This week, several regulatory updates were issued across various sectors. In Income Tax, changes to Form ITR-U extend the filing limit to 48 months from the assessment year’s end, with increased additional tax for later submissions. The Delhi High Court ruled that different floors of the same house do not count as multiple houses for Section 54F deduction, and clarified that Section 153C limitation starts from the date the Assessing Officer receives seized documents. For GST, the Supreme Court dismissed a review petition on ITC for shopping malls, allowing pre-deposit via Electronic Credit Ledger, and upheld ITC refund claims for inverted duty structure accrued before July 18, 2022. Customs saw the removal of conditions for Bangalore Rose Onion exemption and revised adjudication procedures for EOUs. DGFT introduced port restrictions on certain imports from Bangladesh and amended import policies for gold, silver, and platinum. SEBI enhanced internal audit norms for Market Infrastructure Institutions and mandated accessible digital KYC for persons with disabilities. MCA extended the CSR-2 filing deadline. IBBI introduced new forms and timelines for CIRP, and clarified procedures for personal guarantor insolvency. RBI updated bank names, withdrew the DAY-NULM circular, and released draft circulars on inoperative accounts, KYC updates, capital raising for UCBs, and AIF investments by regulated entities. Additionally, the Supreme Court ruled on volume-based discounts not constituting abuse of dominance, and upheld a bank’s employee service bond clause.
Notifications & Circulars issued during week (19th-25th May 2025)
A. Income Tax
ITR-U Form (For persons to update income within forty-eight months from the end of the relevant assessment year) updated: The notification amends the Income Tax Rules. Form ITR-U has been replaced with new form in Appendix-II of the existing rules. The key updates include extension of time limit for filing ITR-U to 48 months from the end of the relevant assessment year. Additional tax applicable is 60% for submissions in the third year and 70% in the fourth year. Also the amendments to Section 139(8A) restrict the filing of ITR-U if a notice under Section 148A is issued after 36 months. However, if subsequent orders under Section 148A(3) determine no valid case for such notice, taxpayers may file ITR-U within the extended 48-month window.
(Link: Income Tax Notification 49/2025 Dated 19/05/2025)
HC, Different floors of same house cannot be considered as multiple house for 54F deduction: Case of PCIT vs Lata Goel, HC Delhi Judgement Dated 30th April 2025. High Court held that different floors of a singular house cannot be considered as multiple residential houses. Accordingly, deduction under section 54F of the Income Tax Act cannot be denied. The appeal of revenue is dismissed.
HC, Section 153C Limitation starts from date AO receives documents: Case of Landcraft developers Private Limited vs ACIT, HC Delhi Judgement dated 5th May 2025.High Court has quashed a notice issued under Section 153C of the Income Tax Act, for Assessment Year 2015-16, ruling that the assessment proceedings initiated against the petitioner were barred by limitation. The court emphasized that the period of limitation for passing an assessment order under Section 153C commences from the date on which the Assessing Officer (AO) of the ‘other person’ receives the seized documents.
B. GST
SC dismissed review petition of GST department regarding ITC on shopping mall: Case of Chief Commissioner CGST vs Safari Retreats Private Limited, SC Judgement Dated 20th May 2025. The apex court dismissed a review petition challenging its 3rd October 2024, judgment on the grounds of “no error apparent on the record,” This decision maintains the earlier interpretation of Section 17(5) of the Central Goods and Services Tax (CGST) Act, which pertains to Input Tax Credit (ITC) on immovable properties.
— The original SC judgment, had introduced a ‘functionality test’ for determining ITC eligibility on construction costs of immovable properties. This test aims to ascertain if a property is integral to a business’s operations and plays an essential role in generating taxable supplies. The case stemmed from the respondent being denied ITC on the construction of a shopping mall intended for commercial leasing. The tax authorities had cited Section 17(5)(d) of the CGST Act, which generally blocks ITC on properties constructed ‘on one’s own account’. The SC had remitted the case back to the Orissa High Court for reconsideration. This reconsideration was to be based on whether the shopping mall could be classified as ‘plant’ under the newly introduced functionality test, thereby potentially allowing ITC. This interpretation suggests that if an immovable property is directly linked to taxable activities, such as renting or leasing, it may qualify for ITC.
