For the week ending 23rd February 2025, key tax and regulatory updates include an extension for filing Form 56F under Section 10AA of the Income Tax Act until 31st March 2025. New TDS guidelines for salaries (FY 2024-25) outline updated tax rates and deductions. The Supreme Court ruled that trust registration under Section 12AA should be based on proposed, not actual, activities, and penalties for undisclosed income under Section 271AAA were set aside if taxes were paid with interest.
In GST, biometric Aadhaar authentication for registration is now mandatory in Jharkhand and Andaman & Nicobar Islands. The Supreme Court ruled that retrospective amendments in Punjab VAT Rules cannot restrict input tax credit and that lottery distributors are not liable for service tax. Customs updates include amendments to tariff notifications, the introduction of a Single Electronic Bond (SEB), and the automation of refund processing via ICEGATE. The Delhi High Court ruled that mobile phone activation does not void duty drawback claims.
RBI permitted primary dealers to match Gilt Account Holder transactions on NDS-OM, revised prudential regulations under Basel III, and issued draft guidelines on prepayment charges. The Sovereign Gold Bond redemption schedule and a $10 billion forex liquidity injection through USD/INR swaps were also announced.
Other significant rulings include gratuity forfeiture without a criminal conviction, employment rights under unconstitutional job advertisements, and liability limitations for directors in cheque bounce cases.
Notifications & Circulars issued during week (17th – 23rd Feb 2025)
A. Income Tax
Extension of due date for filing of Form No. 56F under the Income Tax Act: All taxpayers who wish to claim deductions under section 10AA (exemptions to new businesses in SEZs) need to file Form 56F, certified by chartered accountant. CBDT, exercising its authority under Section 119(2) (b), has extended the deadline for Assessment Year 2024-25 to March 31, 2025. (Income Tax Circular 02/2025 Dated 18/02/2025)
Income Tax and TDS Deduction from Salaries for FY 2024-25: The circular provides guidance on income tax deduction from salaries under Section 192 for the financial year 2024-25. It incorporates amendments from the Finance Acts, highlighting key changes such as the inclusion of Agniveer Corpus Fund contributions in “salary” under Section 17(1) and revised provisions for perquisites under Section 17(2). Surcharge rates under the old tax regime have been updated, with rates varying from 10% to 37% based on income thresholds. The new tax regime rates for FY 2024-25, introduced under Section 115BAC, range from 5% to 30% depending on income levels, with specific conditions for computation. Amendments to Form 16 and Form 24Q ensure compliance with the revised provisions. (Income Tax Circular 02/2025 Dated 20/02/2025)
SC, Section 12A Trust registration based on proposed activities, not actual activities: Case of CIT Exemptions vs International Health Care Education and Research Institute, SC Judgement Dated 11th February 2025. The case involved a charitable trust that had applied for registration under Section 12AA, a prerequisite for claiming exemptions under Sections 10 and 11 of the Act. The Commissioner had denied registration on the grounds that the trust had not yet undertaken any charitable activities. However, both the Appellate Tribunal and the High Court ruled in favour of the trust, a decision upheld by the Supreme Court. The court emphasized that the Commissioner, when considering an application under Section 12AA, should primarily focus on the genuineness of the trust’s proposed activities and their alignment with the trust’s objectives as outlined in the trust deed. (SC Judgement Dated 11/02/2025)
SC, Penalty for undisclosed income admitted during search set aside as tax paid with interest: Case of K Krishnamurthy cs DCIT, SC Judgement Dated 13th February 2025. The apex court held that no penalty under section 271AAA(1) of the Income Tax Act can be imposed, when undisclosed income during course of search is admitted and paid tax with interest. Accordingly, penalty is set aside. (SC Judgement Dated 13/02/2025)
B. GST
Advisory on Biometric-based Aadhaar authentication and document verification for GST registration applicants of Jharkhand and Andaman & Nicobar Islands: CGST rule was amended which provide for identification of applicants on biometric- based Aadhaar authentication, which includes taking the applicant’s photograph and verifying the original documents submitted with the application. The new functionality mandates that after submitting Form GST REG-01, applicants will receive an email with either a link for OTP-based Aadhaar Authentication or a link to book an appointment at a GST Suvidha Kendra (GSK). It has been rolled out in Jharkhand and Andaman & Nicobar Islands effective from 15th February 2025. (GSTN Advisory Dated 18/02/2025)
