 2025

The Ministry of Corporate Affairs (MCA) issued a notification on May 7, 2025, enacting the Companies (Indian Accounting Standards) Amendment Rules, 2025. These rules amend the Companies (Indian Accounting Standards) Rules, 2015, primarily focusing on Indian Accounting Standard (Ind AS) 21, which deals with the effects of changes in foreign exchange rates. The amendments introduce detailed guidance on assessing whether a currency is exchangeable into another currency, estimating the spot exchange rate when a currency is not exchangeable, and the required disclosures in such circumstances. Definitions and application guidance are added to clarify terms and processes related to exchangeability for different purposes, such as reporting foreign currency transactions or translating foreign operations. Corresponding amendments are also made to Ind AS 101 regarding first-time adoption of Ind AS in the context of severe hyperinflation and non-exchangeable currencies. These amendments are applicable for annual reporting periods beginning on or after April 1, 2025, with specific transitional provisions outlined.

Effective April 1, 2025, companies delaying payments to Micro and Small Enterprises (MSEs) beyond 45 days will face.

B. MCA issued Companies (Cost Records and Audit) Amendment Rules, 2025.

The Ministry of Corporate Affairs (MCA) has issued a new notification, G.S.R. 361(E), bringing important changes to how companies manage and report their cost audits. These changes are part of the Companies (Cost Records and Audit) Amendment Rules, 2025, and will come into effect from July 14, 2025. The focus of this amendment is to replace and modernize two key forms used by companies: Form CRA-2 and Form CRA-4. These forms are used to appoint cost auditors and to file cost audit reports with the Central Government.

C. Ministry of Corporate Affairs amends Annual Filing Forms MGT-7, MGT-7A, And MGT-15

The Ministry of Corporate Affairs (MCA) has recently released an official notification dated 30th May, 2025, regarding some rules further added to amend the Companies (Management and Administration) Rules, 2014, by the Central Government of India, in exercise of its powers granted under sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), specifically:

• These amended rules may now be called the Companies (Management and Administration) Amendment Rules, 2025.
• These amendments will be made effective from the 14th day of July, 2025.
• In the Companies (Management and Administration) Rules, 2014, the forms MGT-7, MGT-7A, and MGT-15 are being replaced with new e-forms.

1. Insolvency and Bankruptcy Board of India amends The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

The Insolvency and Bankruptcy Board of India (IBBI/Board) has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025 (Amendment Regulations) on 26th May, 2025. The amendments, which come into immediate effect, aim to further streamline and strengthen the corporate insolvency resolution process.

Key highlights of the Amendment Regulations are as follows:—

FEMA

1. Reporting on Firms Portal – Issuance of Partly Paid Units by Investment Vehicles

Investment vehicles issuing partly paid units to non-residents must report these transactions on the FIRMS (Foreign Investment Reporting and Management System) portal using Form InVI. A special one-time window allows for reporting within 180 days from the date of the circular for issuances before May 23, 2025, without late submission fees. Issuances made on or after May 23, 2025, must be reported within 30 days, as per existing regulations.

A. Process for appointment, Re-appointment, termination, or acceptance of resignation of specific Key Management Personnel (KMPs) of a Market Infrastructure Institution (MII) – Cooling-Off Period For KMPs of an MII joining a Competing MII – Provision relating to re-appointment of Public Interest Directors (PIDs)

Market Infrastructure Institutions (MIIs) such as stock exchanges, clearing corporations, and depositories. Here’s an overview of the key provisions concerning the appointment, reappointment, termination, and cooling-off periods for Key Management Personnel (KMPs) and Public Interest Directors (PIDs

1. Appointment, Reappointment, and Termination of Specific KMPs

SEBI has mandated that the appointment, reappointment, or termination of specific KMPs—including the Compliance Officer (CO), Chief Risk Officer (CRO), Chief Technology Officer (CTO), and Chief Information Security Officer (CISO)—must receive approval from the Governing Board of the MII. Previously, these decisions were within the purview of the Nomination and Remuneration Committee (NRC) of the MII.

2. Cooling-Off Period for KMPs and Directors Joining Competing MIIs

The Governing Board of an MII may prescribe a minimum cooling-off period for its KMPs and Directors—including the Managing Director (MD) and PIDs—before they can join a competing MII. However, SEBI will no longer prescribe a mandatory cooling-off period for PIDs transitioning from one MII to another.

3. Reappointment of Public Interest Directors (PIDs)

The existing process for the appointment of PIDs, which requires prior approval from SEBI but does not mandate shareholder approval, will continue. If the Governing Board of an MII decides not to reappoint an existing PID after their first term, it must record the rationale for this decision and communicate it to SEBI.

Disclaimer Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates for the period 31.05.2025

Executive Summary

Income Tax

• Section 37(1)- No deduction or allowance in respect of expenses incurred to settle proceedings in relation to contraventions or defaults.
• Section 89(1)(L), Last date to file declaration of tax arrears with the Designated Authority.
• Section 54EC, No capital gains tax if the amount is invested in specified bonds.
• Ninth Amendment Rules, 2025
• Tenth Amendments Rules, 2025
• Eleventh Amendment Rules, 2025
• Section 206C– TCS under section 206C(1F) shall be liable on notified goods exceeding specified value

Goods And Services Tax (GST)

• Notification no. 11/2025 – Central Goods and Services Tax (Second Amendment) Rules, 2025 – Amendment in Rule 164, dated 27-03-2025
• Circular no. 248/05/2025 – GST, various issues related to availment of benefit of Section 128A of the CGST Act, 2017, dated 27-03-2025
• Frequently Asked Questions on ‘Restaurant Service’ Supplied At ‘Specified Premises’, dated 28-03-2025
• Instruction no. 3/2025 – GST, instructions for processing applications for gst registration, dated 17-04-2025
• Press release, the government is not considering levying Goods and Services Tax (GST) on UPI transactions over INR 2,000, dated 18-04-2025
• S.R. 256(E) – GST Appellate Tribunal Rules, 2025, dated 24-05-2025

Companies Act 2013/ Other Laws

• Stricter Compliance for Delayed Payments to MSMEs
• Second Amendment to CIRP Regulations
• Focus on the Real Estate Sector in CIRP
• Capping of Penalties for FEMA Violations
• Enhanced Disclosures by Foreign Portfolio Investors (FPIs)

A. SECTION 37(1) OF THE INCOME-TAX ACT, 1961 – BUSINESS EXPENDITURE – ALLOWABILITY OF – NO DEDUCTION OF ALLOWANCE IN RESPECT OF EXPENSES INCURRED TO SETTLE PROCEEDINGS UNDER NOTIFIED LAWS, DATED 23-04-2025

In exercise of the powers conferred by clause (iv) of Explanation 3 of sub-section (1) of section 37 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that any expenditure incurred to settle proceedings initiated about contravention or defaults under the following laws shall not be deemed to have been incurred for business or profession and no deduction or allowance shall be made in respect of such expenditure, namely: —

(a)  The Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b)  The Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(c)  The Depositories Act, 1996 (22 of 1996);

(d)  The Competition Act, 2002 (12 of 2003).

This notification shall come into force on the date of its publication in the Official Gazette.

