The week ending 22nd December 2024 saw several important updates across various sectors. The Income Tax department issued clarifications, including exempting the Credit Guarantee Fund for Micro and Small Enterprises from TDS and addressing eligibility under the Direct Tax Vivad Se Vishwas Scheme. The CBDT launched an electronic campaign to resolve income mismatches for FY 2023-24 and 2021-22. GST updates included changes to the E-Way Bill and E-Invoice systems, with Multi-Factor Authentication (MFA) mandatory for taxpayers above Rs 20 crore in turnover starting January 2025. The Customs department imposed anti-dumping duties on products from China and restricted manufacturing processes for solar projects in warehouses. SEBI announced various regulatory changes, including amendments to Mutual Fund, Research Analyst, and Investment Advisor regulations, while also focusing on offshore derivative instruments and data sharing policies. In the corporate sector, the Insolvency and Bankruptcy Board of India (IBBI) issued key rulings related to corporate debtor control and liquidation processes. Additionally, the Reserve Bank of India introduced a draft bill to curb unregulated lending practices. The Supreme Court also delivered judgments on unauthorized constructions and non-arbitrable wage disputes, reinforcing strict adherence to building regulations and employment law. These updates reflect ongoing efforts to streamline tax procedures, enhance regulatory compliance, and improve consumer protections across various sectors.
Notifications & Circulars issued during week (15th– 22nd Dec 2024)
A. Income Tax
No TDS on payments to Credit Guarantee Fund Trust for Micro and Small Enterprises: The notification exempts the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) from the requirement of tax deduction at source (TDS) on any payments received by the trust. As referred to in clause (46B) of section 10 of the Act. (Income Tax Notification 128/2024 Dated 18/12/2024)
Guidance Note 2/2024 on provisions of the Direct Tax Vivad se Vishwas Scheme (DTVSV): The DTVSV scheme has been enacted vide Finance (No 2) Act, 2024 to provide for dispute resolution in respect of pending income tax litigation. It has commenced from 1st October 2024 and the rules and forms has been notified. The guidance note provide clarifications to queries received from the stakeholders, as regards eligibility of cases, set-aside appeal, prosecution, computation of amount payable, disputed penalty, APA/MAP cases, taxes paid before filing declaration, TDS related matters, and others. (Income tax Circular 19/2024 Dated 16/12/2024)
CBDT Launches Electronic Campaign to Address Income and Transaction Mismatches for FY 2023-24 and FY 2021-22: The campaign is intended to assist taxpayers in resolving mismatches between the income and transactions reported in the Annual Information Statement (AIS) and those disclosed in Income Tax Returns (ITRs). The informational messages have been sent via SMS and email to taxpayers and non-filers where mismatches have been identified between transactions reported in AIS and the ITRs filed. Taxpayers can file revised or belated ITRs, and may also provide their feedback, including disagreeing with the information reported in the AIS, through the AIS portal. (Income Tax Press Release dated 17/12/2024)
HC, Revenue not entitled to adjust refunds against stayed demand: Case of Nokia Solutions and Networks India Pvt Ltd vs JCIT, HC Delhi Judgement Dated 4th December 2024. HC held that revenue/ department is not entitled to adjust the refunds granted to the petitioner against demand of tax that is stayed. Accordingly, department is directed to refund the amount due to the petitioner. (HC Delhi Judgement Dated 04/12/2024)
HC, Exemption under section 54F admissible in respect of only one residential property: Case of Kamla Ajmera vs PCIT, HC Delhi Judgement Dated 3rd December 2024. The appellant‘s purchase of two distinct, non-adjacent flats, located on diagonally opposite ends of two different floors, even though in a same tower of a residential society, does not fulfill the criteria for exemption under Section 54F of the Act. While it is true that the words ‘a residential house’ used in section 54F of the Act were judicially interpreted to allow certain flexibility in cases where more than one residential unit could, in essence, form a single residential house. HC held that in case of investment in two residential properties, exemption under section 54F of the Income Tax Act is available in respect of only one of the two residential properties. (HC Delhi Judgement Dated 03/12/2024)
B. GST
Advisory on Updates to E-Way Bill and E-Invoice Systems: The updated versions will be rolled out of the E-Way Bill and E- Invoice Systems effective from 1st January 2025 so as to enhance the security of the portals, in line with best practices and government guidelines. Multi Factor Authentication (MFA) will become mandatory from 1st January for taxpayers with AATO exceeding Rs 20 Crores, from 1st February 2025 for those with AATO exceeding Rs 5 Crores, and from 1st April 2025 for all other taxpayers and users. The generation of E-Way Bills will be restricted to documents dated within 180 days from the date of generation. The extension of E-Way Bills will be limited to 360 days from their original date of generation. (GSTN Advisory Dated 17/12/2024)
Advisory for Entry of RR Number /eT-RRs in EWB system Post EWB-FOIS Integration: It is informed that the Freight Operation Information System (FOIS) system of Indian Railways has been integrated with the E-Way Bill (EWB) system via Application Programming Interfaces (APIs). The advisory provide guidance for accurate entry of RR Number /eT-RRs following the Integration of EWB with FOIS system of Indian Railways. (GSTN Advisory Dated 18/12/2024)
C. Central Excise
No Notification/ Circular during the week.
