AI Implementation in Depositories: New Rules Mandate 15-Day Fee Payment and Data Protection Under Regulation 82AA

SEBI amended the Depositories and Participants Regulations effective April 1, 2025, introducing key modifications to regulatory compliance. Depositories must now remit annual fees within 15 days of the financial year start, accompanied by chartered accountant-certified computation statements. A 15% per annum interest penalty applies for delayed or insufficient payments. Notably, regulation 82AA establishes depositories' sole responsibility for artificial intelligence implementation, mandating accountability for data privacy, security, and regulatory compliance regardless of whether AI tools are internally developed or externally sourced. The amendment emphasizes protection of investor data and stakeholder interests in automated systems while maintaining fiduciary obligations.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85691

#SEBI #DepositoryRegulations #ArtificialIntelligence #DataPrivacy - SEBI

SEBI Makes Intermediaries Fully Liable for AI Tools' Output and Data Privacy in Investment Operations Under 2008 Regulations

SEBI amended the Intermediaries Regulations 2008 by introducing Chapter IIIB concerning artificial intelligence usage. The amendment establishes that regulated entities utilizing AI and machine learning tools, whether proprietary or third-party, are solely accountable for data privacy, security, and integrity of investors' information. Entities bear complete responsibility for AI-generated outputs and regulatory compliance. The regulation encompasses all AI applications used for investment, trading, strategy dissemination, or internal operations. SEBI reserves the right to take punitive action under Chapter V for violations. The amendment defines AI tools as any software, program, or system used for investment-related activities or compliance purposes, applying to all SEBI-regulated persons as defined in regulation 16A.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85692

#AIRegulation #SEBICompliance #FinancialRegulation #InvestorProtection - SEBI

Stock Exchanges Must Take Full Responsibility for AI Tools Used in Trading and Operations Under New Regulation 39B

SEBI amended the Securities Contracts Regulations by introducing Regulation 39B, establishing strict accountability for recognized stock exchanges and clearing corporations utilizing artificial intelligence tools. The amendment mandates these entities bear sole responsibility for data privacy, security, and integrity of investor information, accountability for AI-generated outputs, and compliance with applicable laws. The regulation encompasses both internally developed and third-party AI solutions used for trading, settlement, compliance, or business operations. This amendment, effective upon gazette publication, represents a significant regulatory framework for AI governance in securities markets, ensuring protection of stakeholder interests while enabling technological advancement in market infrastructure.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85693

#SecuritiesLaw #AIRegulation #StockMarket #SEBI - SEBI

SEBI Mandates Uniform Investor Charter Compliance Across 19 Market Intermediary Categories Including Brokers, Mutual Funds, Advisers

SEBI introduced comprehensive amendments across multiple regulations mandating compliance with Investor Charter requirements. The amendments affect 19 different regulatory frameworks including those governing stock brokers, merchant bankers, registrars, debenture trustees, mutual funds, custodians, investment advisers, and portfolio managers. Each regulated entity must now ensure compliance with the Investor Charter as specified by SEBI. The regulations came into effect upon official gazette publication in February 2025. This standardized approach aims to enhance investor protection and transparency across India's securities market by requiring all market intermediaries and participants to adhere to uniform charter guidelines prescribed by the regulatory authority.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85694

#SEBIRegulation #InvestorProtection #FinancialMarkets #SecuritiesLaw - SEBI

RBI Revises Payment Rules Between ACU Member Countries Under FEMA 14(R)(1) For Cross-Border Transactions

RBI amended the Foreign Exchange Management (Manner of Receipt and Payment) Regulations 2023 through notification FEMA 14(R)(1)/2025-RB. The amendment modifies Regulation 3(2)(I)(a)(ii) regarding payments between ACU member countries. Under the revised provision, transactions between residents of ACU participant countries must be conducted through the ACU mechanism or as per RBI directions to authorized dealers. For transactions with ACU members except Nepal and Bhutan, payments shall follow the specified manner for other transactions. The amendment aims to streamline cross-border payment mechanisms within ACU member territories while maintaining regulatory oversight of foreign exchange transactions. The regulations take effect upon official gazette publication.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85695

#FEMA #RBIGuidelines #ForexRegulations #CrossBorderPayments - FEMA

Central Government Sets Phased Implementation Dates for CGST Amendment Rules Under Section 164 Starting February 2025

