Cross border 'fast track' merger permitted under automatic route

On 6 June 2026, the Reserve Bank of India (RBI) issued a notification ^[1] amending the rules governing cross-border mergers under the Foreign Exchange Management Act, 1999 (FEMA), as part of India’s ongoing efforts to simplify the regulatory framework and enhance ease of doing business.

Inbound Merger of a U.S. Company into an Indian Company: Regulatory Framework, Benefits and Key Compliance Requirements

Introduction

India has emerged as a preferred jurisdiction for multinational groups and technology startups seeking to simplify global structures, access Indian capital markets, and align their corporate domicile with business operations. One of the most effective mechanisms for achieving this objective is an inbound merger, wherein a foreign company merges into an Indian company, and the Indian company becomes the surviving entity.

A common scenario involves a U.S. holding company being merged into its Indian subsidiary or affiliate, resulting in the Indian company absorbing the U.S. entity. This structure has gained significant momentum due to the increasing trend of "reverse flipping," where overseas holding companies relocate their corporate headquarters to India in anticipation of domestic fundraising or public listing opportunities. Recent regulatory reforms have also streamlined the approval process for eligible inbound mergers, making India a more attractive destination for corporate reorganizations.

GST Insights: Three Key Rulings on Taxability, Intermediary Status, and ITC

1. Healthcare Services Retain Exemption Even When Provided Through Another Hospital

Valuation vs Demerger: Kolkata ITAT Clarifies the Boundaries

 Recently, the Kolkata ITAT held that no addition under section 56(2)(x) can be made in respect of assets received pursuant to a qualifying demerger, where the prescribed conditions under the Income-tax Act are duly satisfied. The Tribunal further clarified that valuation principles as prescribed under Rule 11UA of Income-tax Rules (ordinarily applicable for determining fair market value of shares) cannot be imported to challenge a demerger that otherwise complies with the statutory framework.

India Grants Full Tax Exemption to FIIs and BIS on Government Securities via Ordinance

 In a significant policy move, the Government of India has promulgated the Income-tax (Amendment) Ordinance, 2026, granting complete tax exemption to Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) on interest and capital gains arising from investments in government securities (G-Secs).

The ordinance, which took effect retrospectively from April 1, 2026, was promulgated by President Droupadi Murmu as Parliament was not in session.

Single Show Cause Notice for Multiple Financial Years Under GST: Why Courts Are Striking It Down

 A single show cause notice (SCN) issued for multiple financial years has become a common flashpoint under the Goods and Services Tax (GST) regime. While the tax department often adopts this practice for administrative convenience, it is now consistently being struck down by various High Courts across India. This article examines why such consolidated proceedings are legally untenable.

CBDT guidelines for compulsory scrutiny selection for FY 2026-27

 Recently, the Central Board of Direct Taxes (“CBDT”) has issued guidelines prescribing the parameters for compulsory selection of income-tax returns filed in FY 2025-26 for complete scrutiny during FY 2026-27. The guidelines identify specific categories of cases that will be mandatorily selected for scrutiny and set out the procedure to be followed by the tax authorities for such selection.

Mumbai ITAT Rejects LIFO and Upholds FIFO Approach for Capital Gains Computation

 In a recent ruling of Megasolis renewable , the Mumbai ITAT upheld the application of the First-In-First-Out ("FIFO") method for computing capital gains on the sale of shares held in physical form, rejecting the taxpayer's attempt to compute gains based on LIFO method. Significantly, the Tribunal invoked the doctrine of substance over form and characterised the taxpayer's approach as a colourable device aimed at reducing its tax liability.

ITAT Mumbai Upholds Tax Certainty for Category III AIFs

In a significant ruling delivered in the case of 360 One Core Aggressive, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has reinforced crucial tax principles for Category III Alternative Investment Funds (AIFs).

Independent Director Eligibility – Cousin of Promoter/Promoter Group Member is Eligible

 In a recent informal guidance letter, SEBI clarified whether a cousin of a Promoter Group member qualifies as a person ‘related to promoters or directors’ for the purposes of Independent Director eligibility under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’) and concluded that such a relationship, standing alone, does not trigger disqualification.

Background

olkata ITAT reaffirms that suspicion alone cannot justify additions under Section 68 (Unexplained Cash Credits)

 Recently, the Kolkata ITAT in Action Tie-up Pvt. Ltd. v. DCIT ruled in favour of the taxpayer and reiterated that additions towards alleged bogus sale transactions cannot be sustained merely on the basis of suspicion, third-party statements, or general allegations of accommodation entries, especially where the taxpayer has furnished complete documentary evidence supporting the transactions.

In the present case, the assessee company had sold investments in unlisted shares during the relevant assessment years. The tax authorities alleged that the transactions were accommodation entries and treated the sale proceeds as unexplained cash credits. The allegation was primarily based on statements recorded from certain third parties during search proceedings and the observation that some purchaser entities were subsequently struck off by the Registrar of Companies. The Assessing Officer further alleged that the assessee and related entities were merely “pass-through” or “shell” entities facilitating accommodation entries.

However, the assessee submitted detailed documentary evidence to substantiate the genuineness of the transactions, including audited financial statements, bank statements, confirmations, income tax records, details of investments held over multiple years, and responses received directly from purchasers in compliance with notices issued by the department. It was also highlighted that the investments had been acquired in earlier years and accepted by the department in scrutiny assessments.

The Hon’ble Tribunal, after examining the facts and legal position, ruled in favour of the assessee and made the following key observations: