Weekly Round-up on Tax and Corporate Laws | 1st December to 6th December 2025

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Dec 1^st to Dec 06^th 2025, namely:

1. MCA raises small company thresholds to Rs. 10 crore paid-up capital and Rs. 100 crore turnover;
2. HC’s clarification wasn’t a “finding” or “direction” to trigger section 153(6): HC;
3. GSTN issues additional FAQs on GSTR-9 and GSTR-9C for FY 2024-25: Advisory;
4. Successive petitions filed to avoid pre-deposit are invalid; no relief granted without compliance with law: HC;
5. GSTN makes Table 3.2 of GSTR-3B non-editable from Nov 2025 tax period: Advisory;
6. GSTN enables auto-suspension of GST Registration due to missing bank details under Rule 10A: Advisory; and
7. Accounting treatment for interest on project-specific interest-free loans and adjustment of investment income under Ind AS.

 

1. MCA raises small company thresholds to Rs. 10 crore paid-up capital and Rs. 100 crore turnover

The Ministry of Corporate Affairs has notified the Companies (Specification of Definition Details) Rules, 2025, through Notification No. G.S.R. 880(E) dated 1 December 2025. With this move, the definition of a small company has been expanded once again, giving a much larger set of businesses the benefit of simplified compliance.

• Revision of Financial Thresholds for Small Companies

Under the amended rules, the paid-up capital ceiling for a small company now stands at ten crore rupees, up from the earlier limit of four crore rupees. The turnover limit, based on the latest audited financial statements, has also been sharply raised from 40 crore rupees to 100 crore rupees. These revised financial thresholds will apply for the interpretation of clause (85) of section 2 of the Companies Act, 2013, i.e., the Small Company.

• Push towards ease of doing business

This change follows the government’s broader push over the last few years to encourage ease of doing business for India’s growing segment of emerging and mid-scale enterprises. By widening the net of companies that qualify as small, the amendment is expected to reduce regulatory burden for a large number of entities that sit between the traditional MSME bracket and the lower end of mid-corporates.

Once classified as a small company, an entity becomes eligible for several relaxations. These include reduced compliance requirements around board meetings and the elimination of mandatory cash flow statements. Many first-generation entrepreneurs and closely-held family businesses also find this status helpful because it allows them to focus more on operations while still staying compliant with the law.

• Impact on fast-growing and lean businesses

The revised thresholds are likely to be particularly meaningful for companies experiencing fast revenue growth but still operating with lean teams. For such businesses, shifting into the small company category can free up bandwidth and reduce compliance costs at a crucial stage of expansion. On the regulatory side, the move signals MCA’s continued effort to keep statutory definitions aligned with economic realities, inflation and the rising scale at which young companies operate today.

Read the Notification

2. HC’s clarification wasn’t a “finding” or “direction” to trigger section 153(6): HC

The erstwhile assessee (Shell Technology India Private Limited) filed its return for the relevant assessment year 2007-08. With effect from 01-04-2008, the assessee merged with the petitioner, i.e. Shell India Markets Private Limited, pursuant to a Scheme of Amalgamation approved by the Hon’ble High Courts of Karnataka and Madras.

The Petitioner also furnished copies of the orders passed by the Hon’ble High Courts. However, the then Assessing Officer (AO) proceeded with the assessment proceedings and issued, inter alia, a notice under Section 143(2) on 19-11-2010 in the name of ‘STIPL’, which did not exist as of that date. Subsequently, a final Assessment Order was passed in the name of the erstwhile entity, i.e. STIPL.

On appeal, the Tribunal held that the assessment order, having been passed in the name of a non-existent entity, i.e. STIPL, was a nullity in the eyes of the law and liable to be quashed. The High Court also upheld the Tribunal’s order setting aside the assessment order.

The High Court’s order further clarified that the Department’s appeal against the Tribunal’s order was being dismissed solely on the ground that the notice and the Assessment Order had been passed in the name of the transferor company (STIPL). The Court further observed that the consequence of this submission was that the Assessment Order and Notice ought to have been issued in the name of the transferee company and not the transferor.

The Court clarified that its order would not preclude the Department from initiating fresh proceedings against the transferee company, in accordance with the law. Thereafter, Assessing Officer issued a notice under section 143(2) to the petitioner-company, claiming that the income was proposed to be assessed in the petitioner’s hands in ”compliance” with the order of the High Court.

The matter reached the Bombay High Court again.

