The week ending March 2, 2025, saw key regulatory updates across various financial domains. In income tax, amendments to Rules 12CA and 12CC revised reporting requirements for business and securitization trusts. The Delhi HC ruled that Section 68 does not apply to goodwill-based share issuance. In GST, AAAR clarified that leasing electric vehicles without an operator attracts 18% GST, while AAR denied input tax credit for vehicles used in automobile benchmarking. The SC upheld GST and Customs arrest provisions but mandated procedural safeguards. The Delhi HC confirmed that GST re-registration is not barred post-cancellation. Customs updates included tariff value revisions for edible oils, gold, silver, and areca nuts, countervailing duty on saccharin imports from China, and clarifications on duty drawback. SEBI allowed demat accounts for Associations of Persons (AoPs) under specific conditions. RBI revised prudential norms for urban cooperative banks, adjusted risk weights on microfinance loans, and restored risk weights for bank exposures to NBFCs. It also announced the renewal of the India-Japan Bilateral Swap Arrangement. The IBBI penalized a resolution professional for creditor list filing lapses, and the NCLAT ruled that financial creditors can proceed under IBC even if disputes are under arbitration. The Supreme Court ruled that a General Power of Attorney (GPA) expires on the principal’s death and that an unregistered Agreement to Sell does not transfer ownership rights. These updates reflect significant regulatory developments affecting businesses and financial institutions.
A. Income Tax
Amendment to Rules 12CA, 12CC and Forms 10IH, 64A, 64B, 64C, 64D, 64E & 64F relating to reporting requirements for business trusts and securitization trusts: Rule 12CA, relating to statements under section 115UA, now mandates that business trusts furnish income distribution details in Form 64A to tax authorities and in Form 64B to unit holders, with specific timelines and digital submission procedures. Similarly, Rule 12CC, related to statements under section 115TCA, requires securitization trusts to provide income details in Form 64E to authorities and Form 64F to investors, with similar digital submission and verification protocols. It also updates Form No. 10IH and replaces Forms 64A to 64F with revised formats in Appendix-II, streamlining the reporting of income distributions and payments by these trusts. (Income Tax Notification 17/2025 Dated 24/02/2025)
HC, Section 68 addition Not Applicable to Shares Issued for Goodwill: Case of PCIT vs Zexus Air Services Pvt Ltd, HC Delhi Judgement Dated 28th January 2025. The case centred on whether the issuance of shares in exchange for goodwill, without monetary consideration, should be taxed under Section 68 of the Income Tax Act, 1961. The court upheld ITAT’s decision, stating that Section 68 applies only to unexplained cash credits and not to book entries made for legitimate business transactions. Section 68 does not apply to documented corporate transactions involving goodwill-based share issuance. (HC Delhi Judgement Dated 28/01/2025)
B. GST
AAAR, Leasing of electric vehicles without an operator are considered a transfer of the right to use goods, hence same GST rate 18% applicable: Case of True Solar Private Limited, AAAR Odisha Ruling Dated 18th December 2024. AAAR ruled that the leasing of Electric Vehicles without an operator is classified as a financial lease, not an operating lease. Further, tax to be paid at the same rate applicable to the supply of similar goods with transfer of title i.e. @18%. (AAAR Odisha Ruling Dated 18/12/2024)
AAR, Input Tax Credit on purchase of motor vehicles used for providing ‘Automobile Bench Marking Services’ not available: Case of A2Mac1 India Private Limited, AAR Tamil Nadu Ruling Dated 6th December 2024. AAR ruled that based on the facts, records and evidences submitted along with the application, and after making detailed analysis, the input tax credit on the purchase of motor vehicles used for providing taxable outward supply of ‘Automobile Bench Marking Services’ and supplied as ‘Scrap of Automobiles’ is not available to the applicant as the applicant’s activity would not fall within the exception to the exclusion provided under section l7(5)(a) of CGST/TNGST Act.
AAR, value of silver supplied free of cost by the Naval formations (in the form of old batteries) is to be included in the taxable value: Case of High Energy Batteries (India) Limited, AAR Tamil Nadu Ruling Dated 6th December 2024. AAR ruled based on the facts and circumstances of the present application, the value of silver supplied free of cost by the Naval formations (in the form of old batteries) is to be included in the taxable value adopted by the applicant on the batteries manufactured and supplied by them to the Naval formations for the purpose of payment of GST.