SC, Rule 21(8) of Punjab VAT Rules cannot apply retrospectively: Case of State of Punjab vs Trishala Alloys Pvt Ltd, SC Judgement Dated 17th February 2025. The case involved a manufacturer of iron and steel goods, which had claimed Input Tax Credit (ITC) on goods purchased at a higher tax rate of 4.5%. The tax rate on such goods was later reduced to 2.5%, and Rule 21(8) was introduced effective 1st February 2014, to limit ITC to the reduced rate for goods in stock. However, the amendment to the parent statute, the Punjab VAT Act, enabling such restriction, came into effect only on 1st April 2014. The apex court held that a taxpayer acquires a vested right to ITC under the statute in effect at the time of purchase, and this right cannot be unilaterally reduced through rules introduced without statutory backing. Taxing statutes cannot have retrospective effect to the detriment of taxpayers unless expressly provided. (SC Judgement Dated 17/02/2025)
SC, Service tax not leviable on distributor of lottery tickets: Case of Union of India vs Future Gaming Solutions Pvt Ltd, SC Judgement Dated 11th February 2025. The apex court held that activity of lottery distributor doesn’t constitute a service and hence imposition of service tax on distributor of lottery tickets not justifiable. There being no agency and no service rendered by the respondents as an agent to the Government of Sikkim, service tax is not leviable on the transactions. (SC Judgement Dated 11/02/2025)
C. Central Excise
No Notification/Circular during the week.
D. Custom Duty
Amendments to custom rate notification: The notification amends the earlier Notification 50/2017 dated 30th June 2017. It relates to entries under Serial Numbers 551 and 555 in the notification’s table, replacing the previous entry “84” in column (6) with a blank entry (“-”). (Custom Notification 15/2025 (T) Dated 20/02/2025)
Customs (On – Arrival Movement for Storage and Clearance at Authorised Importer Premises) Regulations, 2025: The regulations apply to importers recognized as Authorised Economic Operators (AEOs) and relates to the movement, storage, and clearance process for imported goods at designated premises before removal or clearance. The goods can be moved to designated premises under bond. These also require the importer to store and handle goods safely, maintain records, and comply with prescribed timelines. (Custom Notification 11/2025 (NT) Dated 17/02/2025)
Single Unified Multi-Purpose Electronic Bond (SEB) in Customs- ‘Ekal Anubandh’: The circular allows importers and exporters to replace transaction-specific bonds with a unified electronic bond, reducing administrative burdens and enhancing efficiency. The SEB, executed electronically via ICEGATE, supports features like digital payment of stamp duty, electronic execution through National E-Governance Services Limited (NeSL), and integration with electronic bank guarantees (e-BG). The initiative eliminates the need for physical signatures, notaries, and paperwork, providing real-time management and tracking of bonds and bank guarantees. (Custom Circular 04/2025 Dated 17/02/2025)
Automation of Refund Application and Processing in Customs: The circular relates to automation of Customs refund applications and processing via the ICEGATE Portal. Applicants can now electronically file refund claims under Section 27 of the Customs Act, and other relevant provisions. The key features include electronic submission of applications, generation of a Unique Application Reference Number (ARN), and direct bank account crediting of refund amounts. Refund status updates, deficiency notifications, and final orders are communicated via the ICEGATE dashboard. Concurrent audits are replaced with post-audit mechanisms for improved efficiency. (Custom Circular 05/2025 Dated 17/02/2025)
HC, Duty drawback post unlocking/activation of mobile phone eligible: Case of Aims Retail Services Pvt Ltd vs Union of India, HC Delhi Judgement Dated 13th February 2025. HC held that in the opinion of this court, the unlocking/activating of the mobile phones as per the procedures adopted by the Petitioners herein is mere ‘Configuration’ of the product to make it usable and does not constitute “taken into use” under proviso to Rule 3 of the Duty Drawback Rules. (HC Delhi Judgement dated 13/02/2025)
HC, Disposing detained gold without notice is illegal, orders customs to pay market value & delay costs: Case of Gor Sharian vs Comm of Customs, HC Delhi Judgement Dated 14th February 2025. The petitioner, a Russian citizen, had gold detained at IGI Airport. While the petitioner won an appeal for the gold’s release upon payment of a redemption fine and penalty, the customs disposed of the gold without informing the petitioner or the court. The court ordered the customs to pay the petitioner the full current market value of the gold within three weeks, plus costs if the payment is delayed. (HC Delhi Judgement dated 14/02/2025)
E. Directorate General of Foreign Trade (DGFT)
No Notification/ Circular during the week.