B. SECTION 89(1)(L) OF THE FINANCE (NO.2) ACT, 2024 – LAST DATE FOR FILING DECLARATION IN RESPECT OF TAX ARREAR TO DESIGNATED AUTHORITY, DATED 08-04-2025

In exercise of the powers conferred by clause (l) of sub-section (1) of section 89 of the Finance (No. 2) Act, 2024 (15 of 2024), the Central Government hereby notifies under the Direct Tax Vivad se Vishwas Scheme, 2024, the 30th day of April, 2025 as the last date, on or before which a declaration in respect of tax arrears shall be filed by the declarant to the designated authority, per the provisions of section 90 of the said Act.

C. SECTION 54EC OF THE INCOME-TAX ACT, 1961 – CAPITAL GAINS NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS – NOTIFIED BONDS, DATED 07-04-2025

1. In exercise of the powers conferred by clause (ba) of Explanation to section 54EC of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that bonds redeemable after five years and issued on or after 1st day of April, 2025, by the Housing and Urban Development Corporation Limited (HUDCO) (a public financial institution notified by the Central Government under section 2(72) of the Companies Act, 2013), as ‘long-term specified asset’ for the said section.
2. HUDCO shall utilize the proceeds from such bonds only for those infrastructure projects that can service the debt out of the project revenues without being dependent on the State Governments for the service of debts.

D. INCOME-TAX (NINTH AMENDMENT) RULES, 2025 – AMENDMENT IN RULE 114, DATED 03-04-2025

In exercise of the powers conferred by sub-section (2A) of section 139AA, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Ninth Amendment) Rules, 2025.

(2) They shall come into force with effect from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in rule 114, after sub-rule (5A), the following shall be inserted, namely:—

“(5AA) Every person who has been allotted permanent account number on the basis of Enrolment ID of Aadhaar application form filed prior to the 1st day of October, 2024, shall intimate his Aadhaar number to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorized by the said authorities.”

Such intimation shall be made on or before the 31st day of December, 2025 or such date as may be specified by the Central Board of Direct Taxes in this behalf.

E. INCOME-TAX (TENTH AMENDMENT) RULES, 2025 – INSERTION OF RULE 12AE AND FORM ITR-B, DATED 07-04-2025

In exercise of the powers conferred by section 158BC, read with section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Tenth Amendment) Rules, 2025.

(2) They shall be deemed to have come into force on the 1st day of September 2024.

2. In the Income-tax Rules, 1962, after rule 12AD, the following rule shall be inserted, namely: ––

“12AE. Return of income under section 158BC.—

(1) The return of income required to be furnished by any person under clause (a) of sub-section (1) of section 158BC, relating to any search initiated under section 132 or requisition made under section 132A on or after the 1st day of September, 2024 shall be in the Form ITR-B and be verified in the manner indicated therein.

(2) The return of income referred to in sub-rule (1) shall be furnished by a person, mentioned in column (2) of the Table below in the manner specified in column (3) thereof: ––

(3) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the return in the manners specified in column (3) of the Table.

(4) In a case where the claim of credit of the tax payments is made against undisclosed income of the block period other than by way of self-assessment tax for the block period, claim of such credits and the allowability thereof shall be subject to the verification by and satisfaction of, the Assessing Officer.”

F. INCOME-TAX (ELEVENTH AMENDMENT) RULES, 2025 – AMENDMENT IN FORM NO. 27EQ, DATED 21-04-2025

In exercise of the powers conferred by section 295, read with section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: —

1. (1) These rules may be called the Income-tax (Eleventh Amendment) Rules, 2025.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in Form No. 27EQ, in the Annexure, in the Notes thereto, in Note 11, in the table, after the row relating to “Collection at source on sale of motor vehicle”, the following shall be inserted, namely:—

G. SECTION 206C OF THE INCOME TAX ACT, 1961 – TCS- NOTIFIED GOODS EXCEEDING SPECIFIED VALUE IN RESPECT OF WHICH COLLECTION OF TAX SHALL BE MADE UNDER SUB-SECTION (1F) OF SAID SECTION, DATED 22-04-2025

In exercise of the powers conferred by clause (ii) of sub-section (1F) of section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the following goods of the value exceeding ten lakh rupees for collection of tax at source as specified therein —

This notification shall come into force on the date of its publication in the Official Gazette.

A. NOTIFICATION NO. 11/2025- CENTRAL GOODS AND SERVICES TAX (SECOND AMENDMENT) RULES, 2025 – AMENDMENT IN RULE 164, DATED 27-03-2025

Central Goods and Services Tax (Second Amendment) Rules, 2025 – Key Changes:

1. Amendments to Rule 164:
   1. Changes in Sub-rule (4):

• No Refund: No refund will be granted for any tax, interest, or penalty already paid for periods before the 2025 amendment.
• Partial Withdrawal of Appeal: If an appeal involves both eligible (1st July 2017 – 31st March 2020) and non-eligible periods, the applicant can choose to opt out only for the eligible period.
  1. Changes in Sub-rule (7):
• No Need to Fully Withdraw Appeal: The applicant does not have to withdraw the entire appeal; they only need to inform the authority about opting out for the eligible period.
• Deemed Withdrawal: The appeal will be considered withdrawn only to the extent of the eligible period (1st July 2017 to 31st March 2020).

1. CIRCULAR NO. 248/05/2025 – GST, VARIOUS ISSUES RELATED TO AVAILMENT OF BENEFIT OF SECTION 128A OF THE CGST ACT, 2017, DATED 27-03-2025

1. FREQUENTLY ASKED QUESTIONS ON “RESTAURANT SERVICE” SUPLLIED AT “ SPECIFIED PREMISES”, DATED 28-03-2025

3. INSTRUCTION NO. 3.2025 – GST, INSTRUCTIONS FOR PROCESSING APPLICATIONS FOR GST REGISTRATION, , DATED 17-04-2025

1. PRESS RELEASE, GOVERNMENT IS NOT CONSIDERING LEVYING GOODS AND SERVICES TAX (GST) ON UPI TRANSACTIONS OVER INR 2000, DATED 18-04-2025

• No GST is being proposed on UPI transactions above INR 2,000; claims are false and baseless.
• GST is charged only on payment service charges like MDR (Merchant Discount Rate), not on UPI transactions.
• Since January 2020, MDR has been removed for Person-to-Merchant (P2M) UPI transactions by CBDT.
• As no MDR is charged on UPI P2M payments, no GST applies on such transactions.
• Government promotes UPI growth through an Incentive Scheme supporting low-value P2M transactions:
• FY 2021-22: INR 1,389 crore
• FY 2022-23: INR 2,210 crore
• FY 2023-24: INR 3,631 crore
• India leads in digital payments: 49% of global real-time transactions (as per ACI Worldwide Report 2024).
• UPI transaction value has grown massively:
• From INR 21.3 lakh crore (FY 2019-20) ➔ to INR 260.56 lakh crore (FY 2024-25).
• P2M transactions alone reached INR 59.3 lakh crore.

1. S.R. 256(E)- GST APPELLATE TRIBUNAL RULES, 2025, DATED 24-05-2025

1. STRICTER COMPLIANCE FOR DELAYED PAYMENTS TO MSMEEffective April 1, 2025, companies delaying payments to Micro and Small Enterprises (MSEs) beyond 45 days will face.