D. Custom Duty
Customs restrict manufacturing for Solar Projects in warehouses: The notification specifies certain manufacturing processes not permitted within a warehouse, particularly related to goods imported for solar power generation projects supplying electricity. The restriction is applicable only when electricity is resulting from the manufacturing processes and other operations in relation to the warehoused goods. (Custom Notification 86/2024 (NT) dated 16/12/2024)
Anti-dumping Duty on Telescopic Channel Drawer Slider originating in or exported from China: Anti-dumping Duty has been imposed on imports of Telescopic Channel Drawer Slider originating in or exported from China, and imported into India. It shall be applicable for a period of 5 years. (Custom Notification 27/2024 (ADD) dated 18/12/2024)
E. Directorate General of Foreign Trade (DGFT)
SION for export of Propionic Anhydride notified: DGFT announce the fixation of a new Standard Input Output Norm (SION) for the export product Propionic Anhydride under the Chemical and Allied Product category (Product Code A). It specifies the import requirements for Propionic Anhydride. In order to export 1 kg of Propionic Anhydride, 1.15 kg of Propionic Acid and 0.500 kg of Acetic Acid Glacial are allowed as inputs. (DGFT Public Notice 34/2024 Dated 17/12/2024)
Rescheduling of Launch Date for Enhanced Preferential eCoO 2.0 System: The scheduled launch of the revamped Preferential Certificate of Origin (eCoO) system, eCoO 2.0, which was earlier notified as 21st December 2024 has been extended to 17th January 2025. However, the electronic filing of Non-Preferential Certificates of Origin (CoO) on the eCoO 2.0 Platform shall be mandatory from 1st January 2025 as already notified. (DGFT Trade Notice 24/2024 Dated 20/12/2024)
F. Securities and Exchange Board of India (SEBI)
Amendment to Mutual Funds Regulations: It introduces “Specialized Investment Funds” (SIFs), defined as mutual funds catering to accredited investors with specific conditions. These funds can operate without requiring a separate trust for launching investment strategies. SEBI has clarified that the new chapter dedicated to SIFs applies exclusively to these funds, and other regulations, guidelines, and circulars will also govern them unless otherwise specified. (SEBI Notification Dated 16/12/2024)
Amendment to Research Analysts Regulations: It defines “non-individual” entities, including partnership firms and limited liability partnerships, and specifies “other business activity or employment” as activities unrelated to securities, excluding the handling of client funds or providing investment advice. New clauses also define “part-time research analysts” and clarify the term “persons associated with research services,” extending to those engaged in providing research services or interacting with clients, but excluding administrative staff with no client contact. (SEBI Notification Dated 16/12/2024)
Amendment to Investment Advisors Regulations: The key amendments include the clarification that “trading calls” are not considered as investment advice, the introduction of “part-time investment adviser” as a distinct category, and new provisions for qualification and certification requirements. The regulations also address the maintenance of deposits, compliance officer roles, and obligations related to the use of artificial intelligence tools by advisers. SEBI has outlined clearer guidelines for investment advisers with more than 300 clients or fees exceeding three crore rupees, requiring them to transition to non-individual status. New rules also include the disclosure of AI usage in advice, a cap on the number of clients for part-time advisers, and changes to registration processes. (SEBI Notification Dated 16/12/2024)
Measures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-à-vis FPIs: The circular modifies the requirements for issuing ODIs, mandating that FPIs issue ODIs only through a separate dedicated registration. ODIs must be fully hedged with securities (excluding derivatives) and cannot be hedged through Indian stock exchange derivatives. It further specifies exemptions for certain categories, such as government-related investors and retail funds. The SEBI mandates that ODI issuing FPIs and depositories track and report compliance, ensuring that subscribers realign their positions if they exceed prescribed thresholds. (SEBI Circular Dated 17/12/24)
