Weekly Round-up on Tax and Corporate Laws | 23rd to 28th February 2026

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Feb 23^rd  to Feb 28^th 2026, namely:

1. India–France Sign Protocol to Amend DTAA; Full Taxing Rights Over Capital Gains to Vest With Country of Residence
2. IBBI Amends CIRP Regulations; Substitutes ‘Fair Value’ Definition and Revises Valuation Process
3. Insurer Not Liable for Penalty Under Sec. 4A(3)(b) of Employees’ Compensation Act; Liability Rests Solely on Employer: SC
4. Taxpayers Can Utilise CGST or SGST ITC in Any Order for IGST Liability in GSTR-3B From Feb 2026: Advisory
5. GSTN Enables Facility for Withdrawal From Rule 14A (Simplified Registration Scheme): Advisory
6. GST Exemption Under Notification 12/2017 Not Available on University Affiliation Fees as Services Are Not Related to Admission or Examinations: HC
7. Applying the Portfolio Approach under Ind AS 115 — Practical Guidance with Illustrations and Collectability Insights

1. India–France Sign Protocol to Amend DTAA; Full Taxing Rights Over Capital Gains to Vest With Country of Residence

The Central Board of Direct Taxes (CBDT) has released a press release on the India-France Double Taxation Avoidance Convention (DTAC). During the recent visit of the President of France to India, the Government of the Republic of India and the Government of the French Republic signed a Protocol amending the India-France DTAC.

The Amending Protocol provides full taxing rights in respect of capital gains arising from the sale of shares in a company to the jurisdiction in which that company is a resident. The Amending Protocol also deletes the so-called Most-Favoured-Nation (MFN) Clause from the Protocol to the DTAC, thereby resolving all issues relating to it. The Amending Protocol also modifies the taxation of dividends by replacing a single 10% tax rate with a split rate of 5% for those holding at least 10% of capital and 15% for all other cases.

It also modifies the definition of ‘Fees for Technical Services’ to align it with the definition in the India-US Double Taxation Avoidance Agreement. It expands the scope of ‘Permanent Establishment’ by adding Service PE.

The Amending Protocol also updates the provisions on Exchange of Information and introduces a new Article on Assistance in the Collection of Taxes, in line with international standards. This would enable and facilitate the seamless exchange of information and strengthen mutual tax cooperation between India and France.

The Amending Protocol also incorporates within the DTAC, the applicable provisions of the BEPS Multilateral Instrument (MLI), which had already become applicable consequent to the signing and ratification of MLI by India and France.

Read the Press Release

2. IBBI Amends CIRP Regulations; Substitutes ‘Fair Value’ Definition and Revises Valuation Process

On February 25, 2026, the IBBI notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2026. These amendments represent a significant step forward in addressing longstanding challenges within the CIRP, particularly in the areas of asset valuation, professional accountability, stakeholder protection and transparency in information disclosure. The amendments substitute the definition of ‘fair value’ under Regulation 2(hb) and revise the manner of determination of fair value and liquidation value. They also provide for the treatment of allottees who have not filed claims in respect of real estate projects.

The IBBI’s key amendments are as follows:

(a) Protection of allottees’ interests in real estate projects

Earlier, there was no specific statutory mechanism under the IBC to safeguard the interests of allottees who had not filed their claims. While such allottees could invoke Section 60(5) of the Code to approach the Adjudicating Authority in relation to claims arising out of the insolvency resolution process, their inclusion in the resolution framework was not expressly guaranteed under the regulations.

The amendments now introduce specific provisions addressing the treatment of allottees in real estate projects via the insertion of new Regulation 38A and enhanced disclosure requirements under Regulation 36(2)(ja).

Regulation 38A specifies mandatory treatment for allottees who have not filed their claims. It states that, in respect of a real estate project where the information memorandum includes the details of allottees who have not submitted their claims, the resolution plan must provide for the treatment of such allottees.

This protection mechanism acknowledges that individual homebuyers may not have timely knowledge of insolvency proceedings or may lack the resources to engage professional assistance for claim preparation and submission.

Further, the disclosure requirements under Regulation 36(2)(ja) mandate the inclusion of all allottee details, including their names, amounts due, and units allotted, whose claims are either reflecting in the books of accounts of the corporate debtor or in the records of the Real Estate Regulatory Authority, but who have not submitted their claims to resolution professionals.