AAR, slack adjusters used in braking system of ‘Buses and Trucks’ are classifiable as Parts and accessories of motor vehicles and attracts 28% GST: Case of Madras Engineering Industries Private Limited, AAR Tamil Nadu Ruling Dated 5th December 2024. AAR ruled that based on the facts, records and evidences submitted along with the application, the slack adjusters used in the braking system of ‘Buses and Trucks’ are classifiable as ‘Parts and accessories of motor vehicles of heading 8701 to 8705 – ‘Others’ under HSN 87089900 and attracts GST at the rate of 28%.. The slack adjusters used in the braking system of ‘Trailers’ are classifiable as ‘Parts and accessories of trailers’ under 87169010 and attracts GST at the rate of 18%. (AAR Tamil Nadu Ruling Dated 05/12/24)
SC, Clarifies arrest rules under GST and Customs Acts: Case of Radhika Aggarwal vs Union of India, SC Judgement Dated 27th February 2025. The apex court upheld the constitutional validity of arrest and prosecution provisions under GST Act and Customs Act but provided safeguards against coercive actions including arrest.
— The apex court has ruled that procedural safeguards under the Code of Criminal Procedure (CrPC), now the Bharatiya Nagarik Suraksha Sanhita (BNSS), must be followed in arrests made under the GST and Customs Acts. It emphasized that anticipatory bail provisions are applicable to cases under these Acts. While upholding legislative amendments, the court imposed procedural safeguards, including mandatory written reasons for arrest, judicial review, and access to legal counsel. (SC Judgement Dated 27/02/2025)
HC, No GST Provision Bars Fresh Registration After Cancellation: Case of Kirpal Singh vs Superintendent CGST, HC Delhi Judgement Dated 13th January 2025. No GST provision renders assessee ineligible from applying for GST registration afresh after cancellation. (HC Delhi Judgement Dated 13/01/2025)
C. Central Excise
No Notification/ Circular during the week.
D. Custom Duty
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver: CBDT notified the Tariff Values of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver, which shall come into force w.e.f. 1st March 2025. The tariff value for crude palm oil is set at USD 1173 per metric ton, while gold and silver have tariff values of USD 927 per 10 grams and USD 1025 per kilogram, respectively. The tariff value for areca nuts is fixed at USD 8140 per metric ton. (Custom Notification 12/2025 (NT) Dated 28/02/2025)
Countervailing Duty on ‘Saccharin in all its forms’ originating in or exported from China: Countervailing Duty (CVD) has been imposed on imports of Saccharin in all its forms originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 01/2025 (CVD) Dated 25/02/2025)
Corrigendum to Notification 26/2024 on Anti-dumping Duty on Textured Toughened (Tempered) Glass: The corrigendum to notification 26/2024 (ADD) dated 4th December 2024 pertains to the description of goods listed under Serial No.1 in the notification’s table. The original text, “Textured Toughened (Tempered) Coated and Uncoated Glass,” has been revised to include a clarifying note. It specifies that the description now refers to “Textured Toughened (Tempered) Glass” with a minimum transmission of 90.5%, a thickness not exceeding 4.2 mm (including a 0.2 mm tolerance), and at least one dimension exceeding 1500 mm, regardless of coating. (Custom Notification 26/2024 (ADD) Corrigendum-II Dated 27/02/2025)
Admissibility of All Industry Rates (AIR) of duty drawback on export goods manufactured from inputs, some of which are non-duty paid: It has been brought to the notice that AIR of duty drawback is being denied or reduced on export goods using inputs, some of which are not duty paid or are paid at concessional rate of duty. In this regard, attention is invited to Circular 19/2005, wherein it was clarified that the concept of AIR of duty drawback is that the rates are determined taking into account the average duties paid on the inputs and in determining the rates, the average (weighted average) consumption of imported / indigenous inputs of a representative cross- section of exporters is taken into account and it is not open to the field formations to probe whether certain exempted inputs have been used in the manufacture of the export goods. (Custom Instructions 01/2025 Dated 28/02/2025)
E. Directorate General of Foreign Trade (DGFT)