Policy for Sharing Data for the Purpose of Research / Analysis: It has been decided to have a uniform policy for Stock Exchanges, Clearing Corporations and Depositories respectively, for sharing data separately for only research/ research publications undertaken by accredited academic institutions. Data shared with vendors for commercial purposes shall not fall under this policy. It has been advised to segregate data available, for each market segment, with them into two baskets i.e. publicly available data and restricted data. The first category, known as the “first basket,” includes aggregate and analyzed data, such as trading statistics, indices snapshots, and corporate bond reports. This data can be freely shared with the public and researchers, with certain restrictions on volume and processing, for which a small fee may be charged. The second category, the “second basket,” contains confidential information, such as KYC data, trade logs, and entity details, which cannot be shared publicly due to privacy concerns. (SEBI Circular Dated 20/12/24)
Industry Standards on Reporting of BRSR Core: The Industry Standards Forum (“ISF”) comprising of representatives from three industry associations, viz. ASSOCHAM, CII and FICCI, under the aegis of the Stock Exchanges, has formulated industry standards, in consultation with SEBI, for effective implementation of the requirement to disclose Business Responsibility and Sustainability Report (BRSR) Core under LODR Regulation. The listed entities shall follow the above industry standards to ensure compliance with SEBI requirements on disclosure of BRSR Core. (SEBI Circular Dated 20/12/24)
Simplification of Offer Document by Asset management Companies (AMC) for Mutual Funds: The Scheme Information Documents (SID) on which observations are issued by SEBI shall be uploaded on the SEBI website for at least 8 working days (earlier 21 days) for receiving public comments on the adequacy of disclosures made in the document. Thereafter, AMC may file final offer documents (SID and KIM) in line with the provisions of clause 1.1.3.3 of SEBI Master Circular on Mutual Funds. (SEBI Circular Dated 20/12/24)
Clarification, FPIs barred from issuing ODIs with derivative instruments only as the underlying: An article has been carried in a section of media suggesting that SEBI has prohibited FPIs from issuing Overseas Derivative Instruments (ODIs). This is incorrect. It is clarified that FPIs have only been barred from issuing ODIs with derivative instruments as the underlying. As on date, there are no ODIs with derivative instruments as the underlying. It is further clarified that ODIs referencing cash market securities can continue to be issued. (SEBI Press Release Dated 18/12/24)
SEBI Board meeting decisions: The board meeting of SEBI held today approved various proposals related to primary market, debt and hybrid securities, mutual funds, alternate investment and FPI, market intermediaries, integrated surveillance, secondary market, legal affairs and investor awareness. (SEBI Press Release Dated 18/12/24)
Extension of suspension in trading in seven key Commodities Derivatives: The suspension in trading in derivative contracts has been extended till 31st January 2025, for commodities i.e. Paddy (non-basmati), Wheat, Chana, Mustard seeds and its derivatives (its complex), Soya bean and its derivatives (its complex), Crude Palm Oil, and Moong. (SEBI Press Release Dated 18/12/24)
Draft Circular on Service platform ‘MITRA’ for investors to trace inactive and unclaimed Mutual Fund folios: It proposes a new service platform, MITRA (Mutual Fund Investment Tracing and Retrieval Assistant), aimed at helping investors trace inactive and unclaimed mutual fund folios. The platform aims to encourage proper KYC compliance, reduce unclaimed folios, and provide a transparent financial ecosystem. It also seeks to mitigate fraud risks by offering a reliable means for investors to locate inactive investments. The platform will be managed by two RTAs, CAMS and KFIN Technologies, and accessible through various mutual fund websites. The platform will also align with SEBI’s cyber resilience framework to ensure security. The comments/ suggestions from stakeholders are invited. (SEBI Draft Circular Dated 17/12/2024)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