• Mandatory MCA Filings: Companies must file a half-yearly return (Form MSME-1) detailing outstanding dues exceeding 45 days.
• Interest Penalties: Compound interest at three times the RBI bank rate (approximately 18%) will be levied on delayed payments.

• Tax Disallowance: Interest paid on delayed payments will not be allowed as a business expense under Section 43B(h) of the Income Tax Act.

Applicability:

• Applies to companies procuring goods or services from MSEs registered under Udyam Registration.

• Does not apply to medium enterprises.

A. SECOND AMENDMENT TO CIRP REGULATIONS

On April 3, 2025, the IBBI introduced the Second Amendment to the Insolvency Resolution Process for Corporate Persons (CIRP) Regulations, 2016. The key change involves the revision of Form H (Compliance Certificate), requiring resolution professionals to provide more detailed disclosures. This includes information on the successful resolution applicant, plan implementation strategies, and income tax loss details, aiming to enhance transparency in the resolution process.

B. FOCUS ON REAL ESTATE IN CIRP

In amendments effective from February 3, 2025, the IBBI addressed challenges in real estate insolvency cases. Notable provisions include:

• Allowing resolution professionals to hand over possession of properties to homebuyers during the resolution process.
• Permitting land authorities to participate in the Committee of Creditors (CoC) meetings.
• Mandating resolution professionals to prepare a report on real estate development rights within 60 days to aid informed decision-making.

FEMA

A. CAPPING OF PENALTIES FOR FEMA VIOLATIONS

The RBI has amended its compounding framework under FEMA, introducing a cap of ₹2 lakh per contravention for specific regulatory violations. This move aims to simplify compliance and encourage voluntary disclosures.

Key Highlights:

• Applicable Violations: Includes delays in repatriation of export proceeds, non-repatriation of Liberalised Remittance Scheme (LRS) proceeds within 180 days, and issuance of high-value shares as gifts without RBI approval.
• Discretionary Powers: Compounding authorities have the discretion to impose reduced penalties based on the nature of the contravention and public interest considerations.
• Legal Framework: Guided by Section 15 of FEMA, 1999, allowing the RBI to compound contraventions upon application by the violator.

A. ENHANCED DISCLOSURES BY FOREIGN PORTFOLIO INVESTORS (FPIs)

On April 9, 2025, SEBI amended its circular mandating additional disclosures by FPIs that meet certain objective criteria. This amendment aims to bolster transparency and regulatory oversight of foreign investments in Indian markets.

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates for the period 30.04.2025.

Executive Summary

Income Tax

• Revised Income Tax Slab under Section 115BAC rates effective from April 1^st, 2025.
• Changes in provisions of Tax Deducted at Source.
• Key changes in Tax Collected at Source (TCS) provisions effective April 1^st, 2025.
• New Limits for Partnership Firms under Section 40b.
• Other Changes made in the Income Tax Act, 1961, effective from April 1^st, 2025.

Goods And Service Tax (GST)

• Section 3, read with section 5 of the Central Goods and Services Tax Act, 2017, and section 3 of the Integrated Goods and Services Tax Act, 2017 – officers under this act – powers of officers – appointment of officers – amendment in notification no. 2/2017-central tax, dated 19-6-2017
• Notification No. 16/2024-Central Tax, dated August 6, 2024, which makes ISD provisions mandatory from April 1, 2025.

Companies Act 2013/ Other Laws

• directs all companies to submit a half-yearly MCA return for delayed MSE payments exceeding 45 days
• Revises investment and turnover criteria for classifying enterprises as MSMEs
• IBBI Mandates Detailed Disclosure of Carry Forward Losses in Information Memorandum
• SEBI Amends LODR Regulations, 2015; Increases HVDLE Threshold to ₹1,000 Crore
• SEBI Amends PIT Regulations, Expands Scope of Unpublished Price Sensitive Information (UPSI)

INCOME TAX CHANGES EFFECTIVE FROM APRIL 1^ST, 2025:

The Budget 2025 introduced some major changes to the Income Tax Act 1961 to simplify the tax structure in India. These changes will come into effect on 1st April 2025 and will be relevant from FY 2025-26 onwards.

A. REVISED INCOME TAX SLAB RATES

The Budget 2025 proposed new tax slab rates under section 115BAC, i.e., the New Tax Regime or the Default Tax Regime. This was to ensure that individuals save more and increase their spending capacity. These revised tax slab rates will be applicable for income earned in FY 2025-26 onwards.

• Rebate under Section 87A has been increased to ₹60,000 (previously ₹25,000). The threshold has been increased from Rs. 7,00,000 to 12,00,000

B. CHANGES IN TDS THRESHOLDS

Significant changes in the provisions of Tax Deducted at Source (TDS) will take effect from April 2025. One of the key proposals includes an increase in the threshold limits for various TDS sections, benefiting both individuals and businesses. The revised TDS thresholds for different sections are as follows:

Omission of Sections 206AB & 206CCA – Higher TDS Provisions Removed

Sections 206AB and 206CCA, which mandated a higher TDS/TCS rate for non-filers of income tax returns, have been removed. Previously, taxpayers who had not filed their income tax returns for the last two years faced higher deduction rates. With the removal of these sections, businesses and individuals will no longer be subject to higher TDS/TCS rates for non-compliance.

C. TCS AMENDMENTS

Key changes in Tax Collected at Source (TCS) provisions effective from April  1^st 2025, are as below:

D. NEW LIMITS FOR PARTNER REMUNERATION

Revised remuneration limits for partners in firms:

E. OTHER CHANGES:

• Startups – Tax Holiday Extension (Section 80-IAC):

The government has extended the tax holiday for eligible startups under Section 80-IAC until March 31, 2030. Startups that qualify under this section will continue to enjoy a 100% deduction on profits for three consecutive assessment years out of their first ten years of incorporation, provided they meet the prescribed conditions.

• IFSC Benefits – Extended Tax Concessions:

To promote financial activities in the International Financial Services Centre (IFSC), the government has extended tax concessions until March 31, 2030. This includes exemptions and tax benefits for units operating in the IFSC, making it an attractive destination for global financial businesses.

• Unit Linked Insurance Plans (ULIPs) – Taxation on Proceeds:

Proceeds from Unit Linked Insurance Plans (ULIPs) will now be taxed as capital gains if:

• The annual premium paid exceeds 10% of the sum assured or
• The total premium across policies exceeds ₹2.5 lakh per year

This change aims to curb the misuse of high-premium ULIPs as a tax-free investment avenue while maintaining their original purpose as an insurance product.

A. SECTION 3, READ WITH SECTION 5 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND SECTION 3 OF THE INTEGRATED GOODS AND SERVICES TAX ACT,2017- OFFICERS UNDER THIS ACT- POWERS OF OFFICERS- APPOINTMENT OF OFFICERS- AMENDMENT IN NOTIFICATION NO. 2/2017- CENTRAL TAX, DATED 19-6-2017

Key Amendments to Notification No. 02/2017-Central Tax:

The Central Government hereby amends Notification No. 02/2017-Central Tax, published in the Gazette of India (G.S.R. 609(E)) dated 19th June 2017.