The Central Government, exercising powers under Section 164 of CGST Act 2017, has notified the implementation dates for specific provisions of CGST (Amendment) Rules 2024. Rules 2, 24, 27, and 32 will come into effect from February 11, 2025, while Rules 8, 37, and clause (ii) of Rule 38 will be implemented from April 1, 2025. This notification, issued by CBIC, establishes a phased implementation approach for the amended rules, ensuring systematic adoption of the new GST provisions. The staggered implementation allows stakeholders adequate time to adapt to the regulatory changes while maintaining administrative efficiency in tax governance.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85696

#GSTUpdates #TaxCompliance #CGSTRules #IndianTaxation - GST

Stock Brokers Can Trade G-Secs Through Independent Business Units While Maintaining Separate Operations From Securities Trading

SEBI authorized registered stock brokers to access NDS-OM for G-Secs trading through Separate Business Units (SBUs). The SBUs must operate independently from the broker's securities market activities, maintaining segregated accounts and net worth. These units are restricted exclusively to NDS-OM transactions and must maintain arm's length relationships with other operations. The regulatory jurisdiction for SBU activities, including policy, risk management, and enforcement, falls under the respective regulatory authority, not SEBI. Consequently, stock exchange grievance mechanisms, Investor Protection Fund, and SCORES system are not applicable for SBU services. This directive aims to establish clear operational boundaries while facilitating broker participation in the G-Secs market.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85697

#GSecs #StockBrokers #NSDSOM #FinancialRegulation - SEBI

Understanding GST "Sale in Transit" Transactions: Place of Supply Rules Under Section 10 of IGST Act, 2017 Explained

A user inquired about conducting "sale in transit" transactions under the GST system, similar to E-1/E-2 sales under the CST system, after generating an e-way bill. One respondent explained the place of supply rules under Section 10 of the IGST Act, 2017, which determine the location of supply based on various conditions such as movement of goods, delivery direction, and installation. Another respondent advised issuing an e-way bill based on the invoice for the subsequent sale. The original inquirer further asked about the specific section applicable for transit sales and delivery.

Source:
https://www.taxmanagementindia.com/web/View_discussions_detail.asp?ID=119574

#GST #IGST #EWayBill #TaxLaw - GST

Input Tax Credit Denied After Dealer Failed to Prove Genuine Purchases and Transport of Copper Materials Under KVAT Act

HC upheld revenue's appeal regarding disallowance of input tax credit and penalty imposition under KVAT Act. The respondent failed to substantiate genuine purchases and movement of goods (copper/GI materials) with credible transportation evidence. Court found suspicious use of two-wheelers for heavy goods transport and non-deposit of tax by selling dealers. HC emphasized that burden of proof lies with dealer claiming input tax credit, and mere production of invoices or cheque payments insufficient. The Tribunal erred in overturning Assessing Authority's findings based solely on documentary evidence without considering goods movement proof and non-payment of tax to exchequer. Penalty under Section 70(2)(a) reinstated as First Appellate Authority lacked grounds for quashing it.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85699

#InputTaxCredit #VATCompliance #TaxLaw #CommercialLaw - VAT / Sales Tax

Sponge Iron Production Case: Revenue's Theoretical Input-Output Ratio Claims Rejected Due to Lack of Evidence

CESTAT allowed the appeal against allegations of clandestine production and removal of sponge iron. Revenue's case relied solely on theoretical input-output ratios without corroborative evidence or independent plant study. Appellant's declared ratio (1:1.92 in 2008-09 to 1:1.87 in 2009-10) was not effectively rebutted. Revenue failed to establish clandestine removal of 11,542 MT through vehicle movements, buyer statements, or cash transaction records. The demand of Rs.1,42,845 was set aside as revenue-neutral since both units shared common balance sheet with eligible CENVAT credit. Extended period demand was time-barred absent evidence of suppression. Consequently, penalties on Managing Director were vacated.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85700

#ExciseDuty #InputOutputRatio #TaxLitigation #IndustrialDispute - Central Excise

Manufacturer Wins Appeal: Technical Specifications Provided Pre-Contract Not Includable in Excise Duty Assessable Value Under Section 4(1)(b)

CESTAT ruled that specifications, drawings, and designs provided by Company M to appellant manufacturer should not be included in assessable value for excise duty calculations. The Tribunal determined these items did not constitute 'additional consideration for sale' under Section 4(1)(b) of Central Excise Act and Rule 6 of Valuation Rules. Key reasoning centered on consideration principles - for inclusion, items must be provided at promisor's desire after formation of seller-buyer relationship. Here, specifications were provided before contractual relationship establishment, when parties were merely prospective seller-buyer. Following precedent from similar vendor cases, CESTAT allowed appeal, concluding specifications and designs fell outside assessable value scope for excise duty purposes.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85701

