Weekly Round-up on Tax and Corporate Laws | 13th to 25th October 2025

This weekly newsletter analytically summarises the key stories reported at taxmann.com during Oct 13^th to Oct 25^th, 2025, namely:

1. NITI Aayog proposes optional industry-specific Presumptive Taxation Scheme for foreign companies;
2. CBDT directs uniform verification of expenses in the assessment of entertainment sector assesses;
3. SEBI proposes a uniform KYC process for new Mutual Fund folios before allowing first investment;
4. Mandamus to include petrol, diesel under GST not maintainable as decision falls within GST Council policy domain: HC;
5. Disclosure of GST returns under RTI barred as Section 158 GST Act overrides general RTI provisions: HC; and
6. ICAI issues revised Technical Guide on Disclosure and Reporting of KPIs in offer documents (2025).

1. NITI Aayog proposes optional industry-specific Presumptive Taxation Scheme for foreign companies

NITI Aayog has released a report highlighting the need to enhance tax certainty and predictability for foreign investors in India. The report notes that while Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) are vital for India’s economic growth, persistent tax uncertainty, particularly around Permanent Establishment (PE) and profit attribution, continues to pose major challenges. Ambiguous rules, changing judicial interpretations, and prolonged disputes, often lasting over a decade, have deterred investors and increased compliance costs.

Despite these hurdles, India remains an attractive investment destination due to its large market, demographic advantages, and ongoing reforms. To unlock its full potential, the report proposes a comprehensive framework that includes an optional, industry-specific Presumptive Taxation Scheme, clearer legislation, faster dispute resolution, and alignment with international best practices.

According to NITI Aayog, these reforms would reduce litigation, strengthen investor confidence, and create a fair and predictable tax regime that promotes high-quality, sustainable foreign investment rooted in real economic activity.

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 2. CBDT directs uniform verification of expenses in the assessment of entertainment sector assessees

The entertainment sector comprises various segments, including television, radio, music, event management, film, animation and visual effects, broadcasting, sports, and amusement. As such, expenses incurred by the different segments of the entertainment sector may be examined on a case-by-case basis, specific to the nature of business undertaken by assessees.

The Central Board of Direct Taxes (CBDT) has issued an advisory to the Assessing Officers (AOs) on the examination of expenses incurred by the entertainment sector. The advisory pertains to the following:

a) Pre-operative expense

These expenses are generally incurred before the commencement of businesses (pre-operative expenses), which may be examined concerning the actual commencement of the businesses of assessees engaged in the entertainment sector under the provisions of section 32D for allowance of such pre-operative expenses for amortisation

b) Declaration of expenses of feature film

Assessees involved in the production of feature films are required to furnish Form No. 52A within thirty days from the end of the financial year or within thirty days from the date of completion of the film, whichever is earlier. In Form No. 52A, entities must disclose the film’s start and completion dates and details of payments exceeding Rs. 50,000 (in aggregate) made or payable to any person involved in its production. The Assessing Officer may verify Form No. 52A and related expenses. Failure to furnish the form on time may attract penalty under section 272A.

c) Expenses incurred on the production of feature films

During the assessment of entities engaged in the production of feature films, the deduction in respect of expenditure on the production of feature films may be verified and allowed as per Rule 9A of the Income-tax Rules, 1962.

Under Rule 9A, a film producer can claim the cost of production as a deduction while computing business profits, including scenarios such as the sale of all exhibition rights or the producer’s commercial exhibition, subject to specified conditions. Similarly, a distributor may claim deduction for expenditure on acquiring film distribution rights under Rule 9B.

Read the Notification

3. SEBI proposes a uniform KYC process for new Mutual Fund folios before allowing first investment

SEBI has proposed a significant change in the process of onboarding mutual fund investors. In its Consultation Paper dated October 23, 2025, the regulator has proposed that a new mutual fund folio should become active only after the investor’s KYC is fully verified in the KRA system. Simply put, the first investment in a new folio will be allowed only when the folio is marked as KYC compliant. Stakeholders can submit their comments to SEBI via its online form by November 14, 2025.

a) Background and Rationale

Currently, new folios can be opened only after completion of the mandatory KYC verification. However, SEBI has observed certain instances of KYC non-compliant folios arising due to the sequential nature of the verification process followed in the mutual fund industry.

At the time of folio creation, AMCs conduct comprehensive internal KYC checks and, upon being satisfied, process the investment while simultaneously forwarding the investor’s documents to the KRA for final verification

In some cases, where the KRA identifies discrepancies or deficiencies during its review, the folio is marked as KYC non-compliant until such deficiencies are rectified and the investor’s KYC status is updated to ‘compliant’ in the KRA system.

Consequently, at the time of a new investment under a new folio of a different scheme, the investor is unable to execute any transaction until the KYC status of the investor is marked as compliant in the KRA system. Further, investors are unable to receive redemption proceeds and dividends into the bank accounts where the bank account details are incorrect.