(Link: SC Judgement Dated 20/05/2025) (Link: SC Judgement Dated 03/10/2024)
SC, GST Pre-Deposit Via Credit Ledger allowed: Case of Union of India vs Yasho Industries Limited, SC Judgement Dated 19th May 2025.The apex court upheld the Gujarat High Court decision allowing the use of the Electronic Credit Ledger (ECL) which contains accumulated input tax credit (ITC) to make the mandatory pre-deposit required for filing an appeal under the Goods and Services Tax (GST) law. CGST Rule 86(2) supports debiting the ECL for discharging liabilities in accordance with Section 49. GST Circular No. 172/2022, while restrictive in paragraph 7, does not classify pre-deposit as a penalty or interest, keeping it outside the bar.
SC, Refund claim for ITC accrued before July 18, 2022 cannot be denied: Case of Assistant Commissioner of Central Taxes vs Gemini Edibles and Fats India Limited, SC Judgement Dated 9th May 2025. The apex court dismisses appeal, affirming ITC refund claims for inverted duty structure prior to July 18, 2022, cannot be denied based on filing date. It upholds ITC Refund for Pre July 2022 period.
SC, upholds Gujarat HC Ruling on GST Classification of ‘Fusible Interlining Cloth’: Case of Union of India vs Girish Pravinbhai Rathod, SC Judgement Dated 16th May 2025. The apex court has upheld a Gujarat High Court decision on the GST classification of “fusible interlining fabric of cotton.” It dismissed a Special Leave Petition filed by the Union of India, affirming the High Court’s ruling that the fabric cannot be classified under Heading 5903 of Chapter 59, rather it should be classified under Chapters 50 to 55, 58, or 60 of the Custom Tariff Act.
AAR, Taxation of Water Quality Monitoring Services, Pure vs Composite Supplies: Case of Sunanda Environmental International Private Limited, AAR WB Ruling Dated 8th May 2025. The AAR ruling relates to GST applicability on various contracts for services provided by the applicant, primarily related to water quality monitoring and management. The ruling clarifies which services qualify as pure services and exempt from tax and which constitutes composite supplies.
AAR, GST on Solar Power Plant components & erection, Composite Supply, rates & valuation: Case of Sunshell Power, AAR WB Ruling Dated 8th May 2025. The applicant is engaged in the business of erection, commissioning and installation projects in the renewable energy sector. The said scope of work would include EPC contracts for rooftop solar power plant including supply of multiple components within the said power plant. This would include monocrystalline panel, inverter with remote monitoring, fixing structure and relevant accessories.
— AAR ruled that the supply of components of the solar power plant along with the erection of the same would be treated as a composite supply of the nature of works contract. As per Entry no. 201 of Notification No. 01/ 2017, tax rate should be 12% IGST on seventy per cent. of the gross value charged by the supplier and 18% IGST on thirty per cent. of the gross value charged by the supplier. The value referred to here is the gross consideration charged by the supplier for the entire supply.
AAR, ST Liability & Rates on Construction, Maintenance & Exemptions: Case of Om Prakash Mahawar, AAR WB Ruling Dated 8th May 2025. The applicant intends to get a land from West Bengal Housing Infrastructure Development Corporation Ltd, on 99 years lease for setting up of Hotel-cum Shopping and Multiplex under the principal use- Assembly – Mercantile Retail, which includes the permission to construct certain area as residential flats.
— AAR ruled that GST on construction work for prospective clients, regardless of whether one charges a lump sum or periodic payments is liable to be paid. The applicable SAC (and not HSN Code) on this supply is 9954 (Construction Services) and the applicable tax rate on the supply under consideration shall be 18%.The applicant is eligible for a deduction as attributable to land portion i.e. 1/3 of consideration on the total value of supply for the purpose of payment of applicable tax. GST is payable on monthly/annual maintenance charges as per entry in sl. no. 33 of Notification No. 11/2017. The SAC Code (and not HSN code) in this case would be 9995 and the applicable GST rate is 18%.
C. Central Excise
No Notifications/ Circular during the week.
D. Custom Duty
Removal of condition for availing exemption on Bangalore Rose Onion: The notification amends previous notification No. 55/2022 dated 31st October, 2022. Specifically, for Sl. No. 1 in column (5) of the table, the existing entry is replaced with a hyphen (“-“) thus removing the conditions for availing exemption on Bangalore Rose Onion.