The High Court held that the High Court order merely clarified that the revenue authorities were not precluded from initiating fresh proceedings against the transferee company (Petitioner) in accordance with the law. The emphasised words clearly rule out any question of a “direction” being issued by the Court. The Assessing Officer also accept this. As to whether the said order contained any “finding” within the meaning of the word, it was viewed that, in the first place, there is no finding at all.

The Court has merely recorded what it felt was the consequence and effect of the submission made by the Petitioner, which the Court had accepted. Clearly, an impact or consequence can only arise after the Court has accepted the submission. Ex facie, this can never be a finding necessary to decide the appeal before the Court. To put it differently, to determine the appeal before it, the Court merely applied the principle laid down in Maruti Suzuki’s case [2019] 107 taxmann.com 375 (SC). It held that no assessment could be made of a non-existent company. No consideration of the assessment in the hands of the Petitioner was necessary to decide and finally dispose of the appeal.

Therefore, even assuming that a finding exists, it is clearly not a “finding” necessary to dispose of the appeal before the Court. Accordingly, there is no question of the provisions of Section 153(6) being attracted in the facts of the present case. For all the reasons set out above, it is viewed that the order of the High Court does not contain any “finding” or “direction” as contemplated by the provisions of Section 153(6).

Read the Ruling

 3. GSTN issues additional FAQs on GSTR-9 and GSTR-9C for FY 2024-25: Advisory

The GSTN has issued an advisory providing additional FAQs on reporting requirements in GSTR-9 and GSTR-9C for FY 2024-25. It briefly clarifies Reverse Charge Mechanism (RCM) disclosures, year-wise Input Tax Credit (ITC) reporting, treatment of prior-year ITC, non-GST purchases, and table-specific obligations including those for e-commerce operators. These FAQs were stated in GSTN Advisory, Dated 04-12-2025.

About the Update

The GSTN has issued an advisory compiling an additional set of FAQs to address queries received on the reporting requirements in various tables of GSTR-9 and GSTR-9C for FY 2024-25. The FAQs clarify reporting of RCM liabilities and related ITC paid in subsequent years, treatment of ITC pertaining to FY 2023-24 but claimed or reversed in FY 2024-25, applicability of specific tables such as 6A1, 7, 12B, and 7J, treatment of non-GST purchases, and reporting obligations for e-commerce operators in Table 4G1.

The advisory explains that taxpayers must disclose RCM transactions and ITC in the year of payment, report prior-year ITC claimed in the current year in Table 6A1, and exclude prior-year reversals from Table 7. It further outlines how differences may arise between GSTR-3B, GSTR-9, and GSTR-9C in specific scenarios and notes that such differences should be explained in the reconciliation statement where required. It also confirms that non-GST purchases are not required to be reported in GSTR-9 and that Table 4G1 applies only where the e-commerce operator is liable to pay tax under section 9(5).

Read the Advisory

4. Successive petitions filed to avoid pre-deposit are invalid; no relief granted without compliance with law: HC

The High Court held that successive writ petitions cannot be used to circumvent the mandatory pre-deposit prescribed under Section 107 of the CGST Act, and no relief can be granted in the absence of statutory compliance. This was held in Simla Gomti Pan Products (P.) Ltd. vs. Commissioner of State Tax U.P.  [2025].

Facts of the Case

The petitioner, challenged orders passed under Section 74 of the CGST Act by filing a statutory appeal, which was dismissed for limitation. Upon remand, the appellate authority again rejected the appeal for non-compliance with the statutory requirement of making a 10 percent pre-deposit under Section 107. It was submitted in the present writ petition that it had already conveyed its inability to make the pre-deposit, that the issue had been considered in the earlier writ petition, and that the appellate authority ought not to have dismissed the appeal on this ground. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the prior order of remand was confined strictly to the issue of limitation and did not grant any exemption from the statutory pre-deposit mandated under Section 107 of the CGST Act and the Uttar Pradesh GST Act. It was observed that neither in the earlier petition nor in the present one had petitioner sought any specific relief for waiver of the pre-deposit, despite full knowledge that the appeal had been dismissed for non-compliance with this requirement. The Court concluded that statutory appeals cannot be entertained.

Read the Ruling

https://taxmann.social/HfDH9

5. GSTN makes Table 3.2 of GSTR-3B non-editable from Nov 2025 tax period: Advisory

The GSTN has issued an advisory announcing that, from the November 2025 period onward, the values auto-populated in Table 3.2 of GSTR-3B for specified inter-State supplies will be non-editable and drawn solely from GSTR-1, GSTR-1A, and IFF. It explains that corrections must be routed through GSTR-1A for the same period, with instant updates to GSTR-3B, while later amendments may be made through GSTR-1/IFF. This was stated in GSTN Advisory, Dated 05-12-2025.