Additionally, AMCs are unable to deliver either physical or email communications to unitholders regarding key developments in the scheme. Besides, fund houses also face difficulties in crediting redemption proceeds and dividends into incorrect bank accounts, leading to an increase in unclaimed redemptions and dividends.

b) SEBI’s Proposal

SEBI has proposed a uniform KYC-verified process for opening mutual fund folios and executing the first investment. The proposed process is as follows:

• Folios must be created by the AMC upon receipt of account opening documents and completion of verifications as per the Know Your Client (KYC) norms for the securities market.
• Upon satisfactory KYC compliance, KYC documents must be sent to the KYC Registration Agency (KRA) by the AMC, which must complete the KYC verification.
• The first investment in a new folio must be permitted only after KYC verification is completed by the KRA and the folio is marked as KYC compliant in the KRA system.
• Investors must be informed at each stage of the KYC process through their registered email and mobile number.

c) What does this mean for the industry?

The proposal is expected to streamline the KYC process and make it more consistent across the mutual fund ecosystem. If folios are verified upfront, it should help reduce future disruptions, especially during redemptions, dividend payouts, or when adding new schemes to an existing folio. Overall, the move aims to improve investor protection, minimize operational frictions, and strengthen confidence in mutual fund transactions.

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4. Mandamus to include petrol, diesel under GST not maintainable as decision falls within GST Council policy domain: HC

The High Court held that a mandamus seeking inclusion of petrol and diesel under GST is not maintainable, as the decision lies solely within the GST Council’s policy domain beyond judicial interference. It observed that no enforceable legal right exists to compel the Council to fix a date for such inclusion.

Facts of the case

The petitioners filed public interest litigations seeking the inclusion of petrol and diesel under GST, challenging the GST Council’s decision not to incorporate these petroleum products within the GST framework at the present stage. The GST Council had considered the issue and resolved that inclusion was not appropriate at that time. The petitioners sought a mandamus directing the GST Council to fix a date for the inclusion of petrol and diesel under GST. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the decision to include petrol and diesel under GST rests solely with the GST Council and that no enforceable legal right exists to compel the Council to fix a date for such inclusion. The Court observed that the issue falls within the policy domain of the GST Council, which is beyond judicial interference. Consequently, the writ petitions were dismissed for want of judicial enforceability. The Court declined jurisdiction to interfere with the GST Council’s policy decision.

Read the Ruling

5. Disclosure of GST returns under RTI barred as sec. 158 GST Act overrides general RTI provisions: HC

The High Court held that disclosure of GST returns under the RTI Act is barred, as Section 158 being a special and later enactment, overrides the RTI provisions on confidentiality. It found no substantiated public interest or prima facie fraud to justify disclosure of third-party information.

Facts of the case

The petitioner sought disclosure under the Right to Information Act, 2005, of GST returns of six industries, alleging fraud by the industries and asserting that the information was required to prosecute them. The Information Officer issued third-party notices and rejected the request after receiving objections. First appeals were dismissed, and a second appeal before the State Information Commissioner was also dismissed. A writ petition was filed challenging the refusal. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the confidentiality provision under the GST Act barred the disclosure of the requested particulars. Being a special and later enactment, the GST law prevailed over the general Right to Information Act, 2005 regime for matters of confidentiality. The allegation of fraud by the petitioner was bald in nature and unsupported by any prima facie material, and no larger public interest was shown to warrant disclosure of personal or third-party information. The public-interest override under the privacy exemption was therefore not attracted, and the authorities had rightly refused to provide the information, confirming the decision in favour of the revenue under Section 158 of the CGST Act/Maharashtra GST Act.

Read the Ruling

6. ICAI issues revised Technical Guide on Disclosure and Reporting of KPIs in offer documents (2025)

The Institute of Chartered Accountants of India (ICAI), through its Auditing and Assurance Standards Board (AASB), has issued the revised Technical Guide on Disclosure and Reporting of Key Performance Indicators (KPIs) in Offer Documents (2025).

This updated guide aligns with the Industry Standards on KPI Disclosures formulated by the Industry Standards Forum (ISF), a joint initiative of ASSOCHAM, CII, and FICCI under SEBI’s guidance. The ISF KPI Standards were notified by SEBI on February 28, 2025, and are effective from April 1, 2025.

The revised edition promotes uniformity in identifying, disclosing, and reporting KPIs in IPO documents. It provides detailed guidance on responsibilities of issuer companies, auditors, and merchant bankers, classification of KPIs, and related disclosure and certification procedures. It also emphasizes robust internal and disclosure controls to ensure accuracy and consistency of reported KPIs.

By strengthening the framework for KPI disclosure and reporting, the revised guide enhances transparency, comparability, and investor confidence in IPO offer documents.

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