This requirement ensures that resolution plans address the interests of allottees in a transparent and structured manner, thereby strengthening stakeholder protection and reducing the risk of their exclusion from the resolution process.

(b) Substitution of the definition of ‘fair value’

The amendment substitutes the definition of ‘fair value’ under Regulation 2(1)(hb). The amended definition establishes fair value as the estimated realizable value of the corporate debtor or the assets of the corporate debtor, as the case may be, if they were to be exchanged on the insolvency commencement date between a willing buyer and willing seller in an arm’s length transaction, after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion.

The amendment expands the scope of valuation from only the assets of the corporate debtor to the corporate debtor as a whole, thereby enabling enterprise-level valuation in addition to asset-level assessment.

(c) Revision in the manner of determination of ‘fair value’ and ‘liquidation value’

The fair value and liquidation value must be determined in the following manner:

• Each set of registered valuers must comprise one registered valuer for each asset class of the corporate debtor, with one designated as the coordinating valuer for fair value computation.
• The resolution professional must facilitate a meeting where the registered valuers, including coordinating valuers, explain the methodology adopted to arrive at the valuation to the members of the committee, before the computation of estimates.
• Each registered valuer must, after physical verification of the inventory and fixed assets of the corporate debtor, submit to the resolution professional and the coordinating valuer a report on the fair value of the assets of the corporate debtor and the liquidation value computed in accordance with the valuation standards notified by the Board.
• The coordinating valuer must compute the fair value of the corporate debtor after considering the fair value of assets as computed by registered valuers within that set and submit the same to the resolution professional.
• The resolution professional may appoint a third set of registered valuers where the estimates of fair value or liquidation value are ‘significantly different’ (i.e. a difference of 25% or more in the fair value of the corporate debtor submitted by the coordinating valuer or in the liquidation value)

(d) Establishment of documentation requirements for registered valuers

The introduction of Regulation 35(1A) establishes comprehensive documentation requirements for registered valuers. It mandates the preparation of valuation reports and the maintenance of supporting documentation in the formats notified by the Board through circulars. This initiative addresses previous inconsistencies in valuation reporting and creates uniform benchmarks for professional documentation across all insolvency proceedings.

(e) Enhanced Information Disclosure Requirements

The amendments substantially expand information disclosure requirements under Regulation 36, introducing new categories of information to be included in the Information Memorandum. The inclusion of detailed receivables, including trade receivables, inter-corporate receivables, and receivables arising under any contract, provides stakeholders with clearer pictures of the corporate debtors’ working capital position.

The requirement to disclose joint development agreements and other similar collaboration or co-development arrangements, including the rights, obligations, and interests of the corporate debtor, addresses information gaps relating to contractual and contingent business arrangements.

Additionally, the mandatory disclosure of assets under attachment by enforcement agencies, including particulars of the assets attached, the authority that has ordered the attachment, and the status of such proceedings, provides greater transparency regarding legal encumbrances affecting the corporate debtor’s asset base.

Read the Notification

3. Insurer Not Liable for Penalty Under Sec. 4A(3)(b) of Employees’ Compensation Act; Liability Rests Solely on Employer: SC

The Supreme Court, in the matter of New India Assurance Co. Ltd. vs. Rekha Chaudhary [2026] 183 taxmann.com 680 (SC), ruled that the liability to pay penalty under Section 4A(3)(b) of the Employees’ Compensation Act rests solely on the employer and cannot be fastened upon the insurer.

3.1 Brief Facts of the Case

In the instant case, the deceased employee was a commercial driver employed by respondent no. 4 (employer). The deceased collapsed and died while driving the employer’s insured vehicle. Respondents 1-3, legal heirs of the deceased, filed a claim petition before the Commissioner under the Employees’ Compensation Act, 1923.

The Commissioner found an employer-employee relationship, held that death occurred during and in the course of employment, and fixed compensation at about Rs. 7.37 lakhs along with 12% interest from the date of the incident.

Observing that the vehicle was covered by a valid commercial vehicle insurance policy issued by the appellant-insurance company, the Commissioner allowed respondent no. 4 to secure indemnification of the compensation from the insurer and issued a show-cause notice to respondent no. 4 proposing penalty under Section 4A(3)(b) of the Act, for default in payment within one month of the amount falling due.