(Link: Custom Notification 30/2025 (T) Dated 19/05/2025)
Customs adjudication, EOU duty demand assignments: This notification prescribe revised procedures for adjudicating pending cases related to 100% Export Oriented Undertakings (EOUs) where both customs and central excise duties are demanded. Previously, these cases were handled by Central Excise Officers. This notification specifies the assignment of de-novo adjudications for cases that have been remanded. Notices involving an aggregate duty up to ₹5 lakhs will be handled by a Deputy or Assistant Commissioner of Customs. Cases with an aggregate duty up to ₹50 lakhs will be assigned to an Additional or Joint Commissioner of Customs. For demands exceeding ₹50 lakhs, the adjudication will be carried out by a Principal Commissioner or Commissioner of Customs.
(Link: Custom Notification 35/2025 (NT) Dated 16/05/2025)
Raxaul Transit Route for Customs Updated Under India-Nepal Treaty: The notification adds an explanation to item (19) relating to Raxaul, specifying that traffic-in-transit via rail through Raxaul will follow the provisions of the Treaty of Transit between India and Nepal signed on 1st June 2023. It formalizes the protocol for rail-based transit traffic through Raxaul, aligning customs operations with the bilateral treaty framework.
(Link:Custom Notification 36/2025 (NT) Dated 23/05/2025)
Disposal of Red Sanders seized by DRI and Customs field formations: The Disposal Manual prescribes the responsibilities of custodians and disposal units for seized goods. The instructions confirms that Customs field formations’ disposal units are responsible for handling Red Sanders seized by DRI, aligning with procedures for other seized items. It emphasizes that for DRI seizures, Customs formations must obtain an authorization from DRI (Annexure-B) for export filing.
(Link: Custom Instructions 12/2025 Dated 22/05/2025)
E. Directorate General of Foreign Trade (DGFT)
Port restriction on import of certain goods from Bangladesh to India: The notification introduces a new Para 19 under ‘General Notes Regarding Import Policy’. For ready-made garments, import from Bangladesh shall not be allowed from any land port, however, it is allowed only through Nhava Sheva and Kolkata seaports. For some specific items imports from Bangladesh shall not be allowed through any LCSs/ICPs in Assam, Meghalaya, Tripura and Mizoram; and LCS Changrabandha and Fulbari, in West Bengal.
These restrictions shall not apply to Import of Fish, LPG, Edible Oil, and Crushed Stone to India from Bangladesh. These restrictions shall also not apply to Bangladesh exports to Nepal/Bhutan transiting through India. Necessary action be taken to sensitize officers in this regard.
(Link: DGFT Notification 07/2025 Dated 17/05/2025)
Amendment in Import Policy and Policy Conditions of specific codes under Chapter 71 of Schedule-I for Gold, Silver, Platinum: The key modifications include the deletion and restructuring of various codes related to the import of silver, gold, and platinum in unwrought, semi-manufactured, and powder forms. Import of high-purity silver (99.9% or more) and gold (99.5% or more) is now restricted and allowed only through nominated agencies as specified by RBI and DGFT, and qualified jewellers via the India International Bullion Exchange (IIBX). Additionally, India-UAE TRQ holders can import through IIBX under specific conditions, with storage in IFSCA-registered vaults in SEZs. Platinum import rules have also been restructured, with distinctions based on form (unwrought, powder) and purity levels. Some categories are now “restricted” or “free,” depending on the purity and importer type.
(Link: DGFT Notification 08/2025 Dated 19/05/2025)
Harmonisation of Schedule-II (Export Policy), with Finance Act amendments: The changes involve modifications to various ITC (HS) codes., i.e. certain codes have been introduced, deleted, amended, split, or merged, as detailed in Annexure-I of the notification. Also, Annexure-II prescibe revisions to the Section Notes, Chapter-wise Main Notes, Sub-Heading Notes, and Supplementary Notes, bringing them in line with the provisions of the Finance Act, 2025.
(Link: DGFT Notification 09/2025 Dated 19/05/2025)
F. Securities and Exchange Board of India (SEBI)
Amendment to Rule 8 of Securities Contracts Regulation Rules: The notification provides that investments made by brokers will not be regarded as part of their business unless such investments involve client funds or securities, or create financial liabilities for the broker. It applies to both rules 8(1)(f) and 8(3)(f). It aims to prevent misinterpretation of brokers’ own investments as business activities, thus reducing unnecessary regulatory burden while still ensuring investor protection where client interests are involved.
