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
- 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.
- 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) 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.
- 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) 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.
- 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: ––
| S. No. | Person | Manner of furnishing return of income |
| 1 | (a) person whose accounts are required to be audited under section 44AB of the Act; (b) Company; (c) Political party. | Electronically under a digital signature. |
| 2 | Any person other than a person mentioned in column (2) of Sl. No. (1) above. | (A) Electronically under a digital signature; (B) Transmitting the data electronically in the return under an electronic verification code. |
(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) 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.
- 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:—
| 206C | Collection at source on the sale of a wristwatch | 6C | MA |
| 206C | Collection at source on sale of art pieces such as antiques, paintings, sculptures | 6C | MB |
| 206C | Collection at source on sale of collectibles such as coins, stamps | 6C | MC |
| 206C | Collection at source on sale of a yacht, rowing boat, canoe, and a helicopter | 6C | MD |
| 206C | Collection at source on the sale of a pair of sunglasses | 6C | ME |
| 206C | Collection at source on the sale of bags such as handbags, purses | 6C | MF |
| 206C | Collection at source on the sale of a pair of shoes | 6C | MG |
| 206C | Collection at source on sale of sportswear and equipment such as golf kit, ski wear | 6C | MH |
| 206C | Collection at source on the sale of a home theatre system | 6C | MI |
| 206C | Collection at source on the sale of horses for horse racing in race clubs, and horses for polo | 6C | MJ”. |
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 —
| Sl. No.
| Nature of goods |
| 1. | Any wristwatch |
| 2. | Any art piece, such as antiques, paintings, sculptures |
| 3. | Any collectibles such as coins, stamps |
| 4. | Any yacht, rowing boat, canoe, or helicopter |
| 5. | Any pair of sunglasses |
| 6. | Any bag, such as a handbag, purse |
| 7. | Any pair of shoes |
| 8. | Any sportswear and equipment such as golf kit, ski wear |
| 9. | Any home theatre system |
| 10. | Any horse for horse racing in race clubs and horses for polo |
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:
- Amendments to Rule 164:
- 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.
- 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).
- 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
| Sno. | Section | Details |
| 1 | Background | Section 128A and Rule 164 inserted w.e.f. 1st November 2024 to provide waiver of interest/penalty for demands under Section 73 for period 1st July 2017 – 31st March 2020. Circular No. 238/32/2024-GST issued earlier for implementation. |
| 2 | Issues Raised | 1. Eligibility where payment made through GSTR-3B instead of DRC-03. |
| 2. Treatment of appeals covering periods inside and outside Section 128A. | ||
| 3 | Issue 1: GSTR-3B Payments | – Payments made through GSTR-3B before 1st November 2024 are eligible for benefit under Section 128A. |
| – Payments after 1st November 2024 must be made via DRC-03 as per Rule 164. | ||
| – Eligibility is subject to verification by the proper officer. | ||
| 4 | Issue 2: Mixed Period Appeals | – If notice/order covers both eligible (FY 2017–18 to FY 2019–20) and non-eligible periods: |
| → Taxpayer files SPL-01 or SPL-02 after payment. | ||
| → Intimate appellate authority that appeal is not pursued for eligible period. | ||
| → Appellate authority to pass order only for non-eligible period. | ||
| – Earlier clarification (Point 6, Circular 238/32/2024) withdrawn. | ||
| 5 | Instructions | – Trade notices to be issued for awareness. |
| – Any difficulty in implementation to be reported to the Board. |
- FREQUENTLY ASKED QUESTIONS ON “RESTAURANT SERVICE” SUPLLIED AT “ SPECIFIED PREMISES”, DATED 28-03-2025
| S No. | Topic | Key Points |
| 1 | What are ‘Specified Premises’? | Premises with hotel supply > ₹7500/unit/day in preceding FY or declared through Annexure VII/VIII. |
| 2 | GST Rate for Restaurants | 18% with ITC (inside specified premises), 5% without ITC (outside specified premises). |
| 3 | Changes Post 1-4-2025 | ‘Declared tariff’ concept removed; ‘value of supply’ basis adopted. |
| 4 | Objective of Change | Certainty based on ‘value of supply’; option for voluntary declaration. |
| 5 | Who Can File Declaration? | Supplier of hotel accommodation; file between 1st Jan–31st Mar (Annexure VII) or within 15 days of registration (Annexure VIII). |
| 6 | Validity of Declarations | Valid till opt-out filed; no yearly filing required.