B.NOTIFICATION NO. 16/2024- CENTRAL TAX, DATED AUGUST 6,2024, WHICH MAKES ISD PROVISIONS MANDATORY FROM APRIL 1^ST,2015

From April 1, 2025, businesses receiving input service invoices for multiple branches must register as an Input Service Distributor (ISD) and distribute ITC accordingly. This applies to shared services like audit fees, legal consultation, and software subscriptions.

Previously optional, ISD registration is now mandatory under Notification No. 16/2024-Central Tax, dated August 6, 2024. Non-compliance may lead to ITC disallowances or penalties.

Input Service Distributor

• Purpose: Distributes ITC on input services (not goods or capital goods) to branches with different GSTINs under the same PAN.
• Distribution Rule: ITC is allocated in proportion to branch turnover.
• Tax Types: ITC is distributed as CGST, SGST, or IGST based on the recipient’s location.

Compliance:

• Requires a separate GST registration.
• Must file a GSTR-6 by the 13th of the following month; recipients view ITC in GSTR-6A and claim it in GSTR-3B.
• GSTR-9 annual return is not required for ISD.
• RCM invoices should be addressed to normal registration and not ISD registration.
• The time limit to avail of ITC is based on the date of the original invoice. For example, ITC related to FY 2024-25 must be availed by November 2025.
• Businesses must align SOPs, automate ITC tracking, and train staff for seamless compliance.

Documents required: Certificate of Incorporation, PAN of applicant, Identity/Address proof of Directors, Address proof of Business, Bank details, details of all GST registrations.

A. GOVERNMENT DIRECTS ALL COMPANIES TO SUBMIT HALF-YEARLY MCA RETURN FOR DELAYED MSE OAYMENTS EXCEEDING 45 DAYS (PROSPECTUS AND ALLOTMENTS OF SECURITIES) AMENDMENT RULES, 2025

The Central Govt. has directed all Companies receiving goods or services from micro and small enterprises to submit a half-yearly return to the MCA if payments exceed 45 days from the acceptance or deemed acceptance date. The return must include (a) the outstanding payment amounts and (b) the reasons for the delay.

B. GOVERNMENT REVISES INVESTMENT AND TURNOVER CRITERIA FOR CLASSIFYING ENTERPRISES AS MSMEs

The Central Government, under the Micro, Small and Medium Enterprises Development Act, 2006, has amended the notification S.O. 2119 (E) dated 26th June 2020, following the recommendations of the Advisory Committee. The amendments revise the investment and turnover limits for classifying enterprises as Micro, Small, and Medium Enterprises (MSMEs). Key changes include:

• Micro Enterprises: The Investment limit increased from ₹1 crore to ₹2.5 crore, and the turnover limit from ₹5 crore to ₹10 crore.
• Small Enterprises: The Investment limit was raised from ₹10 crore to ₹25 crore, and the turnover limit from ₹50 crore to ₹100 crore.
• Medium Enterprises: The Investment limit was revised from ₹50 crore to ₹125 crore and the turnover limit from ₹250 crore to ₹500 crore.

These changes will come into effect from April 1, 2025.

1. IBBI MANDATES DETAILED DISCLOSURE OF CARRY FORWARD LOSSES IN INFORMATION MEMORANDUM

The Insolvency and Bankruptcy Board of India (IBBI) has instructed Insolvency Professionals to incorporate a dedicated section in the Information Memorandum (IM), explicitly outlining carry forward losses under the Income Tax Act, 1961. The disclosure must include the quantum of losses, a breakdown by specific heads, and the applicable time limits. This directive has been issued under Section 196 of the Insolvency and Bankruptcy Code (IBC), 2016.

A. SEBI AMENDS LODR REGULATIONS, 2015; INCREASES HVDLE THRESHOLD TO RS. 1,000 CRORE

The Securities and Exchange Board of India (SEBI) has revised the LODR Regulations, 2015, strengthening compliance requirements for High-Value Debt Listed Entities (HVDLEs). The threshold for HVDLE classification has been raised from ₹500 crore to ₹1,000 crore, with entities exceeding this limit required to comply within six months. Other key amendments cover the Board of Directors (BoD), Audit Committee, Nomination and Remuneration Committee, Related Party Transactions (RPTs), Secretarial Audit, and Secretarial Compliance Reports.

B. SEBI AMENDS PIT REGULATIONS, EXPANDS THE SCOPE OF UNPUBLISHED PRICE SENSITIVE INFORMATION (UPSI)

The Securities and Exchange Board of India (SEBI) has amended the Prohibition of Insider Trading (PIT) Regulations, 2015, broadening the definition of Unpublished Price Sensitive Information (UPSI). Key amendments include:

• Addition of new UPSI events such as award or termination of contracts, rating changes, fundraising plans, forensic audits, and litigation outcomes.
• Strengthened disclosure requirements related to fraud, defaults, insolvency proceedings, and regulatory actions.
• Introduction of a 2-day deadline for recording non-internal information in structured digital databases.
• Clarification that the trading window need not be closed for UPSI not originating within the listed company.

These regulations will come into effect 90 days from their publication in the Official Gazette.

Disclaimer Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates for the period 28.03.2025

Executive Summary

Income Tax

• Section 192 of the Income-Tax Act, 1961 – Deduction at source – Salary- Clarification on Income-Tax Deduction from Salaries during FY 2024-25.
• Executive Summary on the comprehensive simplification of the Income-Tax Act, 1961.
• New slabs in the proposed new regime introduced by Finance Bill, 2025

Goods And Service Tax (GST)

• Circular no. 246/03/2025 – GST – Clarification on applicability of late fee for delay in furnishing of Form GSTR-9C, dated 30-01-2025
• Circular F. no. 190341/12/2025, dated 31-01-2025- The Ministry of Civil Aviation (MOCA) has shared details about Gazette Notification No. 08/2024 – IGST (Rate), dated 08-10-2024, issued by the Department of Revenue.
• Instruction no. 2/2025 – GST, dated 07-02-2025 – Section 128, along with Section 73 of the CGST Act, 2017, deals with waiving interest or penalties for certain tax demands and the procedure for department appeals related only to interest or penalties under Section 128A.
• Circular no. 247/04/2025 – GST, dated 14-02-2025 – Section 9 of the CGST Act, 2017, Clarification covers GST levy and collection on GST rates and the classification (Goods) based on the GST Council’s 55th meeting on 21-12-2024.

Companies Act 2013/ Other Laws

• Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025
• IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2025
• IBBI Amends CIRP Regulations 2025
• SEBI (Mutual Funds) (Amendment) Regulations, 2025
• Relaxation in the timeline for reporting of differential rights issued by AIFs

A. SECTION 192 OF THE INCOME-TAX ACT, 1961 – DEDUCTION AT SOURCE – SALARY – CLARIFICATION ON INCOME-TAX DEDUCTION FROM SALARIES DURING FINANCIAL YEAR 2024-25 UNDER SECTION 192

Amendments made vide the Finance (No. 2) Act of 2024, Finance (No. 1) Act of 2024 and Finance Act of 2023 in respect of rates of deduction of income-tax from the payment of income under the head “Salaries” under section 102 of the Income-tax Act, 1961, during the financial year 2024-25

1. The term “Salary” has been defined in section 15 of the Act. As per the amendment in section 17(1) of the Act vide the finance Act, 2023. “salary”, inter alia, includes the following:

“The contribution made by the Central Government in the previous year, to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in section 80CCH.”