F. Securities and Exchange Board of India (SEBI)
SEBI Procedure for Making, Amending and Reviewing of Regulations 2025: The regulations mandate public consultation, requiring SEBI to publish proposed rules, regulatory intent, and timelines for stakeholder feedback on its website. A minimum of 21 days is provided for public comments. However, in urgent cases, SEBI may bypass public consultation if deemed necessary for investor protection or market stability. The regulations also formalize the process for reviewing and amending existing rules, taking into account legal precedents, global best practices, and ease of doing business. (SEBI Notification Dated 13/02/2025)
Research Analyst Certification Renewal: As per notification issued under SEBI Certification of Associated Persons in the Securities Markets Regulations, individuals registered as research analysts, principal officers of non- individual research analysts, employees, and others associated with research services must obtain certification from the National Institute of Securities Markets (NISM). This certification must be maintained by passing the ‘NISM-Series-XV: Research Analyst Certification Examination’. Furthermore, to ensure continued compliance, individuals must pass the ‘NISM-Series-XV-B: Research Analyst Certification (Renewal) Examination’ before their existing certification expires. (SEBI Notification Dated 14/02/2025)
Amendment of SEBI Mutual Funds Regulations: As per the amendned provisions, asset management companies (AMCs) are required to invest a percentage of employee remuneration in mutual fund schemes, based on employee roles, as specified by SEBI. AMCs are required to conduct stress tests on specific schemes and disclose the results in a prescribed format. It stipulates that funds raised through new fund offers (NFOs) must be deployed within a specified time frame. It mandates AMCs to pay charges, commissions, or fees related to the distribution of mutual fund schemes in the manner outlined by SEBI. (SEBI Notification Dated 14/02/2025)
Most Important Terms and Conditions (MITC) for Investment Advisers: The circular mandate the inclusion of standardized MITC in investment advisory agreements. Investment Advisers (IAs) must disclose these key terms, which have been developed in consultation with the Investment Adviser Administration and Supervisory Body (IAASB) and SEBI. The MITC outlines key provisions, including restrictions on fund acceptance, disclaimers on investment risks, prohibitions on guaranteed returns, fee structures, conflict of interest management, grievance redressal mechanisms, and advisory limitations under SEBI’s purview. (SEBI Circular Dated 17/02/2025)
Most Important Terms and Conditions (MITC) for Research Analysts: The circular mandate Research Analysts (RAs) to disclose standardized MITC in their research service agreements. The MITC, developed in consultation with the Research Analyst Administration and Supervisory Body (RAASB), outlines key provisions, including restrictions on trade execution, fee caps, conflict of interest disclosures, and risk disclaimers. (SEBI Circular Dated 17/02/2025)
Clarification regarding Investor Education and Awareness Initiatives: The circular clarifies provisions related to investor education and awareness initiatives by mutual funds. Asset Management Companies (AMCs) must allocate at least 2 basis points from their daily net assets, within the total expense ratio limit, for investor education. It further clarified that these initiatives may include financial inclusion programs approved by SEBI. (SEBI Circular Dated 20/02/2025)
Modification of Investor Charter for Stock Brokers: The revision account for recent market developments, including the Online Dispute Resolution (ODR) platform and SCORES 2.0. SEBI has directed stock exchanges to ensure stock brokers inform clients about the Investor Charter by displaying it on their websites, placing copies in offices, and including it in account opening kits. Moreover, the brokers must disclose complaint data and their resolution status monthly to enhance transparency in grievance redressal. (SEBI Circular Dated 21/02/2025)