(Link: Fin Min Notification Dated 19/05/2025)
Norms for Internal Audit Mechanism and composition of the Audit Committee of Market Infrastructure Institutions: The circular prescribes enhanced norms for the internal audit mechanism and the composition of the Audit Committee for Market Infrastructure Institutions (MIIs), including Stock Exchanges, Clearing Corporations, and Depositories. The key provisions for internal audit require MIIs to conduct an annual audit of all functions by an independent audit firm that reports solely to the Audit Committee. The scope must cover all MII activities, approved by the Audit Committee, potentially in consultation with the Industry Standards Forum. The process involves sending observations to department heads for comments, incorporating feedback into a final report for the Audit Committee, and including rationale for dropped observations. Regarding Audit Committee composition, it provides that no Executive Director, including the Managing Director, shall be a member.
(Link: SEBI Circular Dated 19/05/2025)
Accessibility and Inclusiveness of Digital KYC to Persons with Disabilities: It follows a Supreme Court judgment, which emphasized the necessity for inclusive financial services, specifically mandating that digital KYC procedures be accessible to individuals with disabilities, including those with visual impairments. The circular mandates all SEBI-registered intermediaries, stock exchanges, mutual fund associations, portfolio managers, and supervision entities to ensure that digital KYC services are accessible to all clients, including those with disabilities. These intermediaries are required to align their digital platforms with the revised FAQ guidelines to facilitate inclusive access.
(Link: SEBI Circular Dated 23/05/2025)
G. Ministry of Corporate Affairs (MCA)
Amendments to Companies Accounts Rules, Extension of due date for filing of Form CSR-2: The deadline for submitting the form, which pertains to Corporate Social Responsibility activities, has been extended. It amends Rule 12(1B), substituting the previous deadline of 31st March 2025, with the new 30th June 2025, date.
(Link: MCA Notification Dated 19/05/2025)
H. Insolvency and Bankruptcy Board of India (IBBI)
Amendment to IBBI Insolvency Resolution Process for Corporate Persons Regulations: The notification amends Regulation 40B relating to filing of forms during the Corporate Insolvency Resolution Process (CIRP). It introduces a structured format and timeline for submitting six forms (CP-1 to CP-5) via an electronic platform. These forms cover various stages of CIRP, from commencement, constitution of the Committee of Creditors (CoC), resolution plan details, and monthly updates, to reporting of avoidance transactions. Non-compliance, including failure to file, inaccurate data, or delays, may lead to regulatory action, such as refusal to issue or renew Authorisation for Assignment.
(Link: IBBI Notification Dated 19/05/2025)
Amendments to IBBI Insolvency Resolution for Personal Guarantors Regulations: The notification introduces a new Regulation 17B, which addresses scenarios where no repayment plan is submitted under Section 105 of the Insolvency and Bankruptcy Code. In such cases, the resolution professional, with creditor approval, is now required to approach the Adjudicating Authority to report the absence of a repayment plan and seek suitable directions. It aims to ensure procedural clarity in instances of non-compliance or inaction by the debtor during the insolvency resolution process.
(Link: IBBI Notification Dated 19/05/2025)
IBBI authorities directed to adhere to timelines in RTI case: The applicant had sought certified copies of the latest IBBI guidelines on Travelling Allowance on Transfer, including details on Composite Transfer and Packing Grant (CTG), personal effects transportation rates, and conveyance rates, along with their applicability and any recent revisions. The appellant’s primary concern was the delay. The First Appellate Authority acknowledged this violation of Section 7(1) of the RTI Act, emphasizing the need for public authorities like the IBBI to be diligent with statutory timelines.
(Link: IBBI FAA Order Dated 19/05/2025)
NCLAT, Service of demand notice under section 8 (CIRP by Operational Creditor) to registered email address of Corporate Debtor sufficient: Case of Vinita Pramod Devkar vs Kailash Shah, NCLAT Delhi Judgement Dated 9th may 2025. The appellate tribunal has held that the communication of Section 8 Demand Notice via registered email address of Corporate Debtor is valid service of demand notice. Accordingly, admission of application under section 9 of the Insolvency and Bankruptcy Code justifiable. Section 8 and 9 of IBC deal with Initiation of Insolvency Resolution Process of Corporate Debtors by Operational Creditor.
I. Reserve Bank of India (RBI)
Alteration in the name of ‘North East Small Finance Bank Limited’ to ‘slice Small Finance Bank Limited’ in the Second Schedule: The notification changes the name of bank previously known as ‘North East Small Finance Bank Limited’ to be renamed as ‘slice Small Finance Bank Limited’.