Difficulty in closure of Advance Authorisation (AA) due to space constraints in the description column of the shipping bills: It has come to the notice that in the process of closure of AA through the online system, certain issues are being faced by exporters due to inability of the system to capture complete description of the export items as per the export invoice. Item description with more than 120 characters, may not completely reflected in Shipping Bills. In such cases, deficiencies are raised by RAs for non-compliance of Para 4.42 (iii) of FTP. Therefore, it is directed that wherever such difficulties are encountered, RAs may corroborate the complete description of the export item and decide such cases on the basis of self-attested copies of GST system generated e-invoices. In such cases, the aforesaid documents may be uploaded along with all the other prescribed documents for Redemption/EDC of Advance Authorisations. (DGFT Trade Notice 32/2025 Dated 28/02/2025)
F. Securities and Exchange Board of India (SEBI)
Opening of Demat Account in the name of Association of Persons (AoP): The circular allows the opening of demat accounts in the name of an AoP. Under the new provisions, AoPs can hold financial instruments like mutual fund units, corporate bonds, and government securities in dematerialized form, subject to specific conditions. The AoP must ensure compliance with statutes governing its constitution while subscribing to securities. The Permanent Account Number (PAN) details of the AoP and its Principal Officer, defined as a key administrative or managerial person, must be provided. Additionally, the demat account cannot be used to subscribe to or hold equity shares. In case of disputes, the Principal Officer will act as the AoP’s legal representative, and all members will bear joint and several liability. (SEBI Circular Dated 25/02/2025)
Introduction of Industry Standards on Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations: The Industry Standards Forum (ISF), consisting of representatives from ASSOCHAM, CII, and FICCI under the guidance of stock exchanges, has formulated these standards in consultation with SEBI. All listed entities are required to adhere to these industry standards to ensure proper disclosure of material events or information. (SEBI Circular Dated 25/02/2025)
Timelines for deployment of funds collected by Asset Management Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of the scheme: AMCs must allocate funds within 30 business days from the date of unit allotment. If deployment is delayed, the AMC must provide written reasons to its Investment Committee, which may grant a one-time extension of another 30 business days after reviewing the cause of the delay. Failure to meet the mandated or extended timeline will result in restrictions, including a ban on accepting fresh investments in the scheme and the removal of exit load charges for investors withdrawing after 60 business days. (SEBI Circular Dated 27/02/2025)
Regulatory framework for Specialized Investment Funds (SIF): SEBI has introduced a regulatory framework for SIF through amendments to the SEBI (Mutual Funds) Regulations. This initiative addresses the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS) in terms of portfolio flexibility. The framework aligns with SEBI’s segmented, risk-based regulatory approach, tailoring norms to investment size, investor profile, and product complexity. The Association of Mutual Funds in India (AMFI) will issue necessary guidelines and standards for SIF. Additionally, stock exchanges, clearing corporations, and depositories are instructed to prepare systems, amend relevant regulations, and ensure wide dissemination of the framework among market participants. (SEBI Circular Dated 27/02/2025)
Amendments and clarifications on Nomination Facilities in the Indian Securities Market: The circular provide clarifications regarding nomination facilities, reference to earlier circular dated 10th January 2025. These mainly relates to Transmission of Assets for Joint Holdings (Clause 2.1.1), Opting Out of Nomination (Clause 2.8), Empowering a Nominee to Operate the Account (Clause 3.5), KYC Norms for Surviving Joint Holders (Clause 3.8), Handling of Credit Transactions (Clause 3.9) and Online and Offline Opt-Out Mechanism (Clause 3.10). (SEBI Circular Dated 28/02/2025)
Industry Standards on Key Performance Indicators (“KPIs”) disclosures in the draft Offer Document and Offer Document: In order to facilitate uniform approach in identification and disclosure practices of KPIs, the Industry Standards Forum (“ISF”) comprising of representatives from three industry associations, viz. ASSOCHAM, CII and FICCI, has formulated industry standards, in consultation with SEBI. The Issuer Companies and Merchant Bankers shall follow the aforesaid industry standards to ensure compliance with the requirement to disclose KPIs in the draft offer document and offer document as per the provisions of ICDR Regulations. (SEBI Circular Dated 28/02/2025)