About the Update

The GSTN has announced that, from the November 2025 tax period onwards, the values auto-populated in Table 3.2 of GSTR-3B relating to inter-State supplies made to unregistered persons, composition taxpayers, and UIN holders will be non-editable. These figures will be system-generated based on the details reported in GSTR-1, GSTR-1A, and IFF. Taxpayers must file GSTR-3B using these auto-populated values only. FAQs have also been released to provide clarity on the revised process and its practical implications.

Any corrections required in Table 3.2 must be made through Form GSTR-1A for the same tax period. The changes made in GSTR-1A will instantly update the auto-populated values in GSTR-3B, ensuring the return can be filed with accurate details. Amendments may also be reported in subsequent periods through GSTR-1/IFF. Taxpayers are advised to ensure accurate reporting in GSTR-1, GSTR-1A, or IFF to maintain consistency and compliance in GSTR-3B.

Read the Advisory

6. GSTN enables auto-suspension of GST Registration due to missing bank details under Rule 10A: Advisory

The GSTN has issued an advisory rolling out an automated system that suspends GST registration where taxpayers fail to furnish bank account details within the timeline prescribed under Rule 10A. It states that suspension and restoration will occur automatically based on updation of bank details, subject to limited category-specific exceptions. This was stated in GSTN Advisory, Dated 05-12-2025

About the Update

The GSTN has rolled out an automated system to suspend GST registrations where taxpayers do not furnish their bank account details within the timeline prescribed under Rule 10A. Except for TCS, TDS, and suo-moto registrations, all taxpayers must provide their bank details within 30 days of registration or before filing GSTR-1/IFF, whichever is earlier. Failure to do so results in automatic suspension of registration. Once bank details are added through a non-core amendment, the system automatically drops any cancellation proceedings. If this does not happen on the same day, taxpayers may manually trigger the process through the “Initiate Drop Proceedings” option.

The advisory also clarifies that furnishing bank account details is not mandatory for OIDAR and NRTP taxpayers. However, OIDAR entities that appoint a representative in India must mandatorily provide their bank account information.

Read the Advisory

7. Accounting treatment for interest on project-specific interest-free loans and adjustment of investment income under Ind AS

Large infrastructure projects are often financed through government support in the form of interest-free or concessional loans earmarked for construction. In such cases, two practical questions commonly arise:

• whether the interest recognised through fair valuation of such loans under Ind AS 109, Financial Instruments qualifies as borrowing cost eligible for capitalisation, and
• whether the investment income earned from temporarily deploying unutilised project-specific funds should be recognised in profit or loss or adjusted against the cost of the qualifying asset.

Ind AS 109 requires interest-free loans to be measured at amortised cost using the effective interest method (EIR). This results in recognition of interest expense using the effective interest rate, representing the time value of money. While Ind AS 23, Borrowing Costs, requires capitalisation of borrowing costs directly attributable to a qualifying asset. For borrowings obtained specifically for constructing a qualifying asset, the capitalisable borrowing cost is the actual borrowing cost minus any investment income earned from temporary deployment of those borrowings.

In one of the similar case, The Expert Advisory Committee (EAC) clarified that interest-free subordinate debt received for a specific construction project must be accounted for in accordance with Ind AS 109 by recognising the loan at fair value on initial recognition and subsequently measuring it at amortised cost using the effective interest method. The resulting interest expense is real, not notional, and must be recognised in the financial statements.

It also opined that where the borrowing is exclusively for a qualifying asset that takes substantial time to construct, the interest should be recognised under the effective interest method should be capitalised to the cost of the asset in line with Ind AS 23. Further, where any portion of these specific borrowings is temporarily invested and generates interest income, the EAC clarified that such investment income must be deducted from the borrowing costs eligible for capitalisation. It should not be recognised in profit or loss until the qualifying asset is ready for its intended use.

Thus, in line with the EAC’s opinion, interest recognised on interest-free or concessional project-specific loans through the effective interest method under Ind AS 109 constitutes a bona fide borrowing cost and must be capitalised when the borrowing relates to a qualifying asset under construction. At the same time, Ind AS 23 requires that any investment income earned from the temporary deployment of such specific borrowings be deducted from the borrowing costs eligible for capitalisation. Accordingly, investment income cannot be credited to profit or loss during the construction phase and must instead reduce the capitalized borrowing cost until the asset is ready for its intended use.

Read the Story