Consultation Paper on Technology based measures to secure trading environment and to prevent unauthorised transactions in trading/demat account of investors: The proposed framework includes SIM binding, biometric authentication, and measures for logging into accounts via multiple devices. Initially, these measures will be optional for investors but will become mandatory in phases. The new system will require clients to link their Unique Client Code (UCC) with a mobile device’s SIM and IMEI number, ensuring secure access. Bio-metric authentication and QR-based verification for logging in from multiple devices will further protect accounts. The framework also introduces the ability for investors to temporarily lock accounts or revoke sessions from other devices. The comments/suggestions from stake holders are invited. (SEBI Consultation Paper Dated 18/02/2025)
Draft Amendment to Master Circular for Infrastructure Investment Trusts (InvITs) and Master Circular for Real Estate Investment Trusts (REITs): The proposed changes seek to align the lock-in requirements for units issued under preferential allotment with the initial public offering requirements outlined in SEBI InvIT/ REIT Regulations. It also introduces clear timelines and responsibilities for approval and listing of follow-on offers, to streamline fundraising processes for publicly traded InvITs/ REITs. The comments/suggestions from stake holders are invited. (SEBI Consultation Paper Dated 20/02/2025)
Consultation paper on expanding definition of Qualified Institutional Buyers (QIBs) to include Accredited Investors (Ais) for the limited purpose of investments in Angel Funds: Angel Funds, categorized as Venture Capital Funds under Alternative Investment Funds (AIFs), currently onboard investors based on self-declared criteria, raising concerns about risk awareness and regulatory compliance. The proposal aims to ensure that only financially sophisticated investors with a verified risk appetite invest in these funds. Currently, private placements are limited to 200 investors, excluding QIBs. By including AIs within QIBs for Angel Fund investments, SEBI intends to facilitate broader participation without violating regulatory intent. It also suggests removing the 200-investor cap on individual Angel Fund investments to attract more capital. The comments/suggestions from stake holders are invited. (SEBI Consultation Paper Dated 21/02/2025)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
SC, affirms IBC as comprehensive framework and sets aside HC order: Case of Bank of Baroda vs Farooq Ali Khan, SC Judgement Dated 20th February 2025. The case arose after the Bank of Baroda initiated proceedings against personal guarantor for loans. HC held that the liability as a guarantor had been waived, thereby rendering the insolvency proceedings non-maintainable. The apex court overturned this decision, ruling that the HC pre-empted the statutory process under the IBC. It emphasized that the insolvency process under the IBC follows a structured approach, wherein a resolution professional is first appointed to assess the financial status of the debtor and submit a report. Only after. this stage does the Adjudicating Authority (National Company Law Tribunal) decide on the admission or rejection of the insolvency application. (SC Judgement Dated 20/02/2025)
NCLAT, Pre-CIRP dues & claims extinguishes post approval of Resolution Plan: Case of Damodar Valley Corporation vs Mackeil Ispat and Forging Ltd, NCLAT Delhi Judgement Dated 6th February 2025. The Tribunal held that by approval of the Resolution Plan, all dues and claims of pre-CIRP stand extinguished. Thus, appellant is not entitled for recovering any dues from respondent which relate to pre- CIRP period. (NCLAT Delhi Judgement Dated 06/02/2025)
NCLAT, Claim of guarantee invoked subsequent to CIRP cannot be admitted in CIRP: Case of Ankur Kumar vs Sustainable Agro-commercial Financial Ltd, NCLAT Delhi Judgement Dated 6th February 2025. The Tribunal held that invocation of guarantee subsequent to initiation of CIRP cannot be the base for any claim to be admitted in the CIRP. Accordingly, appeal is allowed. (NCLAT Delhi Judgement Dated 06/02/2025)