SEBI Launches ‘Bond Central’ for Corporate Bond Data: SEBI has launched Bond Central, a centralized database portal for corporate bonds in India. The platform aims to provide a single, reliable source of corporate bond information, accessible to the public free of cost. The key features of the portal include a unified listing of corporate bonds across exchanges, price comparison with government securities and fixed-income indices, and investor-centric information such as risk assessments, corporate bond documents, and disclosures. (SEBI Press Release Dated 27/02/2025)
Consultation Paper on Enhancing Trading Convenience and Strengthening Risk Monitoring in Equity Derivatives: The key recommendation is shifting from a notional-based Open Interest (OI) measurement to a Delta-based “Future Equivalent” (FutEq) approach, which better reflects market exposure and mitigates risks like artificial stock ban triggers. Additionally, SEBI proposes revising index derivatives position limits to prevent circumvention of intended restrictions. It also seeks feedback on introducing pre-open and post-closing sessions for derivatives, modifying individual position limits for single stocks, and establishing eligibility criteria for non-benchmark index derivatives. Further, SEBI suggests recalibrating Market Wide Position Limits (MWPL) as the new OI method generally results in lower values than the notional OI. Historical data indicates that FutEq OI is around 57% of notional OI, necessitating adjustments to maintain effective risk controls. The comments/suggestions from stake holders are invited. (SEBI Consultation Paper Dated 24/02/2025)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
NCLAT, Financial creditor not prohibited to take remedy under section 7, even if dispute pending in arbitration: Case of Sandeep Jain vs IDBI Trusteeship Services Ltd, NCLAT Delhi Judgement Dated 10th February 2025. The tribunal held that any dispute even pending in the arbitration does not in any manner prohibit the financial creditor to take remedy under Section 7 (Initiation of corporate insolvency resolution process by financial creditor) of IBC. Thus, application is admitted. (NCLAT Delhi Judgement dated 10/02/2025)
NCLAT, Hypothecated assets cannot be claimed through retrospective journal entries to evade Insolvency proceedings: Case of Saturn Ventures and Advisors Pvt Ltd vs S Gopalakrishnan, NCLAT Delhi Judgement Dated 13th February 2025. Initially the machinery was not included because of the journal entry of 31.03.2020 by which the machinery was taken out from the books of the CD but when it was realised that the journal entry dated 31.03.2020 was a fraudulent transaction because it has the effect of paying the intervenor in priority of other creditors and keeping the essential machine out of the reach of other creditors, the RP found that the machine forms integral part of the machine line and filed an application under Section 49 and 66 of the Code seeking annulment of this transaction. NCLT has held that the depreciation under the income tax law is allowed to the owner of the assets and not to the lessee and thus it was held that in the absence of any lease deed, rentals paid, depreciation claimed under the income tax act and that the machinery was hypothecated by the CD with FC at the time of availing loan, all along proves that the machinery belongs to the CD and not to the Appellant. NCLAT has held that the corporate debtor shall remain the owner of the machinery in its possession. (NCLAT Delhi Judgement dated 13/02/2025)
IBBI penalizes IP for not filing revised creditor list with Adjudicating Authority: DC finds that due to the negligence of Mr Sandeep Goel, the application for informing updated list of creditors to the AA remained under defect for nearly six months. Furthermore, Mr. Goel had violated the provision by engaging the Stalwart Resolution Professional LLP before its recognition as an IPE and without making the necessary disclosures in this regard. It imposes penalty of 5,00,000/- (Rupees Five lakh only) on Mr Goel and cautions him to be extremely careful and diligent in performance of his duties. (IBBI Order Dated 25/02/2025)
I. Reserve Bank of India (RBI)
Review and rationalization of prudential norms for Urban Cooperative Banks (UCBs): The key updates include revised definition of small-value loans, increasing the limit to ₹25 lakh or 0.4% of Tier I capital (whichever is higher), with a ceiling of ₹3 crore per borrower. Real estate exposure norms have been adjusted, allowing UCBs to allocate up to 25% of total loans to residential mortgages and up to 5% to the real estate sector (excluding housing loans). The individual housing loan limits have also been revised, with Tier 1 UCBs capped at ₹60 lakh per unit, while Tier 4 UCBs can extend up to ₹3 crore. Additionally, the provisioning glide path for security receipts (SRs) held by UCBs has been extended until FY2028. (RBI Notification 118/2025 Dated 24/02/2025)
