Weekly Round-up on Tax and Corporate Laws | 04th Aug to 09th Aug 2025

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Aug 4th to Aug 9th, 2025, namely: 

1. 1. Lok Sabha passes the Income-tax (No. 2) Bill, 2025, aiming to replace the Income-tax Act, 1961
   2. Changes introduced by the Taxation Laws (Amendment) Bill, 2025;
   3. RBI proposes to ease the claim settlement process of deceased customers’ bank accounts and deposit lockers for legal heirs;
   4. Cess on coal for captive power used in zero-rated exports eligible for refund: HC;
   5. Partner shall be liable even after retirement if same is not communicated in writing to the competent authority: HC;
   6. Accounting for an advance in foreign currency and subsequent revenue recognition under Ind AS 21

1. Lok Sabha passes the Income-tax (No. 2) Bill, 2025, aiming to replace the Income-tax Act, 1961

The Income-tax Act, 1961, heavily amended over six decades, has become complex and inefficient, raising compliance burdens and concerns among taxpayers and administrators. To address this, the Government announced in July 2024 a comprehensive review to make the law concise, clear, and user-friendly.

The Income-tax Bill, 2025, introduced on 13 February 2025 and examined by the Select Committee, saw most recommendations accepted along with stakeholder suggestions for better legal clarity. To incorporate these refinements, the Government withdrew the original Bill and introduced the Income-tax (No. 2) Bill, 2025, in the Lok Sabha, to replace the 1961 Act.

Later, the Income-tax (No. 2) Bill 2025 was also passed by the Lok Sabha in just three minutes, without any debate. The Bill will now go to the Rajya Sabha for approval and thereafter to the President for assent. It will become law once the Presidential assent is provided.

Read the Bill 

Download the Copy of Income Tax Bill 2025 as passed by Lok Sabha 

2. Changes introduced by the Taxation Laws (Amendment) Bill, 2025

On August 11, 2025, the Lok Sabha passed the Taxation Laws (Amendment) Bill, 2025 [‘Amendment Bill’], which amends the Income-tax Act, 1961 (ITA), and the Finance Act, 2025. The bill amends various provisions of the Act to allow tax benefits to the subscribers of the Unified Pension Scheme rolled out in 2025, and to correct errors in the Finance Act 2025.

The changes made by the Amendment Bill are as follows:
A) Extension of tax benefit to subscribers of the Unified Pension Scheme;
B) Any proceedings for the block period commenced after the search shall stand abated;
C) Expanding Rs. 75,000 standard deduction to taxpayers choosing the new tax regime for AY 2026-27; and
D) Benefit of Section 10(23FE) exemption extended to the Public Investment Fund of Saudi Arabia.

Read the changes in detail 

Download copy of the Taxation Laws (Amendment) Bill, 2025 

3. RBI proposes to ease the claim settlement process of deceased customers’ bank accounts and deposit lockers for legal heirs

Earlier, Reserve Bank of India (RBI), in its Statement on Development and Regulatory Policies, announced a review of the extant regulatory guidelines on the ‘settlement of claims in respect of deceased depositors’.

Now, RBI, in a press release dated 6 August 2025, has proposed uniform procedures for legal heirs to access bank accounts and safe deposit lockers of deceased customers. The aim is to cut delays, make requirements clear, and ensure all banks follow the same process.

3.1 Background and Rationale

The current guidelines require banks to adopt a procedure to facilitate expeditious and hassle-free settlement of claims made by survivors/ nominees/ legal heirs. However, the procedures vary across banks. RBI has now issued a draft circular to standardise forms, list required documents, and fix timelines.

3.2 Simplified procedure for settlement of claims

Banks must adopt a simplified procedure for the settlement of claims of deceased customers’ bank accounts and deposit lockers for legal heirs. A threshold limit, subject to a minimum of Rs 15 lakh, must be fixed for simplified procedure for the settlement of claims as under:

• For claims up to Rs 15 lakh: Settlement must be made using basic documents such as a claim form, death certificate, letter of no-objection, and a bond of indemnity signed by the claimants.
• For claims above Rs 15 lakh: Additional documents would be required, such as a succession certificate or a legal heir certificate issued by a competent authority, or a declaration sworn as an affidavit before a Judge/Judicial Magistrate by an independent person.