|
| 7 | Automatic Classification | If supply > ₹7500/unit/day in preceding FY — automatic specified premises, no need for declaration. |
| 8 | Voluntary Declaration without ₹7500 Supply | Possible via Annexure VII by 31st March. |
| 9 | Filing Declarations | Manually/physically before GST jurisdictional authority. |
| 10 | Email/Post Filing | Allowed; acknowledgment issued similarly. |
| 11 | Annual Filing Requirement | No annual filing is needed once declared, unless opted out. |
| 12 | At Time of New Registration | Yes, within 15 days of ARN (Annexure VIII). |
| 13 | For Multiple Premises | Separate declarations are needed for each premises. |
| 14 | Impact on Other Premises | Only premises with supply > ₹7500/unit/day becomes specified, not all. |
| 15 | New Premises for Existing Supplier | File Annexure VIII separately. |
| 16 | New GST Registration (Multiple Premises) | File separate declarations for each premises. |
| 17 | Input Tax Credit (ITC) Impact | Reverse ITC if restaurant service outside specified premises (as per Notification No. 11/2017-CTR). |
| 18 | Restaurants Inside vs. Outside | Inside = 18% GST with ITC; Outside = 5% GST without ITC. |
| 19 | Opting Out After Filing Annexure VIII | Not permitted in the same FY; opt-out effective from next FY. |
| 20 | Withdrawal of Opt-in Before New FY | File opt-out (Annexure IX) before 31st March. |
| 21 | Withdrawal of Opt-out Before New FY | File opt-in again before 31st March. |
| 22 | Declarations for FY 2025-26 | File between 16-01-2025 and 31-03-2025. |
| 23 | Applicability to Catering Services | Yes, the same rules apply. |
| 24 | No Supply > ₹7500 – Need to Declare? | No, not required unless voluntary opt-in needed. |
| 25 | Filed Opt-in but No ₹7500 Supply Later | Must file opt-out declaration between 1st Jan–31st Mar. |
| 26 | Declaration Deadlines | Strictly between 1st Jan–31st Mar of preceding FY. |
| 27 | Where to Find Forms | CBIC Website > Trade Facilitation > Ease of Doing Business. |
| 28 | Acknowledgment Authority | Jurisdictional GST authority — self-assessment basis. |
- INSTRUCTION NO. 3.2025 – GST, INSTRUCTIONS FOR PROCESSING APPLICATIONS FOR GST REGISTRATION, , DATED 17-04-2025
| Sl. No. | Topic | Key Points |
| 1 | Background | Complaints of delays; extra documents asked; aim to stop fake firms and protect genuine applicants. |
| 2 | Problems Identified | Irregular checks; unnecessary clarifications; issues around PPOB, Business Constitution, Identity proofs. |
| 3 | Documents Officers Can Ask | (As per FORM GST REG-01) – Owned Premises: Property Tax/Katha/Electricity/Water Bill. – Rented Premises: Rent Agreement + Lessor’s property proof. – Shared Premises: Consent Letter + Property + ID Proof. – No Agreement: Affidavit + Electricity/Water Bill. – SEZ: SEZ Authorization. – No PAN, Aadhaar, or property photos needed; one document sufficient. |
| 4 | Business Constitution Proof | – Partnership Firm: Partnership Deed. – Society/Trust/Club/Govt Bodies: Registration Certificate. – No need for MSME, Udyam, Trade License. |
| 5 | Processing Applications | – Non-risky: Approve in 7 working days. – Risky (flagged/Aadhaar issues): Approve post physical verification within 30 working days. – Verification must include GPS photos, uploaded 5 days before the 30-day limit. – Verify address through public records. |
| 6 | Clarifications (Form REG-03) | Only for incomplete, illegible, mismatched, vague address or cancelled GSTIN cases. |
| 7 | Applicant Response (Form REG-04) | You must reply within 7 working days; else application can be rejected. |
| 8 | Officer Action | If reply is OK ➔ Approve in 7 working days; if not ➔ Reject via REG-05 with reasons. |
| 9 | Timely Action | No deemed approvals allowed; officers must act promptly. |
| 10 | Restrictions on Queries | No minor/irrelevant queries unless approved by Deputy/Assistant Commissioner. |
| 11 | Senior Officer Supervision | Regular monitoring of registration, physical verifications, and compliance. |
| 12 | Adequate Staffing | Staff must be sufficient to avoid delays. |
| 13 | Trade Notices | Issue local clarifications for acceptable documents. |
- 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.
- S.R. 256(E)- GST APPELLATE TRIBUNAL RULES, 2025, DATED 24-05-2025
| Sr. No. | Topic | Summary |
| 1 | Effective Date | Applicable from 24th April 2025 for GSTAT procedures. |
| 2 | Appeal Filing | Appeals must be filed electronically on the GSTAT Portal with certified copies. |
| 3 | Registrar’s Role | Registrar to manage appeal registration, hearings, and records. |
| 4 | Hearings | Hearings can be physical, virtual, or hybrid; dismissal if parties absent. |
| 5 | Conduct Rules | Tribunal members and representatives must follow the dress code and conduct standards. |
| 6 | Applications | Stay, rectification, and other applications to be filed via GSTAT Form-01. |
| 7 | Document Management | Proper record maintenance; special rules for affidavits and evidence. |
| 8 | Order Pronouncement | Tribunal to pronounce orders within 30 days after final hearing. |
| 9 | Fees and Costs | Prescribed fees for filing/inspection; no fees for government cases. |
| 10 | Record Retention | Case records to be retained for 15 years; special procedural directions allowed. |
- 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.