SC, Directorate of Enforcement (ED) cannot have control over property after approval of resolution plan: Case of CoC vs Directorate of Enforcement, SC Judgement Dated 11th December 2024. The apex court directed control of properties of Corporate Debtor to be taken over by Resolution Applicant since the order of provisional attachment was passed by ED, after Adjudicating Authority approved the Resolution Plan submitted by the successful Resolution Applicant. (SC Judgement Dated 11/12/2024)
NCLAT, Property not owned by Corporate Debtor cannot be sub-leased by liquidator without prior permission: Case of Prabhat Jain vs MP Industrial Development Corporation, NCLAT Delhi Judgement Dated 27th November 2024. The apex court had categorically held that the statutory powers of a public body to regulate public lands cannot be overridden by provisions of the Code. MPIDCL is the statutory authority of government of MP who had given the said land on lease to the Corporate Debtor. Therefore, we find that the Appellant did not has right to create subleases over a third party’s land. NCLAT Delhi held that liquidator cannot create sub-lease over properties not owned by the corporate debtor without prior permission of concerned authority. Accordingly, action to sub-lease without specific permission is incorrect and illegal. (NCLAT Delhi Judgement Dated 27/11/2024)
NCLAT, Date of declaration of loan as NPA can be date of default for initiation of action under section 7 of IBC: Case of Bikram Bahadur vs Bank of India, NCLAT Delhi Judgement Dated 5th December 2024. NCLAT held that date of declaration of the loan account/ debt as NPA can be reckoned as the date of default to enable the Financial Creditor to initiate action under Section 7 of the Insolvency and Bankruptcy Code. (NCLAT Delhi Judgement Dated 05/12/2024)
NCLAT, PBG amount of Corporate Debtor can be demanded by Liquidator under section 60(5)(c): Case of Arkay Logistics Ltd vs Abhijit Guhathakurta, NCLAT Delhi Judgement dated 29th November 2024. The present is not a case where Liquidator was trying to recover any debt, which was owed by the appellant to the CD. Rather, the Liquidator was only asking for the refund of the amount, which was given by the CD towards margin money for securing a Performance Bank Guarantee (PBG) through the appellant from its credit line of the Axis Bank. NCLAT held that considering the text of section 60(5)(c) of IBC, liquidators can ask for the refund of the PBG amount, which was given by the Corporate Debtor towards margin money for securing a PBG. (NCLAT Delhi Judgement dated 29/11/2024)
NCLAT, Payment of liquidator fee mandatory even if secured creditor proceeds to realise its security interest: Case of Shikshak Sahkari Bank Ltd vs Jagdish Kumar Parulkar, NCLAT Judgement Dated 11th December 2024. The Respondent’s claim that the Liquidator is entitled for a fee under Regulation 4(2)(b) only when he has actually realised or distributed any amount is not tenable in the light of Regulation 2 1A. NCLAT Delhi held that even if the secured creditor proceeds to realise its security interest, it is liable to pay liquidator fee as contemplated under Regulation 21A (2)(a) of the Liquidation Regulations. (NCLAT Delhi Judgement Dated 11/12/2024)
Insolvency Professional (IP) and IBBI communications in Insolvency Process exempt under RTI: The appellant sought details about the source and authority behind the RP’s appointment date displayed on IBBI’s website. The CPIO cited regulatory compliance forms filed by Insolvency Professionals as the information source. The appellant further requested copies of these forms, but the IBBI denied access, invoking exemptions under Sections 8(1)(d) and 8(1)(e) of the RTI Act. The First Appellate Authority (FAA) upheld the CPIO’s decision, emphasizing that the requested information involved trade secrets, commercial details, and fiduciary obligations. Disclosure of such information could harm the competitive position of stakeholders and compromise confidentiality. Citing the Supreme Court’s interpretation of fiduciary relationships, it concluded that the public interest did not outweigh the scope of the exemptions. (IBBI RTA Ishrat Ali FAA Order Dated 19/12/2024)