2. As per the amendment vide the Finance Act, 2023 in section 17(2) of the Act, “perquisite”, inter alia, includes the following:

“(i)  The value of rent-free accommodation provided to the employee by his employer

 (ii) The value of any accommodation provided to the assessee by his employer at a concessional rate.”

B. Executive summary on the Comprehensive Simplifiaction of the Income-Tax Act,1961
The Income-tax Bill, 2025 has been tabled in Parliament on 13th February 2025, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961.The simplification exercise was guided by three core principles:

1. Textual and structural simplification for improved clarity and coherence.
2. No major tax policy changes to ensure continuity and certainty.
3. No modifications of tax rates, preserving predictability for taxpayers.

Quantitative Impact

The review has substantially reduced the Act’s volume, making it more streamlined and navigable. Key reductions are summarized below:

C. New slabs in the proposed new regime introduced by Finance Bill, 2025

The new tax regime applies to a person, being an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section.

Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs. 12 lacs. Now he will be required to pay nil tax on such income.

A. Circular no. 246/03/2025 – GST – Clarification on applicability of late fee for delay in furnishing of Form GSTR-9C, dated 30-01-2025

Clarification has been issued regarding late fees for the delay in filing GSTR-9C:

• Key Point: If a taxpayer is required to file both GSTR-9 (Annual Return) and GSTR-9C, the annual return is considered complete only when both forms are submitted.
• Late Fee Applicability: If GSTR-9C is not submitted along with GSTR-9, the late fee under Section 47(2) of CGST Act applies from the due date until both forms are filed.
• Waiver of Late Fee: A special waiver has been granted through Notification No. 08/2025, allowing taxpayers to submit pending GSTR-9C for FY 2022-23 and earlier by March 31, 2025, without additional late fees beyond what was due for GSTR-9.
• No Refund: Any late fee already paid for delayed GSTR-9C submission will not be refunded.
• Trade notices are to be issued for public awareness, and any difficulties should be reported to the Board.

B. Circular F. no. 190341/12/2025, dated 31-01-2025- The Ministry of Civil Aviation (MOCA) has shared details about Gazette Notification No. 08/2024 – IGST (Rate), dated 08-10-2024, issued by the Department of Revenue

Clarification on GST Exemption for Foreign Airlines’ Import of Services:

• GST Exemption: As per the 54th GST Council meeting (09-09-2024), foreign airline establishments in India importing services from related persons abroad without consideration are exempt from GST, subject to these conditions:
• GST is paid on passenger & goods transport services in India.
• MoCA certifies that the establishment is a designated airline under a bilateral air service agreement.
• MoCA certifies that Indian airlines receive reciprocal tax exemption in the foreign country
• MoCA’s Role:
• Provided a list of designated foreign airlines operating in India for Winter 2024-25 (Annexure I).
• Consulted Air India, IndiGo, and Akasa Air on reciprocal tax exemptions (Annexure II).
• Action: The MoCA’s Office Memorandum (O.M.) and annexures are available on the CBIC website for reference.

C. Instruction no. 2/2025 – GST, dated 07-02-2025 – Section 128, along with Section 73 of the CGST Act, 2017, deals with waiving interest or penalties for certain tax demands and the procedure for department appeals related only to interest or penalties under Section 128A

Clarification on Section 128A – Waiver of Interest & Penalty:

• Provision: Section 128A of CGST Act (with Rule 164) allows waiver of interest/penalty for demands under Section 73 for FY 2017-18 to 2019-20, subject to conditions.
• Clarification Sought: Whether benefits apply if:
  • Tax is fully paid, but the department appealed due to incorrect interest calculation.
  • Penalty is not imposed or is below the threshold.
• Decision:
  • If full tax is paid and only interest/penalty is disputed, taxpayers are eligible for Section 128A benefits.
  • Appeals should be withdrawn or not filed if the only dispute is interest/penalty miscalculation.
• Action: Proper officers should withdraw appeals or accept the order if under review.

D. Circular no. 247/04/2025 – GST, dated 14-02-2025 – Section 9 of the CGST Act, 2017, Clarification covers GST levy and collection on GST rates and the classification (Goods) based on the GST Council’s 55th meeting on 21-12-2024.

Key Clarifications from the 55^th GST Council Meeting:

• GST on Pepper (Genus Piper)
  • HS Code: 0904
  • Rate: 5% GST (S. No. 38, Notification 1/2017-CT)
  • Exemption: Agriculturists supplying dried pepper are not liable for GST under Section 23(1).
• GST on Raisins by Agriculturists
  • Exemption: Raisins supplied by agriculturists are not liable for GST under Section 23(1).
• GST on Ready-to-Eat Popcorn
  • Salt & Spices: 5% GST (if loose), 12% GST (if packaged & labeled).
  • Caramel/Sugar Coated: 18% GST (HS 1704 90 90).
  • Past Period up to 14-2-2025: Issue regularized on an “as-is where-is”
• Implementation Issues: Report difficulties to the Board.

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025

The Ministry of Corporate Affairs (MCA) has issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025, under the Companies Act, 2013. This amendment modifies Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, granting a compliance extension for certain private companies.

Private companies (excluding Producer companies) that were not classified as small companies as of March 31, 2023, now have until June 30, 2025, to comply with the relevant sub-rule.

• IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2025

The Insolvency and Bankruptcy Board of India (IBBI) has issued the Voluntary Liquidation Process (Amendment) Regulations, 2025, effective January 28, 2025.

Key amendments include:

• The Board is now mandated to maintain a Corporate Voluntary Liquidation Account with a scheduled bank.
• New Regulation Introduces mandatory electronic filing of forms for different stages of liquidation, with specified timelines. Liquidators must ensure accurate and timely submissions, failing which a penalty of ₹500 per form per month will be imposed.
• Liquidators are now mandated to file the final report, including Form H, with the Adjudicating Authority when a scheme of compromise or arrangement under Section 230 of the Companies Act, 2013, is approved.

These amendments aim to enhance transparency, accountability, and compliance within the Voluntary Liquidation Process.

• IBBI Amends CIRP Regulations 2025

The Insolvency and Bankruptcy Board of India (IBBI) has introduced amendments to the Insolvency Resolution Process for Corporate Persons (CIRP) Regulations, effective February 3, 2025. These changes aim to streamline insolvency proceedings, particularly in the real estate sector.

Key Amendments:

• Resolution professionals (RPs) can now transfer property possession to homebuyers during the resolution process.
• Land authorities are now permitted to participate in Committee of Creditors (CoC) meetings.
• RPs must submit a report on real estate development rights within 60 days to aid decision-making.
• A monitoring committee may be formed to oversee resolution plan execution and submit quarterly progress reports to the Adjudicating Authority.
• MSME Status Disclosure: Corporate debtors must now disclose their MSME registration status to facilitate participation from eligible resolution applicants.

These amendments aim to enhance efficiency, transparency, and stakeholder confidence in the insolvency resolution process.