#ExciseDuty #ValuationRules #TaxAssessment #ManufacturingLaw - Central Excise

Service Tax Not Applicable on Lottery Sales Between States and Distributors Under Entry 62-List II Seventh Schedule

SC determined service tax cannot be levied on lottery ticket sales between state governments and distributors. The relationship between Government of Sikkim and distributors was established as principal-to-principal, not principal-agent. The Court held that conducting lotteries falls within "betting and gambling" under Entry 62-List II of Seventh Schedule, placing it under state jurisdiction. Parliamentary amendments to Finance Act, 1994 attempting to impose service tax on lottery distributors were deemed ineffective since no service was rendered in an agency capacity. The Court emphasized that while lottery tickets constitute actionable claims, conducting lotteries is fundamentally a betting and gambling activity regulated under state authority. Appeals by Union of India were dismissed, affirming states' exclusive right to tax such transactions.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85702

#LotteryLaw #ServiceTax #TaxationRuling #GamblingRegulation - Service Tax

Money Laundering Case: Bail Denied Under PMLA Section 45 as Accused Fails Twin Conditions in Liquor Syndicate Matter

HC rejected bail application under Section 483 BNSS read with Section 45 PMLA. Applicant, allegedly part of liquor syndicate involved in money laundering, failed to satisfy twin conditions for bail under PMLA. Court noted prima facie involvement based on investigation findings and charge sheet. Despite defense arguments regarding ED's arrest powers and selective prosecution, HC determined case gravity and material evidence warranted continued detention. Court referenced precedent limiting ED's arrest powers to objective criteria but found sufficient cause existed. Notable inconsistency in prosecution's approach regarding other syndicate members was acknowledged but deemed insufficient to override PMLA requirements for bail grant.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85703

#MoneyLaundering #PMLA #BailLaw #EconomicOffences - Money Laundering

Customs Broker Penalized for Misdeclared Clothing Import Without Authorization Under Section 112(a)(i) of Customs Act

CESTAT upheld penalties against customs broker for facilitating import of misdeclared worn clothing. Broker failed to exercise due diligence by proceeding without proper importer authorization and verification, relying solely on unauthorized intermediary Nikhil Kumar. Goods were incorrectly classified under CTH 62099090/62044990/62114990 instead of 63090000 and required DGFT authorization as restricted items. Broker submitted false report despite consignment being under alert. Time bar argument rejected as delay occurred due to difficulties in securing importer's presence. Penalty under Section 112(a)(i) of Customs Act maintained as broker's actions rendered goods liable for confiscation. Appeal dismissed.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85704

#CustomsCompliance #ImportRegulations #LegalPenalty #CustomsBroker - Customs

Worn Gold Jewelry Not 'Baggage' Under Section 79 - Customs Officers Cannot Detain Personal Ornaments Worn By Travelers

HC ruled that gold bangles worn by a passenger returning to India do not constitute "baggage" under the Customs Act 1962 and Baggage Rules 2016. The court determined that the Rule's provision regarding articles "carried on the person" exceeds the scope of the parent Act and is ultra vires. The Parliament consciously excluded worn jewelry from customs provisions, and until legislative amendment, officers cannot detain passengers' worn gold under Baggage Rules. The court ordered release of petitioner's 10 bangles within 7 days, finding no concealment as they were openly worn. The ruling emphasized that delegated legislation cannot exceed parent Act's scope and must respect fundamental rights and customs.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85705

#CustomsLaw #GoldJewelry #BaggageRules #LegalRights - Customs

Agricultural Land Sale Exemption Under Section 54B Granted After Proving Cultivation History and Proper Reinvestment

ITAT upheld taxpayer's claim for exemption under section 54B regarding capital gains from sale of agricultural land. Evidence showed consistent agricultural income in previous years, including Rs. 14,000 for AY 2011-12. Independent verification by halka Patwari confirmed cultivation of Gwar crop on the disputed land. While Revenue contested full exemption claim since only part of land was used for agriculture, ITAT found the entire parcel constituted an integrated agricultural asset. Taxpayer complied with reinvestment requirements by purchasing new agricultural land and temporarily depositing Rs. 60 lacs in Capital Gains Scheme, which was later properly declared for taxation. The tribunal ruled the section 54B exemption was validly claimed based on documented agricultural use and compliant reinvestment.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85706