(Link: RBI Notification 38/2025 Dated 21/05/2025)
Withdrawal of Master Circular on Deendayal Antyodaya Yojana, National Urban Livelihoods Mission (DAY-NULM) and related circulars: The RBI has withdrawn circulars following the official conclusion of the DAY-NULM scheme on 30th September 2024. The scheduled commercial banks and small finance banks are no longer required to submit the returns previously mandated by these circulars.
(Link: RBI Notification 39/2025 Dated 21/05/2025)
Reporting on FIRMS portal, Issuance of partly paid units by Investment Vehicles: It involve directions to Category-I Authorised Dealer Banks regarding the reporting of partly paid units issued by investment vehicles to foreign investors. As per provisions, any issuance made on or after 23rd May 2025, must be reported in Form InVI within 30 days of issuance. For issuances made before this date, investment vehicles have been granted a one-time window of 180 days to report these issuances without incurring late submission fees.
(Link: RBI Notification 40/2025 Dated 23/05/2025)
Draft circular on Inoperative Accounts/ Unclaimed Deposits in Banks: It provides that a bank shall make available the facility of updation of KYC for activation of inoperative accounts/ unclaimed deposits at all branches (including non-home branches) and through Video-Customer Identification Process (V-CIP) if requested by a account holder, subject to the facility of V-CIP being provided by the bank. The comments/ feedback from stakeholders are invited.
(Link: RBI Press Release Dated 23/05/2025, Draft Circular)
Draft circular on Updation/ Periodic Updation of KYC: In order to ease the process for the convenience of customers, the instructions regarding updation/ periodic updation of KYC are being amended. The banks are advised to organize camps and launch intensive campaigns focusing on periodic updation of KYC, especially in rural and semi urban branches and the branches having pendency in periodic updation of KYC. The comments/ feedback from stakeholders are invited.
(Link: RBI Press Release Dated 23/05/2025, Draft Circular)
Discussion Paper on Capital Raising Avenues for Primary (Urban) Co-operative Banks(UCBs): The Banking Regulation (Amendment) Act, 2020 has enabled certain capital related provisions such as issuance of special shares, issuance of shares at a premium, etc., which are new to the co-operative banking sector. RBI has released the DP which proposes guidelines on capital raising avenues for UCBs. The comments/ feedback from stakeholders are invited.
(Link: RBI Press Release Dated 22/05/2025, Discussion Paper)
Draft Rules on AIF Investments by Regulated Entities: RBI has released draft directions regarding investments by regulated entities (REs) in Alternative Investment Funds (AIFs). The key proposals include capping individual RE investment in any AIF scheme at 10% of the fund’s corpus, and a collective cap of 15% for all REs combined. Investments by an RE up to 5% will remain unrestricted. However, if an RE invests more than 5% in an AIF that has a downstream debt exposure (excluding equity instruments) to a debtor company of the RE, a 100% provision must be made for the RE’s proportional exposure. Additionally, investments in subordinated units under the Priority Distribution Model must be fully deducted from capital funds. The comments/ feedback from stakeholders are invited.
(Link: RBI Press Release Dated 19/05/2025, Draft Directions)
J. Miscellaneous
SC, Offering volume based discounts does not constitute abuse of dominance under Competition Act: Case of Competition Commission of India vs Schott Glass India Private Limited, SC Judgement Dated 13th May 2025. The apex court held that Schott (principal domestic manufacturer) offering volume based discounts doesn’t constitute abuse of dominance under section 4 of the Competition Act.
SC, Accused entitled to get copies of documents which are not relied upon by prosecution: Case of Sarla Gupta vs Directorate of Enforcement, SC Judgement Dated 7th May 2025. The apex court held that the accused can apply by invoking the provisions of Section 91 of the CrPC (Section 94 of the BNSS) for providing copies of the documents which are not relied upon by the prosecution. Accordingly, ED directed to provide soft or legible copies of all the documents which have not been supplied.
SC, Upholds Bank’s employee service bond clause: Case of Vijaya Bank vs Prashant Narnaware, SC Judgement Dated 14th May 2025. The apex court has reversed the HC decision and affirmed the validity of a clause in an appointment letter issued by Vijaya Bank. The clause required the respondent, to pay ₹2 lakhs in liquidated damages if he resigned before completing a three-year minimum service period. The High Court had previously quashed this condition, deeming it a restraint of trade and against public policy, and directed the bank to refund the amount paid by the employee.
Compiled by: CMA Yash Paul Bhola, MBA, FCMA, Former Director (Finance), National Fertilizers Limited.
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