Review of Risk Weights on Microfinance Loans: As per the updated guidelines, commercial banks, including Small Finance Banks (SFBs) but excluding Regional Rural Banks (RRBs) and Local Area Banks (LABs), may classify microfinance loans under the regulatory retail portfolio (RRP) if they meet specific criteria outlined in the Basel III Master Circular. These loans will attract a 75% risk weight. However, microfinance loans categorized as consumer credit will no longer be subject to the higher 125% risk weight introduced in November 2023. Instead, they will carry a reduced risk weight of 100%. For RRBs and LABs, all microfinance loans will uniformly attract a 100% risk weight. (RBI Notification 119/2025 Dated 25/02/2025)
Review of Risk Weights on Exposures of Scheduled Commercial Banks (SCBs) to Non-Banking Financial Companies (NBFCs): In its earlier directive dated 16th November 2023, RBI had increased risk weights on these exposures by 25 percentage points if the existing risk weight based on the NBFC’s external rating was below 100%. After reviewing the impact of this measure, RBI has now restored risk weights to levels determined solely by the external rating of the NBFC, as specified in the Basel III Capital Regulations. (RBI Notification 120/2025 Dated 25/02/2025)
Updates on UNSC Sanctions List Under UAPA Compliance: MEA has informed about the UNSC amendments on its ISIL (Da’esh) and Al-Qaida Sanctions List of individuals and entities, which are subject to the assets freeze, travel ban and arms embargo. Regulated Entities (REs) are advised to take note for necessary compliance in terms of Master Directions on KYC. (RBI Notification 121/2025 Dated 27/02/2025)
Reporting and Accounting of Central Government transactions for March 2025: The Government of India has decided that the date of closure of residual transactions for the month of March 2025 be fixed as April 10, 2025. It has been advised prepare separate set of scrolls, one pertaining to March 2025 residual transactions and another for April transactions during the first 10 days of April 2025. (RBI Notification 122/2025 Dated 28/02/2025)
Renewal of the Bilateral Swap Arrangement between Japan and India: Japan and India renewed the Bilateral Swap Arrangement (BSA). It is a two-way arrangement where both authorities can swap their local currencies in exchange for the US Dollar. The size of the BSA remains unchanged, that is, up to 75 billion US Dollars. (RBI Press Release Dated 28/02/2025)
J. Miscellaneous
SC, General Power of Attorney (GPA) ends on principal’s death, Unregistered Agreement to Sell (ATS) doesn’t transfer ownership: Case of Ananthamurthy vs J Manjula, SC Judgement Dated 27th February 2025. The Supreme Court examined the following legal questions:
1. Does a General Power of Attorney (GPA) confer ownership rights upon the holder.
2. What is the legal effect of an unregistered Agreement to Sell
3. Can a GPA holder execute a sale deed after the death of the principal
4. Whether a suit for permanent injunction is maintainable without a declaratory relief regarding title.
— A General Power of Attorney is fundamentally an instrument of agency and ceases to exist upon the death of the principal. Transactions based on such an instrument after the principal’s death are legally void.
— Immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of “GPA sales” or “SA/GPA/will transfers” do not convey title and do not amount to transfer, nor can they be recognised or valid mode of transfer of immovable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognised as deeds of title, except to the limited extent of Section 53-A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered assignment of lease. It is time that an end is put to the pernicious practice of SA/GPA/will transactions known as GPA sales.
— Regarding the unregistered Agreement to Sell, the court emphasized: An unregistered sale agreement does not convey ownership. Under the Transfer of Property Act, 1882, and the Registration Act, 1908, a registered conveyance deed is mandatory for the legal transfer of ownership rights.
— An agent or power of attorney holder derives authority strictly from the instrument of agency. Once the principal dies, the agent’s authority ends unless it is explicitly coupled with an interest that survives beyond the principal’s lifetime.
— A claim to ownership of immovable property must be pursued within the statutorily prescribed period. The appellants failed to act within the legal timeframe, rendering their claim unsustainable.
— Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person(s) presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified.
— Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent. (SC Judgement Dated 27/02/2025)
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