NCLAT, Liquidator empowered to proceed with private sale of Corporate Debtor by Swiss Challenge Mechanism: Case of Power Mech Projects Ltd vs Essar Power, NCLAT Delhi Judgement Dated 4th February 2025. This Appeal has been filed challenging the order of the Adjudicating Authority (AA) allowing Liquidator to sell the Corporate Debtor (CD) as a going concern through private sale method. The Tribunal held that the decision taken by the Liquidator to proceed with private sale by adopting Swiss Challenge Mechanism, cannot be said to be a decision beyond the jurisdiction or authority of the Liquidator. (NCLAT Delhi Judgement Dated 04/02/2025)
NCLAT, Security Deposit Under MoU Without Borrowing Effect Not Financial Debt: Case of Global Indian School Education Services Pvt Ltd vs Abhay Narayan Manudhane, NCLAT Delhi Judgement Dated 13th February 2025. The Tribunal held security deposit provided under a Memorandum of Understanding (MoU) without a commercial borrowing element does not constitute financial debt under IBC. (NCLAT Delhi Judgement Dated 13/02/2025)
NCLAT, Non-Registration of Charges Doesn’t Deny Secured Creditor Status in CIRP: Case of Home Kraft Avenues vs Jayesh Sanghrajka, NCLAT Delhi Judgement Dated 14th February 2025. The appellant challenged a decision that categorized them as an unsecured creditor despite a loan agreement securing four flats as collateral. The Tribunal ruled that the non- registration of a charge under Section 77 of the Companies Act, does not preclude an applicant from being treated as a secured creditor under IBC. (NCLAT Delhi Judgement Dated 14/02/2025)
Investigation Status Inquiries Are Beyond RTI Act Scope: The CPIO had replied that the complaint was “under examination,” which the appellant found vague and inadequate. Upon review, the First Appellate Authority held that the RTI Act permits access only to information held by a public authority and does not require the creation or interpretation of information. The authority found that inquiries regarding investigation status or actions taken by IBBI officials amounted to seeking opinions or advice, which falls outside the scope of the RTI Act. (IBBI CPIO-FAA Order Dated 21/02/2025)
IBBI suspended Vijay Kumar Garg IP for mismanagement in asset disposal & auction process: The Disciplinary Committee (DC) found that he failed to properly categorize and allocate assets during the e-auction process, leading to discrepancies in the sale of HCSD pipes. A successful bidder challenged the sale, and the National Company Law Tribunal (NCLT) set aside the auction, directing a fresh sale. IBBI suspended the registration of Vijay Kumar Garg, or one year. (IBBI DC Order dared 19/02/2025)
I. Reserve Bank of India (RBI)
Government securities transactions between a Primary Member (PM) of NDS-OM and its own Gilt Account Holder (GAH) or between two GAHs of the same PM: RBI has now allowed these transactions to be matched on the NDS-OM platform in both the anonymous Order Matching (OM) and Request for Quote (RFQ) segments. Matched transactions will be cleared and settled via Clearing Corporation of India Limited (CCIL). The bilateral transactions between a PM and its GAHs, or between two GAHs of the same PM, reported to NDS-OM can also optionally utilize CCIL’s clearing and settlement services. (RBI Notification 115/2025 Dated 17/02/2025)
Amendment to Prudential Regulations under the Basel III Capital Framework: The amendment specifically relates to investment norms for All India Financial Institutions (AIFIs) including EXIM Bank, NABARD, NaBFID, NHB, and SIDBI. As per the revised guidelines, AIFI investments in long-term bonds and debentures (with a minimum residual maturity of three years) issued by non-financial entities will not be included in the 25% ceiling under the Held to Maturity (HTM) category. (RBI Notification 116/2025 Dated 17/02/2025)
RBI ‘Forward Contracts in Government Securities’ Directions: RBI has issued the Forward Contracts in Government Securities Directions, 2025, applicable to forward contracts in government securities in the Over-the-Counter (OTC) market. These define terms like bond forwards, cash settlements, and covered shorts, while specifying eligibility criteria for market participants. Scheduled commercial banks and standalone primary dealers can act as market- makers, engaging in covered and uncovered short positions within prescribed limits. Eligible users, including residents and non-residents, may undertake transactions for hedging purposes. Settlement can be physical or cash- based, facilitated by authorized clearing entities. Reporting of transactions and settlements to the Trade Repository (TR) is mandatory, with additional documentation standards recommended by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). (RBI Notification 117/2025 Dated 21/02/2025)