• SEBI (Mutual Funds) (Amendment) Regulations, 2025

The Securities and Exchange Board of India (SEBI) has introduced the Mutual Funds (Amendment) Regulations, 2025, bringing key changes to the Mutual Funds Regulations, 1996, effective April 1, 2025. The amendments require Asset Management Companies (AMCs) to invest a portion of their employees’ remuneration in mutual fund schemes based on their roles, as specified by SEBI. Additionally, AMCs must conduct stress tests on specific schemes and disclose the results in a prescribed format. The regulations also mandate that funds raised through New Fund Offers (NFOs) be deployed within a specified timeframe. Furthermore, AMCs must ensure that charges, commissions, or fees related to mutual fund distribution are paid in accordance with SEBI’s guidelines. These changes aim to enhance transparency, risk management, and accountability in the mutual fund industry.

• Relaxation in the timeline for reporting of differential rights issued by AIFs

The Securities and Exchange Board of India (SEBI) has extended the deadline for Alternative Investment Funds (AIFs) to report differential rights issues to March 31, 2025. This extension, from the original February 28, 2025 deadline, comes after requests from the AIF industry for additional time to comply with the reporting requirements.

The extension aims to provide AIFs with additional time to ensure compliance with these regulatory guidelines, thereby promoting fair and equal treatment of investors.

Disclaimer Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for the period 28.02.2025

Executive Summary

Income Tax

• Income-Tax (First Amendment) Rules, 2025 – Insertion of New Rule 6GB
• Income-Tax (Second Amendment) Rules, 2025 – Amendment in Rule 21AIA – Insertion of Rules 2DAA and 21ACA
• Guidance for Application of the Principal Purpose Test under India’s Double Taxation Avoidance Agreement.
• CBDT notifies Amendments in Income- Tax Rules,1962 to prescribe conditions for applicability of Presumptive Taxation regime for Non- Resident Cruise Ship Operators.
• Section 197A, read with Section 194A of the Income-Tax Act,1961- No Deduction in certain cases.

Goods And Service Tax (GST)

• Circular No. 240/34/2024 clarifies the availability of Input Tax Credit for electronic commerce operators when services specified under Section 9(5) of the CGST Act, 2017
• Circular No. 241/35/2024 clarifies the availability of Input Tax Credit for goods delivered by the supplier at his place of business under an ex-works contract as per Section 16(2)(b) of the CGST Act, 2017.
• Clarification on place of supply of online services supplied by the suppliers of services to unregistered recipients, Circular No. 242/36/2024 – GST [F. No. CBIC-20001/14/2024 – GST], dated 31-12-2024
• Clarification on various issues pertaining to GST treatment of vouchers, Circular No. 243/37/2024 – GST [F. No. CBIC-20001/14/2024 – GST], dated 31-12-2024
• Section 69, read with section 132 of the Central Goods and Services Tax Act, 2017 – power to arrest – guidelines for arrest and bail in relation to offences punishable amendment in instruction no. 2/2022-23 [GST- investigation], dated 17-08-2022
• Section 9 of the Central Goods and Services Tax Act, 2017 – levy and collection of tax – CGST rate schedule for goods – amendment in notification no. 1/2017 – Central Tax (rate), dated 28-06-2017
• Section 11 of the Central Goods and Services Tax Act, 2017 – power to grant exemption from tax – list of CGST exempt goods (nil rated goods) – amendment in notification no. 2/2017- Central Tax (rate), dated 28-06-2017
• Section 9, read with sections 11, 15, and 16 of the CGST Act, 2017 – Amendment in CGST rate schedule for services in Notification No. 5/2025 – Central Tax, dated 16-01-2025.
• The amendment to Notification No. 12/2017-Central Tax (Rate) revises certain exemptions for CGST exempt services, including changes to specific service categories and definitions.
• The amendment to Notification No. 8/2018-Central Tax (Rate) exempts central tax on intra-state supplies of goods in excess of the specified margin of the supplier as per the updated schedule.
• The amendment to Notification No. 11/2017-Central Tax (Rate) updates the CGST rate schedule for services, including changes to specified premises and new annexures for declarations.
• The amendment to Notification No. 12/2017-Central Tax (Rate) revises certain exemptions for CGST exempt services, including changes to specific service categories and definitions.
• Section 9 of the Central Goods and Services Tax Act, 2017 – The amendment to Notification No. 13/2017-Central Tax (Rate) updates the reverse charge mechanism on certain specified supplies of services under Section 9 of the CGST Act.
• The amendment to Notification No. 17/2017-Central Tax (Rate) specifies that tax on intra-state supplies under notified categories of services shall be paid by the electronic commerce operator under Section 9 of the CGST Act.
• Notification No. 1/2025-Central Excise (N.T.) appoints officers in notified jurisdictions to pass orders on excise and service tax appeals under Section 174 of the CGST Act, 2017.
• Central Goods and Services Tax (amendment) rules, 2025 – amendment in rule 19 and 87, insertion of new rule 16a and substitution of Form reg-12, Notification No. 7/2025 – Central Tax, dated 23-01-2025
• Notification No. 08/2025-Central Tax waives penalty for failure to file Form GSTR-9C along with Form GSTR-9 for financial years, if submitted by 31st March 2025.
• CBIC cautions against fraudsters issuing fake and fraudulent summons for GST violations press release, dated 24-01-2025
• Circular No. 244/01/2025 regularizes GST payment on co-insurance premium apportioned by lead insurers and on ceding/re-insurance commission deducted by insurers from reinsurance premiums.
• Circular no. 245/02/2025 F. No. CBIC – 190354/2/2025 – to (tru-ii) – CBEC, clarifications regarding applicability of GST on certain services

Companies Act 2013/ Other Laws

• Companies (Accounts) Second Amendments Rules,2024
• IBBI amends guidelines for technical standards on core and other services under Information Utilities Regulations
• Companies with turnover above Rs 250 crore must get onboard on ‘Trade Receivables Discounting Platforms by 31.03.2025
• Prior Approval for Change in Control, transfer of Shareholdings among Immediate Relatives and Transmission of Shareholdings and their effect on Change in Control
• SEBI updates Debenture Trustee’s due diligence certificate format for unsecured debt securities

• Income – tax (First Amendment) Rules, 2025 – Insertion of New Rule 6GB

In exercise of the powers conferred by section 295, read with sub-section (1) of section 44BBC of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:

2025. (1) These rules may be called the Income-tax (First Amendment) Rules, 2025.

(2) They shall come into force on the date of their publication in the Official Gazette.

1. In the Income-tax Rules, 1962, after rule 2DA, the following shall be inserted namely:-

       “CCCB-Special provisions for computing profits and gains of business of operation of cruise ships in case of non-residents.”

Rule 6GB

Conditions for non-resident, engaged in the business of operation of cruise ships for section 44BBC–

For the purposes of section 44BBC, an assessee, being a non-resident, engaged in the business of operation of cruise ships shall, –

(i)      operate a passenger ship having a carrying capacity of more than two hundred passengers or length of seventy-five meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers.

(ii)   operate such ship on scheduled voyage or shore excursion touching at least two sea ports

of India or same seaports of India twice.

(iii)    operate such ship primarily for carrying passengers and not for carrying cargo; and

(iv)  operate such ship as per the procedure and guidelines if any, issued by the Ministry of     Tourism or Ministry of Shipping.