3.3 Standardisation of procedure for submission of claims

Banks must use standardised forms for receiving the claims and other documents as per the prescribed formats. These forms and documents, required for the settlement of claims w.r.t deposit accounts/safe deposit lockers/articles in safe custody kept by a deceased customer must be available at all branches and on the bank’s website for the convenience of claimants.

Additionally, banks must display on their websites –

• All documents to be submitted by a claimant and
• The procedure to be followed for the settlement of claims

Once all required documents for processing of the claim have been submitted by the claimant, the bank must issue a confirmation to the claimant.

Also, banks may provide an online facility for lodging claims through their websites. Upon a claimant uploading the claim form along with the required documents, banks must send an acknowledgement/confirmation through appropriate channels and provide an option for online tracking of the status of the claim.

3.4 Settlement of claims for safe deposit locker and articles in safe custody kept by deceased customer

If a sole locker hirer nominates an individual to receive the contents of the locker in case of his/her death, a bank must give access of the locker to such nominee with the liberty to remove the contents of locker.

In case, the locker is hired jointly with the instructions to operate it under joint signatures, and the locker hirers nominates any other individual, in the event of death of any of the locker hirers, the bank must give access of the locker and the liberty to remove contents jointly to the nominees and the surviving hirers.

• Documents to be obtained by bank for processing of the claim
  The following documents must be obtained by the bank for processing of the claim –
  A) Claim form duly signed by the survivors/nominees
  B) Death certificate and
  C) Officially valid document of the survivor/nominee towards verifying her/his identity and address
•  Banks must ensure the following before giving access to nominees/survivors
  Banks must ensure the following before giving access to the contents of locker to nominees/survivors:
  A) Exercise due care and caution in establishing the identity of nominees/survivors and deceased status of locker hirers by obtaining documentary evidence;
  B) There is no order or direction as on date from Courts/Forums restraining the nominees/survivors or bank from giving access to locker of deceased customer;
  C) Make it clear to nominees/survivors that access to and liberty to remove the contents of locker is given to them only as a trustee of the legal heirs of deceased locker hirer.

3.5 Settlement of claims in respect of missing persons

The settlement of claims for missing persons must be governed by the provisions of sections 110 and 111 of the Bharatiya Sakshya Adhiniyam, 2023. The nominee/legal heir must obtain an express presumption of death of the depositor before the Competent Court. If the Court presumes death, then the claim in respect of missing person can be settled on the basis of court orders.

Further, banks must formulate a policy to settle the claims of missing persons after considering the legal opinion and taking into account the facts and circumstances of each case. Also, claims for missing persons could be settled without insisting on the production of any documentation other than the FIR and a non-traceable report issued by police authorities and a letter of indemnity from the claimant.

3.6 Compensation for delay in settlement of claims

Where any deposit-related claim is not settled within 15 calendar days from the date of receiving the complete set of documents associated with claim, then the bank must communicate the reasons for the delay to the claimants.

In case of delay, the bank must pay compensation to the claimants in the form of interest at a rate not less than the prevailing bank rate + 4% p.a. on the settlement amount due for the period of delay. Further, in case of claims related to safe deposit locker/articles in safe custody, the bank must pay compensation to the claimants at the rate of Rs 5,000 for each day of delay.

Read the Press Release

4. Cess on coal for captive power used in zero-rated exports eligible for refund : HC

The Hon’ble Gujarat High Court held that a refund of unutilised input tax credit of compensation cess on coal used for captive power generation is admissible when the resultant goods are exported as zero-rated supplies. Relying on the precedents, the Court held that cess is not leviable on zero-rated supplies even if IGST is paid, making input cess credit eligible for refund.

4.1 Facts

The petitioner, a company engaged in the manufacture and sale of various chemical products, sought refund of unutilised input tax credit (ITC) of cess paid on purchase of coal used for captive power generation in the course of manufacturing goods exported as zero-rated supplies on payment of IGST. For the relevant period, the petitioner purchased coal from the open market and paid cess as charged by its vendors. The electricity generated from the coal was used in the manufacture of chemical products that were either exported outside India or supplied to Special Economic Zone Units. The petitioner submitted that although IGST was paid on export of goods, cess was not payable on such supplies, and hence, ITC of cess accumulated without utilisation. A refund claim was filed for the proportionate cess credit relatable to such zero-rated supplies. The jurisdictional authority rejected the refund on the ground that exports were made with payment of IGST, and therefore, refund of cess credit was not admissible. The appeal against the said rejection was also dismissed, and the matter was accordingly placed before the High Court.

