2025MONTHLY NEWS & UPDATES FOR JANUARY 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.