• Income – tax (Second Amendment) Rules, 2025 – Amendment in Rule 21AIA: Insertion of Rules 2DAA and 21ACA

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

2025. (1) These rules may be called the Income-tax (Second Amendment) Rules, 2025.

(2) They shall come into force on the date of their publication in the Official Gazette.

1. In the Income-tax Rules, 1962,

• After rule 2DA, the following shall be inserted namely:-

“Conditions for the Venture Capital Fund for the clause (23FB) of section 10.–2DAA”

• After rule 21AC, the following shall be inserted namely:-

“Conditions and activities for the Finance Company located in any International Financial Services Centre for section 94B.– 21ACA”

• Guidance For Application of the Principal Purpose Test under India’s Double Taxation Avoidance Agreement

The Multilateral Convention to Implement Tax Treaty Related Provisions to Prevent Base Erosion and Profit Shifting (“MLI”) entered into force for India on 1st October, 2019. The MLI modifies some of India’s Double Taxation Avoidance Agreements (DTAAs). A key provision of the MLI is the Principal Purpose Test (PPT), which seeks to curb revenue leakage by preventing treaty abuse. While the PPT is included in most of India’s DTAAs through the MLI, it is part of some other DTAAs through bilateral processes.

1. The PPT envisages denial of benefits under a DTAA where it is reasonable to conclude, having considered all the relevant facts and circumstances that one of the principal purposes of an arrangement or transaction was to obtain a benefit, directly or indirectly, under a DTAA.
2. For DTAAs where the PPT has been incorporated through the MLI-from the date of entry into effect of the provisions of the MLI with respect to the DTAA specified in Article 35 of the MLI, as under:
3. With respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after the first day of the previous year that begins on or after the latest of the dates on which the MLI enters into force for the Contracting Jurisdictions to the DTAA:
4. With respect to all other taxes levied by India for previous years beginning on or after the expiration of a period of six calendar months from the latest of the dates on which the MLI enters into force for the Contracting jurisdictions to the DTAA.

• India has made certain treaty-specific bilateral commitments in the form of grandfathering provisions under the following DTAAs, as on date:
  1. India-Cyprus DTAA.
  2. India-Mauritius DTAA; and
  3. India-Singapore DTAA
• CBDT notifies Amendments in Income – Tax Rules,1962 to prescribe conditions for applicability of Presumptive Taxation Regime for Non – Resident Cruise Ship Operators

As a measure to promote investment and employment, Finance (No. 2) Act, 2024 inter-alia provided a presumptive taxation regime for non-residents, engaged in the business of operation of cruise ships. Further, exemption has been provided for any income of a foreign company from lease rentals of cruise ships, received from a related company which operates such ship or ships in India. The applicability of this presumptive taxation regime is subject to the conditions, as prescribed.

The conditions which have been prescribed for non-resident, engaged in the business of operation of cruise ships provide that such non-resident shall: —

1. Operate  a passenger ship having a carrying capacity of more than 200 passengers or length of 75 meters or more, for leisure and recreational purposes and having appropriate dining and cabin facilities for passengers.
2. Operate such ship on scheduled voyage or shore excursion touching at least two sea ports of India or same sea ports of India twice;

• Operate such ship primarily for carrying passengers and not for carrying cargo; and

1. Operate such ship as per the procedure and guidelines if any, issued by the Ministry of Tourism or Ministry of Shipping.

• Section 197A, read with Section 194Q of the Income – Tax Act,1961- No Deduction in certain cases

In exercise of the powers conferred by sub-section (1F)  of Section 197A of the Income-tax Act, 1961, the Central Government hereby specifies that no deduction of tax shall be made under the provisions of section 194Q of the said Act by a person, being a buyer, in respect of purchase of goods from a Unit of International Financial Services Centre, being a seller, subject to the following conditions, namely:—

1. The seller shall-
   1. Furnish a statement -cum-declaration in the format provided to the buyer giving details of previous years relevant to the ten consecutive assessment years for which the seller opts for claiming deduction under subsections (1A) and (2) of section 80LA of the said Act; and
   2. Such statement-cum-declaration so furnished shall be verified in the manner specified in the said Form, for each previous year relevant to the ten consecutive assessment years for which the seller opts for claiming deduction under sub-sections (1A) and (2) of section 80LA of the said Act;
2. The buyer shall-
3. Not deduct tax on payment made or credited to the seller after the date of receipt of copy of the statement- cum-declaration in the said Form from the seller; and
4. Furnish the particulars of all the payments made to the seller on which tax has not been deducted in pursuance of this notification in the statement of deduction of tax referred to in sub-section (3) of section 200 of the said Act read with rule 31A of the Income-tax Rules, 1962.
5. This notification shall come into force on 1^st day of January, 2025.

• Circular no. 240/34/2024 – GST [F. No. CBIC-20001/14/2024 – GST], dated 31-12-2024, clarifies the availability of Input Tax Credit for electronic commerce operators

The clarification confirms that electronic commerce operators (ECOs) do not need to reverse ITC for services under Section 9(5) (except for tax payments under this section, which must be in cash). ITC can still be used for the ECO’s own tax liabilities, ensuring uniform application of ITC rules.

• Circular No. 241/35/2024 – GST clarification on availability of Input Tax Credit as per clause (b) of sub-section (2) of section 16 of the Central Goods and Services Tax Act, 2017

The clarification confirms that ITC is available for goods under Ex-Works (EXW) contracts when handed over to a transporter on the buyer’s behalf, as this qualifies as “receipt” under Section 16(2)(b) of the CGST Act. The same principle applies to all EXW contracts, provided goods are used for business purposes.

• Clarification on place of supply of online services supplied by the suppliers of services to unregistered recipients, Circular No. 242/36/2024 – GST, dated 31-12-2024

Suppliers of online services must mention the unregistered recipient’s State on invoices to ensure correct place of supply under GST. Failure to do so may lead to revenue misallocation and penalties. Compliance measures, including system updates and enforcement, are required for uniform implementation.

• Clarification on various issues pertaining to GST treatment of vouchers, Circular No. 243/37/2024 – GST [F. No. CBIC-20001/14/2024 – GST], dated 31-12-2024
• Vouchers are not taxable under GST if recognized by RBI as “money” or classified as “actionable claims” (excluding betting, gambling, etc.). Trading vouchers in a P2P model is not taxable, but commission-based distribution is taxable.
• Additional services related to vouchers are taxable, while unredeemed vouchers (breakage) do not attract GST.
• Section 69, read with section 132 of the Central Goods and Services Tax Act, 2017 – power to arrest – guidelines for arrest and bail in relation to offences punishable under-said act – amendment in instruction no. 2/2022-23

Regarding this the Delhi High Court ruled that the grounds for arrest must be communicated in writing to the arrested person, to mandate written explanation and acknowledgment at the time of the Arrest Memo.

• Section 9 of the Central Goods and Services Tax Act, 2017 – levy and collection of tax – CGST rate schedule for goods – amendment in notification no. 1/2017 – Central Tax (rate), dated 28-06-2017

The Central Government has amended the CGST Act (2017) to include Fortified Rice Kernel (FRK) under specific tax schedules and revised the definition of “pre-packaged and labelled” for retail sale up to 25 kg/liters, effective immediately.