As the employer neither appeared nor replied, the Commissioner imposed a 35% penalty, about Rs. 2.58 lakhs, on the employer for the delay without justification.

The claimants appealed to the High Court, seeking an enhancement of compensation and challenging the fixation of primary liability on the employer rather than on the insurer. The High Court declined enhancement, however, set aside the Commissioner’s orders to the extent they placed primary liability on the employer, and fastened liability for compensation, interest and penalty on the appellant–insurer.

Thereafter, an appeal was made before the Supreme Court. On appeal, the appellant–insurer accepted liability for compensation and interest but challenged only the direction to pay the statutory penalty under Section 4A(3)(b) of the Act.

3.2 Supreme Court Observations

It was noted that the appellant had undeniably admitted its liability to pay the compensation and interest component under Section 4A(3)(b) of the Act, which is to the tune of Rs. 7,36,680/- with 12% p.a. simple interest from the date of death till payment, and there is no dispute on the same. Therefore, the scope of the present appeal was confined to determining the liability for paying the penalty component under Section 4A(3)(b) of the Act.

Further, the present form of Section 4A(3)(b) is the result of a substitution brought into the principal section by way of the Workmen’s Compensation (Amendment) Act, 1995, which came into force on 15th September 1995.

After the substitution of Section 4A, the three components have been severed to form part of two different clauses within the same sub-section (3), i.e., clause (a) including compensation and interest, and clause (b) solely including the penalty.

The legislative intent behind severing the penalty component was to ease the burden on indemnifiers who were otherwise obliged to pay a penalty arising from the employer’s personal default to pay compensation within one month from the date it fell due, a burden not consequent to any failure on the part of the indemnifier. Earlier, the penalty formed part of the compensation and interest; therefore, the indemnifier was compelled to pay the penalty as well, leaving no deterrent for employers to deposit compensation within one month.

3.3 Supreme Court Ruling

The Supreme Court held that the submission that the insurance policy covered all components, including penalty, cannot be accepted for two reasons. First, the respondent has not produced the extant insurance policy in effect at the time of the incident. Second, more significantly, Section 4A(3) of the Act statutorily obligates the employer to pay compensation determined under Section 4 within one month from the date it fell due.

Further, when the statute itself obligates the employer to make the payment within one month, such obligation cannot be subordinated to any contractual obligation, as that would disregard legislative intent.

Therefore, the High Court erred in directing the appellant-insurer to bear a penalty in addition to compensation and interest. Thus, the impugned order was to be set aside to the extent it imposed liability to pay a penalty on the appellant-insurer, and that liability was to be fastened upon the employer.

Read the Ruling

4. Taxpayers Can Utilise CGST or SGST ITC in Any Order for IGST Liability in GSTR-3B From Feb 2026: Advisory

The GSTN has issued an advisory allowing taxpayers to utilise CGST or SGST ITC in any order for payment of IGST liability in GSTR-3B after exhausting IGST ITC. It clarifies operational implementation and refers to the earlier advisory, with the functionality applicable from the February 2026 return period. This was stated in GSTN Advisory, Dated 19-02-2026.

4.1 About the Update

The GSTN issued an advisory clarifying the utilization of Input Tax Credit (ITC) for payment of IGST liability in GSTR-3B. Taxpayers are allowed apply CGST or SGST ITC in any order for discharging IGST liability after complete exhaustion of IGST ITC.

The advisory refers to point 3 of the earlier advisory dated 30-01-2026 and is intended to provide operational. It further specifies that this functionality will be effective from the February 2026 return period.

Read the News

5. GSTN Enables Facility for Withdrawal From Rule 14A (Simplified Registration Scheme): Advisory

The GSTN has issued an advisory enabling an online facility for withdrawal from Rule 14A (Simplified Registration Scheme) through filing Form GST REG-32 on the GST Portal. It prescribes submission timelines, authentication requirements, and restrictions during processing of the application and post-approval compliance through Form GST REG-33. This was stated in GSTN Advisory, Dated 21-02-2026.

5.1 About the Update

The GSTN has introduced an online facility for taxpayers registered under Rule 14A of the CGST Rules to apply for withdrawal from the simplified registration scheme by filing Form GST REG-32 on the GST Portal. Draft applications must be submitted within 15 days, and Aadhaar or biometric authentication of the Primary Authorised Signatory and at least one Promoter/Partner (if applicable) is required.