Draft circular on Responsible Lending Conduct- Levy of Foreclosure Charges/ Pre-payment Penalties on Loans: RBI Regulated Entities (REs) shall permit foreclosure/ pre-payment of all floating rate loans sanctioned for purposes other than business to individuals, with or without co-obligant(s), without levying any charges/ penalties. REs, other than Tier 1 and Tier 2 Primary (Urban) Co-operative Banks and Base Layer NBFCs, shall not levy any charges/ penalties in case of foreclosure/ pre- payment of floating rate loans granted to individuals and MSE borrowers, with or without co-obligant(s), for business purpose. However, in case of MSE borrowers, these instructions shall be applicable up to the aggregate sanctioned limit of ₹7.50 crore per borrower. The comments/suggestions from stake holders are invited. (RBI Draft Circular Dated 21/02/2025)
Sovereign Gold Bond (SGB) Scheme Calendar for premature redemption during April to September 2025: In terms of SGB Scheme, premature redemption of the gold bonds is permitted after five years from the date of issue of such bonds. Accordingly, the details of tranches falling due for premature redemption during the period 1st April 2025 to 30th September 2025, along with the window available for submission of request for premature redemption by the investors have been notified. (RBI Press Release Dated 21/02/2025)
RBI to inject liquidity $10 billion through long term USD/INR Buy/Sell Swap auction: The swap is in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side. A bank shall sell US Dollars to the Reserve Bank and simultaneously agree to buy the same amount of US Dollars at the end of the swap period. It will be for a tenor of 3 years, Spot date 4th March 2025 and Far Leg date 6th March 2028. (RBI Press Release Dated 21/02/2025)
J. Miscellaneous
SC, Gratuity Forfeiture- Conviction Not Needed for Moral Turpitude: Case of Western Coal Fields Ltd vs Manohar Govinda Fulzele, SC Judgement Dated 17th February 2025. The apex court has clarified that a criminal conviction is not a prerequisite for forfeiting an employee’s gratuity when the misconduct involves an offense of moral turpitude. The court emphasized that the Act does not mandate a criminal conviction, but rather requires the disciplinary authority to determine if the misconduct constitutes such an offense. (SC Judgement dated 17/02/2025)
SC, No Right to Employment if Job Advertisement is Void & Unconstitutional: Case of Amrit Yadav vs State of Jharkhand, SC Judgement Dated 10th February 2025. The apes court held that individuals appointed through a fundamentally flawed and illegal advertisement have no right to continue in their employment. The court’s decision relates to recruitment advertisement that lacked essential details such as the number of available posts and the reservation quota. It emphasized that such omissions render an advertisement void, as they violate the principles of transparency and fairness mandated by Articles 14 and 16 of the Constitution of India. (SC Judgement dated 10/02/2025)
SC, Only Signatory/Responsible Directors Liable in Cheque Bounce Cases: Case of Hitesh Verma vs Health Care at Home India Pvt Ltd, SC Judgement Dated 29th January 2025. The apex court ruled that a director who is not a signatory to a dishonoured cheque cannot be held liable under Section 138 of the Negotiable Instruments Act, unless specific conditions are met. The court emphasized the distinction between a director who is merely part of a company and a director responsible for its business conduct. Under Section 141 of the Act, liability can be imposed only if it is explicitly stated in the complaint that the accused director was in charge of and responsible for the company’s business at the time of the offense. Since the complaint lacked such an assertion against the appellant, the Court held that prosecution could not be sustained. (SC Judgement dated 29/01/2025)
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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)
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