4.2 Held

The High Court held that the issue was no longer res integra in view of the decision in Patson Papers Pvt. Ltd. v. Union of India [2023] 145 taxmann.com 231 / 81 GST 345 (Guj.), wherein it was held that refund of unutilised ITC of cess paid on coal is admissible where such coal is used for manufacture of goods that are exported as zero-rated supplies. It was observed that even where IGST is paid on export of goods, the goods themselves may be exempt from compensation cess, and therefore no output liability of cess arises. Since the facts in the present case were identical to those in Patson Papers Pvt. Ltd., the Court held that the petitioner was entitled to refund of unutilised ITC of cess paid on purchase of coal used in the manufacture of exported goods. The Court directed the Department to process the petitioner’s refund application accordingly.

Read the Ruiling

5. Partner shall be liable even after retirement if same is not communicated in writing to competent authority: HC

The Hon’ble Punjab & Haryana High Court held that a retiring partner remains liable for tax dues of the firm unless written intimation of retirement is furnished to the competent authority as mandated by law.

5.1 Facts

The petitioner, in a matter placed before the High Court, was issued a notice following assessment of the firm under section 73 of the CGST Act and the Punjab GST Act in relation to discrepancies in payment of GST. The petitioner submitted that he had retired from the partnership firm and had no further involvement with its affairs, and therefore could not be held liable for any tax dues or compliance failures. It was contended that any action initiated against him post-retirement was without justification. The petitioner sought relief from proceedings on the ground that he bore no continuing obligation as a partner. The matter was accordingly placed before the High Court.

5.2 Held

The High Court held that although the petitioner claimed to have retired from the firm, no written intimation of such retirement had been furnished to the competent authority. It was noted that under section 90 of the CGST Act and the Punjab GST Act, intimation of retirement of a partner must be given to the Commissioner in writing, failing which the liability of such partner continues under law. In the absence of any such intimation, the Court found no merit in the petitioner’s claim that he was not liable. The petitioner was unable to demonstrate any legal ground that would justify interference by the Court. Accordingly, the writ petition was dismissed.

Read the Ruiling 

6. Accounting for an advance in foreign currency and subsequent revenue recognition under Ind AS 21

When applying Ind AS 21, The Effects of Changes in Foreign Exchange Rates, and Ind AS 115, Revenue from Contracts with Customers, a practical challenge often arises in determining the correct accounting treatment for advances received in foreign currency for goods or services to be delivered over time. The central issue lies in establishing whether such advances constitute monetary or non-monetary items, as this directly impacts their translation at the reporting date and the measurement of related revenue. The standards provide clear guidance: non-monetary liabilities, such as advances where the obligation is to deliver goods or services rather than repay cash, are translated at the exchange rate on the date of receipt and are not re-measured subsequently. Monetary assets or liabilities, such as receivables in a fixed foreign currency, are re-translated at the closing rate at each reporting date, with exchange differences recognised in profit or loss.

This distinction can be challenging in practice, especially in contracts where part of the consideration is received upfront and the remainder is billed as the performance obligation is satisfied. The advance portion, if non-monetary, locks in the exchange rate at the date of receipt for the purpose of measuring the related revenue, while the unbilled portion, if monetary, is measured at the exchange rate on the date the performance obligation is satisfied (or an average rate for the period) and revalued at the closing rate until settlement.

For example, consider an Indian software company that signs a six-month contract worth USD 100,000 with a US client for custom software development. The client pays a 40% advance (USD 40,000) on the contract start date. Since the company’s obligation is to deliver services and not return cash, this advance is treated as a non-monetary contract liability and recorded at the spot exchange rate on the receipt date, remaining unchanged until the related service is performed. As work progresses evenly each month, a proportion of the revenue is drawn from this advance at the historical rate, while the balance of the contract value (USD 60,000), representing unbilled work, is recognised as a monetary contract asset. This asset is initially measured at the average exchange rate for the service period. At year-end, before the project is complete, the monetary asset is revalued at the closing exchange rate, resulting in a foreign exchange gain or loss.

This example highlights the importance of correctly distinguishing between monetary and non-monetary components of foreign currency transactions to ensure compliance with Ind AS requirements. Proper documentation of the rationale for classification is essential to avoid errors and maintain the integrity of financial reporting.

Read the Story