IBBI suspends registration of Insolvency Professional (IP) Mr Kairav Anil Trivedi for violation of IBC provisions: He is accused of entering into a Memorandum of Understanding (MoU) with Virat Tradecorp Pvt. Ltd. without prior approval from the Committee of Creditors (CoC). This MoU, related to the reopening of the company’s Panwa plant, was signed on the same day as his visit to the site, raising concerns about undue haste and a lack of transparency. Additionally, Trivedi denied entry to a joint inspection team of CoC members, depriving them of the opportunity to assess the company’s affairs. Disciplinary Committee found that his actions violated several provisions of the IBC, including the requirement for CoC approval before entering material contracts. It decided to suspend the registration of Mr Kairav Anil Trivedi for a period of 2 years. (IBBI Order Dated 17/12/2024)
I. Reserve Bank of India (RBI)
Draft Bill to ban unregulated lending activities: DFS has issued a draft bill titled “Banning of Unregulated Lending Activities (BULA)” to address unregulated lending practices and protect consumer interests. The bill aims to prohibit individuals or entities from engaging in public lending without proper authorization or registration under applicable laws. It defines key terms such as “digital lending” and “unregulated lending activities” and specifies measures to curb such practices. It proposes appointing competent authorities and establishing designated courts for enforcement. The comments/suggestions from stakeholders are invited. (Fin Min Communication Dated 13/12/24)
J. Miscellaneous
SC, Illegal Constructions Can’t Be Regularised despite Long Occupancy & Investments: Case of Rajendra Kumar Barjatya vs UP Avas Evam Vikas Parishad, SC Judgement dated 18th December 2024. The apex court reaffirmed the need to strictly enforce building regulations and issued detailed guidelines to prevent unauthorised constructions and ensure accountability among authorities. The Court strongly condemned constructions carried out in violation of approved building plans or without any planning permission. It emphasized that violations must be dealt with firmly. The Court also criticized regularization schemes, often used to condone violations, warning that such measures, if not exceptional, undermine orderly urban development and harm the environment. The Court also issued 12 comprehensive directives to prevent and address unauthorised constructions. (SC Judgement Dated 18/12/2024)
SC, Disputed related to non-payment of wages and legality and propriety of termination are non-arbitrable: Case of Dushyant Janbandhu vs Hyundai Autoever India Ltd, SC Judgement Dated 11th December 2024. The apex court held that petition under section 11(6) of the Arbitration and Conciliation Act, is not maintainable since disputes that are related to non- payment of wages and legality and propriety of termination are non- arbitrable. Such disputes are governed by statute under the Payment of Wages Act and the Industrial Disputes Act. (SC Judgement Dated 11/12/2024)
SC, Penalty imposed since inquiry report not provided as mandated under the Sexual Harassment Act: Case of X vs Union of India, SC Judgement Dated 4th December 2024. A constable in the Border Security Force and she made a complaint of sexual harassment against one of the officers. According to the petitioner, since the BSF had not taken any action on the complaint made by the petitioner, she was constrained to file a writ petition before this Court. In the writ petition, a detailed counter affidavit has been filed. SC held that Inquiry Report ought to have been given to the victim as it is required to be given under Section 13 (1) to all the “concerned parties”. On the facts of this case where the Inquiry Report was not been given to the petitioner, there has clearly been a violation of Section 13 of the Act. We therefore impose a penalty of Rs. 25,000/ which will be given to the petitioner by the Border Security Force. (SC Judgement Dated 04/12/2024)
******
Disclaimer: The contents of this article are for informational purposes only. The user may refer to the relevant notification/ circular/ decisions issued by the respective authorities for specific interpretation and compliances related to a particular subject matter)
Author Bio