#CapitalGains #Section54B #AgriculturalLand #TaxExemption - Income Tax

Pen Drive Evidence Valid, Cash Receipt Rates Modified, R&D Deductions Under Section 35(2AB) Partially Allowed

ITAT addressed three key issues in this tax appeal. The tribunal upheld the addition of undisclosed income based on electronic evidence from a seized pen drive, as proper certification under Section 65B(4) of Indian Evidence Act was obtained. Regarding unaccounted cash receipts, ITAT modified CIT(A)'s approach of applying 85% blanket rate, directing reassessment based on the assessee's declared net profit rates for respective years. On R&D deductions under Section 35(2AB), the tribunal confirmed that post July 2016, deductions must align with DSIR quantification, except for AY 2016-17 where full revenue expenditure deduction was allowed. The tribunal also upheld CIT(A)'s deletion of Section 69C additions after verifying opening cash balances from seized documents.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85707

#TaxLaw #Section35 #RandDDeductions #ElectronicEvidence - Income Tax

Taxpayer's Section 80JJAA Deduction Claim in Revised Return Valid if Form 10DA Filed During Assessment Proceedings

ITAT allowed taxpayer's appeal regarding deduction claim under Section 80JJAA made in revised return. While AO rejected the claim solely due to timing of revised return filing, ITAT held that once revised return is accepted, all deductions claimed therein must be considered. Following SC precedent in G.M Knitting Industries, submission of prescribed Form 10DA during assessment proceedings constitutes valid compliance. Matter remanded to AO for verification of other eligibility conditions under Section 80JJAA and quantification of deduction amount. Appeal allowed for statistical purposes with direction to examine substantive qualification criteria rather than rejecting claim on procedural grounds.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85708

#TaxDeduction #Section80JJAA #RevisedReturn #TaxCompliance - Income Tax

Reassessment Order Under Section 148A(d) Invalid Due to Wrong Authority's Approval for Beyond 3-Year Cases

ITAT determined the assessment order under s.148A(d) for AY 2018-19 was invalid due to improper sanctioning authority approval. The order issued on 06.04.2022 received approval from Principal Commissioner of Income Tax (PCIT) instead of the statutorily required Principal Chief Commissioner of Income Tax (PCCIT), as mandated by s.151 for cases beyond three years from assessment year end. Following precedent in Holiday Developers case, ITAT held that PCCIT approval was mandatory since the order fell outside the three-year window. Consequently, both the s.148A(d) order and subsequent s.148 notice were quashed, ruling in assessee's favor due to jurisdictional defect in sanctioning authority.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85709

#TaxLaw #Section148A #ReassessmentNotice #IncomeTax - Income Tax

Income Tax Reassessment Notice Under Section 147/148 Quashed Due To Prior Full Disclosure Of Interest-Free Group Loans

HC quashed reassessment notice under s.147/148 of Income Tax Act concerning interest-free loans to related entities and interest claims on borrowed funds. The assessee had made complete disclosure in original returns filed on 29.09.2013 including balance sheet and P&L statements. RTI documents revealed AO had formed opinion on interest-free group loans during original assessment concluded on 29.06.2015. Court found no failure by assessee to disclose material facts necessary for assessment. The subsequent reopening was unwarranted as AO had previously justified original assessment conclusions in response to audit objections. Notice dated 28.03.2021 and speaking order dated 29.07.2021 were held unsustainable.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85710

#TaxLaw #ReassessmentNotice #Section147 #IncomeTaxAct - Income Tax

Tax Authority's Pre-Resolution Period Refund Adjustment Valid; Resolution Applicant Cannot Claim AY 2010-11 Tax Returns

HC affirmed tax authority's adjustment of AY 2010-11 refund against pre-existing tax liabilities of corporate debtor. Resolution applicant's claim to refund rejected on dual grounds: first, the adjustment effectively reduced tax dues already considered in approved resolution plan; second, resolution applicant's rights commenced only from plan approval date (November 7, 2017), precluding claims to pre-resolution period tax refunds. Court determined resolution applicant could not assert rights over tax assessments and resultant refunds from AY 2010-11, as these predated their assumption of corporate debtor's management. Challenge to adjustment procedure dismissed despite notice argument.

Source:
https://www.taxmanagementindia.com/web/tmi_highlights_details.asp?id=85711

#CorporateInsolvency #TaxRefund #IBC #TaxAdjustment - Income Tax