Calcutta HC confirms disallowance of payments to group's central company made on pre-determined basis treating them as Contractual Payments and not Reimbursements

 The Calcutta High Court upheld the Tribunal’s disallowance of payments made by the taxpayer that were labelled as reimbursements but were pre-decided irrespective of actual expenditure. The Court held that since the payments were fixed percentages of net sales and not linked to actual costs, they were in substance contractual payments for services and attracted tax deduction at source. As the taxpayer did not deduct tax at source, the disallowance was sustained. Typically, no tax is required to be deducted on genuine reimbursements made on the basis of actual expenses.

 

DGFT restricts RoDTEP benefits to 50% of notified rates and value caps on exported products

 This Tax Alert summarizes a recent Notification  issued by Directorate General of Foreign Trade (DGFT) rationalizing rebate rates notified under the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme.

Under the scheme, eligible exporters receive a rebate at notified rates on exports made by them, either as a percentage of free-on-board (FOB) value with a value cap per unit of the exported product wherever required, or a fixed rebate amount per unit.

Vide Notification dated 23 February 2026 (supra), the RoDTEP rates on all products notified in Appendix 4R and 4RE to the FTP, other than those falling under ITC HS Chapter 1 to 24, is capped at 50% of the existing rates and where applicable, 50% of the notified value caps.

This change may affect exporters availing benefits under the scheme, potentially altering export costing, pricing, and cash flow projections.

Transfer of employee-related liabilities under slump sale not sufficient for deduction under section 43B - Actual payment mandatory to claim benefit

 Recently, the Hon’ble Income-tax Appellate Tribunal, Hyderabad (‘ITAT’) in the case of Deputy Commissioner of Income-tax v. Corteva Agriscience Services India (P.) Ltd. has held that a company cannot claim deduction under section 43B of the Income-tax Act, 1961 (‘the Act’) on the basis of a notional or deemed payment merely because employee related liabilities such as leave encashment and bonus were transferred to another company pursuant to a slump sale. The ITAT clarified that section 43B permits deduction only upon actual payment of the specified liabilities within the prescribed time and that a mere transfer of obligation to another entity does not satisfy this requirement.

Press Release on Amending Protocol to India-France tax treaty

 This Tax Alert summarizes a Press Release  dated 23 February 2026 issued by the Ministry of Finance (MoF) announcing amendments to the India-France Double Taxation Avoidance Agreement (DTAA or tax treaty) vide an Amending Protocol signed by India and France.

RBI Proposes Key Reforms to NBFC Registration & Exemption Framework (2026 Draft Directions)

 In a significant move impacting family offices and group investment / holding structures, the Reserve Bank of India (“RBI”) has introduced draft amendments to the regulatory framework governing Non-Banking Financial Companies (“NBFCs”).

GSTAT holds re-adjudication under Section 73 can be done only by the proper officer where Section 74 proceedings held unsustainable in appeal

 This Tax Alert summarizes a recent ruling of the Goods and Services Tax Appellate Tribunal (GSTAT) ^[1] on jurisdiction of the Appellate Authority to re-adjudicate proceedings where original proceedings initiated under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act) are held unsustainable due to the absence of any fraud or intent to evade tax on the part of the taxpayer.

ECB Regulations revamped by RBI - Effective 9 February 2026

 The Reserve Bank of India (“RBI”) has notified the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, marking a significant overhaul of India’s External Commercial Borrowing (“ECB”) framework.

Draft Income-tax Rules, 2026 - Key changes and brief overview

 The Central Board of Direct Taxes (‘CBDT’) has released the Draft Income-tax Rules, 2026, along with accompanying Draft Forms, to operationalize the Income-tax Act, 2025, which is scheduled to come into force on April 1, 2026. These draft rules are currently in the public domain for feedback until February 22, 2026. The new framework aims to simplify compliance by reducing the number of rules from 511 to 333 and forms from 399 to 190. A comprehensive overview of key proposed changes, featuring combined common rules and forms, is tabulated below:

Taxability of Foreign Salary Credited to NRE Account

 As per Income Tax Law, the total income of a non-resident includes income from any source that is received or deemed to be received in India during the relevant previous year.

ITAT Chandigarh holds Stamp Duty value on Agreement for Sale date to prevail over Registration date for Income Tax purposes

 Recently, the Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Monica Bibbly Sood, has ruled that for the purposes of Section 50C of the Income-tax Act (dealing with deemed valuation of immovable property), the “appointed date” for determining stamp duty valuation shall be the date of agreement to sell, and not the date of registration of the sale deed, where part consideration has been received through banking channels in accordance with the provisions of Section 50C.

Retrospective removal of provision permitting addition of non-relatives as Trust beneficiaries : Key to Gift-Tax Relief on Share Contribution under Indian Income Tax Act

 Chennai Tribunal held that where a trust has been retrospectively amended to eliminate the possibility of adding non-relatives as beneficiaries, contribution of shares by the settlor to the trust would not attract the gift tax provisions.

 

HC holds unutilised CGST and IGST credit can be transferred on business transfer between distinct persons

 This Tax Alert summarizes a recent ruling of the Andhra Pradesh High Court (HC) ^[1] on the Goods and Services Tax (GST) implications on business transfer between distinct persons.

The assessee transferred its Research and Development unit in Andhra Pradesh (AP) to its Karnataka unit. The Appellate Authority for Advance Ruling (AAAR^[2] held such transfer as taxable supply of goods and disallowed transfer of unutilized ITC. Aggrieved the assessee filed a writ petition before the HC.

Draft Income Tax Rules, 2026

 The Central Board of Direct Taxes (CBDT) released the Draft Income Tax Rules, 2026 on February 7, 2026. It has invited suggestions and opinions from all stakeholders. Tax professionals, experts, and the general public can share their views up to February 22, 2026. So, what are the Draft Income Tax Rules, 2026? Rules are detailed instructions linked to an Act. They explain the practical side of compliance, such as reporting requirements, monetary limits, procedures, and form-filing rules. If all these details were written directly in the Act, the Act would become very long and complicated. Instead, the Act lays down the main provisions, while the Rules provide the step-by-step guidance.