During the processing of Form GST REG-32, taxpayers cannot file core or non-core amendments or self-cancellation applications. After approval through Form GST REG-33, taxpayers are required to report output tax liability exceeding Rs. 2.5 lakhs on supplies to registered persons from the first day of the succeeding month.

Read the News

6. GST Exemption Under Notification 12/2017 Not Available on University Affiliation Fees as Services Are Not Related to Admission or Examinations: HC

The High Court held that the GST exemption under Notification 12/2017 was not available on university affiliation fees, as such services were not related to the admission of students or the conduct of examinations. It held that affiliation services fall outside the scope of the exemption. This was held in Bharathidasan University vs. Joint Commissioner of GST (ST-Intelligence) [2026].

6.1 Facts

The petitioner filed a writ petition challenging the applicability of GST on affiliation fees received from affiliated colleges. It was submitted that the fees were exempt under Notification No. 12/2017, as services relating to student admission or conduct of examinations. The respondents, including the Joint Commissioner of GST contended that affiliation fees were not services provided to students for admission or for conducting examinations, and accordingly issued intimations of liability with interest and penalty. The petitioner relied on its claim that affiliation was essential for colleges to admit students. The matter was accordingly placed before the High Court.

6.2 Held

The High Court held that the affiliation fees collected by the university did not constitute services relating to the admission of students or the conduct of examinations, and were therefore not eligible for exemption under Notification No. 12/2017, dated 28-6-2017. The Court observed that while affiliation was a prerequisite for colleges to admit students, it fell outside the definition of services directly relating to admission or examination conduct, which formed the limited scope of the exemption. Relying on Section 11, read with Section 9, of the CGST Act and Tamil Nadu GST Act. The Court dismissed the petition, and upheld the university’s liability to pay GST on affiliation fees.

Read the Ruling

7. Applying the Portfolio Approach under Ind AS 115 — Practical Guidance with Illustrations and Collectability Insights

Revenue recognition significantly impacts an entity’s financial performance, and Ind AS 115 establishes a principle-based framework requiring revenue to be recognised when control of goods or services transfers to customers. While the standard is designed for individual contracts, businesses dealing with large volumes of similar transactions often face practical implementation challenges. To address this, Ind AS 115 permits the portfolio approach as a practical expedient.

Under the portfolio approach, entities may apply the revenue recognition model to a group of contracts or performance obligations with similar characteristics instead of accounting for each contract separately, provided the outcome is not materially different from individual contract accounting. Although individual contract accounting remains the default rule, portfolio accounting is allowed based on reasonable judgment supported by appropriate estimates, assumptions, and documentation.

When forming portfolios, entities consider factors such as customer type, pricing structure, nature and timing of services, contract duration, and historical behavioural patterns like renewals or cancellations. The approach is particularly useful in high-volume environments such as subscription services, financial products, or standardised customer arrangements, where operational efficiency can be achieved without compromising financial reporting reliability.

Importantly, the portfolio approach can be applied selectively, for example, in amortising contract acquisition costs, assessing contract assets, or performing impairment evaluations rather than across the entire revenue model.

Regarding collectability, Ind AS 115 still requires assessment at contract inception; however, entities may rely on historical portfolio-level data to support their judgment. If collection is probable, revenue is recognised in full and expected defaults are treated separately under credit loss provisions. Conversely, where historical patterns indicate inability or unwillingness to pay, revenue recognition may be restricted.

In essence, the portfolio approach balances conceptual accuracy with operational practicality. It enables efficient accounting for high-volume, similar contracts while ensuring that financial statements continue to faithfully represent the economic substance of transactions through sound judgment and consistent application.

Let us understand the portfolio approach through an example of “Digital Subscription Business”.

A streaming platform provides monthly subscription services to millions of users who pay a fixed fee for identical access to content. Analysing each subscription individually would be operationally impractical. Instead, the company groups customers into portfolios based on subscription tiers and billing cycles. Using historical data on renewals, cancellations, and refunds, the entity recognises revenue at the portfolio level. Because customer behaviour is highly consistent, the results closely approximate individual contract accounting while significantly reducing complexity.

Read the Story