• Section 11 of the Central Goods and Services Tax Act, 2017 – power to grant exemption from tax – list of CGST exempt goods (nil rated goods) – amendment in notification no. 2/2017- Central Tax (rate), dated 28-06-2017

The CGST Act (2017) is amended to include Gene Therapy and update the definition of “pre-packaged and labelled” goods, effective immediately.

• Section 9 of the Central Goods and Services Tax Act, 2017 -Notification No. 3/2025 – Central Tax (rate) [G.S.R. 56(e)F. No. 190354/2/2025 – tru, dated 16-01-2025

The CGST Act (2017) is amended to include “food inputs” under government programs for weaker sections, with a 2.5% tax rate, effective immediately.

• Section 11, read with section 9 of the Central Goods and Services Tax Act, 2017 – power to grant exemption from tax – exemption of central tax on intra-state supplies of goods from so much tax as specified in schedule iv of notification no.1/2017 – dated 16-01-2025

The CGST Act (2017) is amended to increase the tax rate under S. No. 4 of Notification No. 8/2018 from 6% to 9%, effective immediately.

• Section 9, read with sections 11, 15, and 16 of the CGST Act, 2017 – Amendment in CGST rate schedule for services in Notification No. 5/2025 – Central Tax, dated 16-01-2025.

The CGST Act (2017) is amended to update the definition of “specified premises” for hotel accommodation services, with new annexures for opt-in and opt-out declarations, effective from 1st April 2025.

• Section 11 of the CGST Act, 2017 – Amendment in Notification No. 12/2017, Central Tax (rate), regarding CGST exempt services, in Notification No. 6/2025, dated 16-01-2025.

The CGST Act (2017) is amended to update exemptions for certain services, including transmission and distribution, motor vehicle accident fund services, and training partners approved by the National Skill Development Corporation, effective from 1st April 2025.

• Notification No. 7/2025 – Central Tax (rate) dated 16-01-2025, Section 9 of the Central Goods and Services Tax Act, 2017 – levy and collection of tax – reverse charge on certain specified supplies of services – amendment in notification no. 13/2017 – Central Tax (rate), dated 28-06-2017Notification No. 7/2025 – Central Tax (rate) dated 16-01-2025
• Section 9 of the Central Goods and Services Tax Act, 2017 – levy and collection of tax – notified categories of services, tax on intra-state supplies shall be paid by electronic commerce operator

The Central Government has amended Notification No. 17/2017-Central Tax (Rate) to substitute the definition of “specified premises” to align with clause (xxxvi) of paragraph 4 of Notification No. 11/2017-Central Tax (Rate). This amendment takes effect from April 1, 2025.

• Notification No. 1/2025-Central Excise (N.T.) appoints officers in notified jurisdictions to pass orders on excise and service tax appeals under Section 174 of the CGST Act, 2017-The Central Board of Indirect Taxes and Customs has appointed Central Excise Officers with jurisdiction to pass orders on appeals filed after July 1, 2017, under the Central Excise Act and the Finance Act.
• Central Goods and Services Tax rules, 2025 – Notification No. 7/2025 – Central Tax [F. No. CBIC-20001/15/2024 – GST], dated 23-01-2025

The CGST Rules, 2017, are amended to introduce temporary identification numbers for non-registered persons making payments, allow composition taxpayers to use FORM GST CMP-02 for intimation, and update the common portal and FORM GST REG-12 accordingly.

• Section 128, read with sections 44 and 47 of the Central Goods and Services Tax Act, 2017 – A late fee waiver is granted for delayed FORM GSTR-9 filings for FY 2017-18 to 2022-23, provided FORM GSTR-9C is filed by March 31, 2025, but no refund is given for late fees already paid.
• CBIC cautions against fraudsters issuing fake and fraudulent summons for GST violations press release, dated 24-01-2025-Taxpayers can verify the authenticity of CBIC communications, including summons, using the ‘VERIFY CBIC-DIN’ tool, and report fake summons for law enforcement action.
• Circular no. 244/01/2025 – GST F. No. CBIC – 190354/2/2025- The 53rd GST Council meeting recommended including certain insurance-related activities in Schedule III of the CGST Act, with GST payments regularized for the period 07.2017 to 31.10.2024, effective from 01.11.2024.
• Circular no. 245/02/2025 F. No. CBIC – 190354/2/2025 – to (tru-ii) – CBEC, clarifications regarding applicability of GST on certain services-The 55th GST Council meeting clarified various GST matters, including exemptions and regularizations for penal charges, payment aggregators, R&D services, skilling services, facility management, and electricity utilities, ensuring better compliance with GST laws.

• Companies (Accounts) Second Amendment Rules, 2024

The amendments to the Rules extend the deadline for filing the Corporate Social Responsibility (“CSR”) report under Form CSR-2 for the financial year 2023-2024. Initially, the deadline for filing Form No. CSR-2 for the financial year 2023-2024 under the Rules was set for December 31, 2024. However, the amendment now extends the deadline and allows companies to submit their CSR reports under Form No. CSR-2 on or before March 31, 2025, after filing of Form No. AOC-4 or AOC-4 NBFC (Ind-AS) or AOC-4 XBRL, as the case may be.

• IBBI amends guidelines for technical standards on core and other services under the Information Utilities Regulations

IBBI has notified amendments to the guidelines for technical standards for the performance of core services and other services under the IBBI (information utilities) regulations, 2017. The amendments include the use ofa  Permanent Account Number (PAN) or other OVDs for user identity verification during registration. Additionally, IUs are required to use UIDAI’s demographic authentication facility for verifying user identities.

• Companies with turnover above Rs. 250 crore must get onboarded on ‘Trade Receivables Discounting Platforms’ by 31.03.2025

In line with section 9 of the MSME Development Act, 2006, the Central Government has mandated that all companies registered under the Companies Act, 2013, with a turnover of more than Rs. 250 crores and all Central Public Sector Enterprises (CPSEs) be onboarded on the Trade Receivables Discounting System (TReDS) platforms as notified by the RBI. The onboarding process for these entities must be completed by March 31, 2025.

• Prior Approval for Change in Control, Transfer of Shareholdings among Immediate Relatives, and Transmission of Shareholdings and their effect on Change in Control

The Securities and Exchange Board of India has issued a circular on prior approval for change in control, transfer of shareholdings among immediate relatives, and transmission of shareholdings and their effect on change in control which includes the following:

1. Transfer /transmission of shareholding in case of unlisted body corporate intermediary
2. Transfer /transmission of shareholding in case of a proprietary firm-type intermediary
3. Transfer /transmission of ownership interest in case of partnership firm-type intermediary
4. The provisions of this circular shall be applicable with immediate effect.(27.12.2024)

• SEBI updates Debenture Trustee’s due diligence certificate format for unsecured debt securities

SEBI has revised the due diligence certificate format for Debenture Trustees (DTs) in unsecured debt securities under Non-Convertible Securities Regulations. Issuers must submit a due diligence certificate obtained from the Debenture Trustee during draft offer document filing and listing application, in the revised format. This circular shall be applicable with immediate effect.(29.01.2025)

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Updates are for    the period 31.01.2025.