Weekly Round-up on Tax and Corporate Laws | 2nd to 7th March 2026

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Mar 02nd  to Mar 07th 2026, namely:

1. CBDT Amends Rules 114F–114H to Align Reporting Obligations with Crypto-Asset & Digital Currency Framework
2. Beedi Rollers Supplying Beedis via an Intermediary Dependent on Company Were Deemed Employees Entitled to PF Benefits: HC
3. SEBI Introduces ‘Voluntary Debit Freeze’ Facility to Secure Mutual Fund Units from Unauthorised Redemption or Transfer
4. Quasi-Judicial Authorities Should Not Blindly Rely on AI-Generated Citations/Judgements Without Reading Actual Judgements: HC
5. Duplicate GST Proceedings on Same GSTR-2A/3B Mismatch Led to Double Taxation; Order Quashed, Matter Remanded: HC
6. Lease Term Re-Assessment Under Ind AS 116 and Its Impact on Lease Liability Measurement
7. IRDAI Issues Exposure Draft for Ind AS Implementation in Insurance Sector from 1 April 2026

1. CBDT Amends Rules 114F–114H to Align Reporting Obligations with Crypto-Asset & Digital Currency Framework

The Central Board of Direct Taxes (CBDT) has notified an amendment to Rule 114F to Rule 114H of the Income-tax Rules, 1962. The amendment is made to include the definition of “Central Bank Digital Currencies” and “Specified Electronic Money Product”. The amended rule has also expanded the definition of “financial asset” to include any interest (including a futures or forward contract or option) in a relevant crypto-asset.

The following are the key amendments that have been introduced in the Rules:

1. The definition of the term “central bank digital currencies” has been inserted in the Explanation to Rule 114F(1)(a).
2. The threshold limit of USD 10,000 has been inserted for the depository account, which represents all specified electronic money products held for the benefit of a customer.
3. The term “financial asset” has been amended to include any interest (including a futures or forward contract or option) in a relevant crypto-asset.
4. The definition of the term “depository institution” has been amended to include an entity that holds specified electronic money products or central bank digital currencies for the benefit of customers.
5. The term “exchange transaction” has been defined to mean any exchange between relevant crypto-assets and fiat currencies and any exchange between one or more forms of relevant crypto-assets.
6. The term “relevant crypto-asset” has been defined to mean any crypto-asset that is not a Central Bank Digital Currency or specified electronic money product or for which the reporting crypto-asset service provider has adequately determined that it cannot be used for payment or investment purposes.
7. The term “Specified Electronic Money Product” has been defined to mean any product that satisfies the following criteria:

• • A digital representation of a single fiat currency;
  • Issued on receipt of funds for making payment transactions.
  • Represented by a claim on the issuer denominated in the same fiat currency;
  • Accepted in payment by a natural or legal person other than the issuer; and

Redeemable at any time and at par value for the same fiat currency upon the holder’s request.

Read the Notification

2. Beedi Rollers Supplying Beedis via an Intermediary Dependent on Company Were Deemed Employees Entitled to PF Benefits: HC

The High Court, in the matter of Seyadu Beedi Company vs. Regional Provident Fund Commissioner [2026] 183 taxmann.com 731 (HC), ruled that beedi rollers employed through an intermediary would still be considered employees entitled to PF benefits under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

2.1 Brief Facts of the Case

In the instant case, the petitioner was a beedi manufacturing company. It procured unbranded beedis from M/s. Rajan Traders affixed its brand and sold them. The petitioner was covered under the EPF Act. A complaint by the District Beedi Employees Union alleged that provident fund benefits were not extended to about 800 beedi rollers engaged through M/s. Rajan Traders.

Pursuant to the complaint, the Regional Provident Fund Commissioner conducted an enquiry and passed an order dated 01.07.2023 under Para 26B of the EPF Scheme, read with Section 7A of the Act and held that beedi rollers supplying beedis to M/s. Rajan Traders were employees of the petitioner and had to be enrolled as PF members.

After affording the petitioner an opportunity of hearing, the order recorded that M/s. Rajan Traders lacked registration and dealt exclusively with the petitioner, that tobacco was supplied to rollers and unbranded beedis were procured through it, and that the unit functioned as a benami/intermediary of the petitioner. On these facts, the rollers were treated as “employees” under Section 2(f) of the Act.

Separately, the Assistant Provident Fund Commissioner passed an order dated 17.08.2004 under Section 7A of the Act, determining EPF contribution of about Rs. 2.09 crores in respect of 700 beedi rollers, treating them as employees of the petitioner.

The petitioner challenged the Para 26B read with Section 7A order before the Appellate Tribunal, which set aside the Regional Provident Fund Commissioner’s order.

Thereafter, the Regional Provident Fund Authority and the Beedi Workers Union filed writ petitions challenging the Appellate Tribunal’s order. The High Court dismissed those writ petitions, thereby confirming the Appellate Tribunal’s order.

In writ appeals, the Division Bench held that the Appellate Tribunal lacked jurisdiction to entertain an appeal against an order passed under Para 26B read with Section 7A. Subsequently, the petitioner filed an instant writ petition before the High Court.

2.2 High Court Observations

It was noted that under section 2(f) of the Act, an ‘employee’ includes a person employed directly or indirectly. The present case involves indirect engagement of labour through M/s Rajan. The enquiry revealed that the petitioner exercised control over ‘R’ and over the manner in which the beedis were to be rolled. The petitioner company provided specifications for rolling beedis. The beedis so rolled were purchased through ‘R’, branded as the petitioner’s product and sold in the market.

Further, it was noted that beedi rollers were producing beedis and rendering services to the petitioner company through M/s. Rajan Traders. The presence of M/s Rajan Traders, as an intermediary, does not alter the relationship between the beedi workers and the petitioner company.

The High Court observed that the sustenance of beedi rollers was wholly dependent on the petitioner company, and that the arrangement adopted by the petitioner company was intended to project the absence of a nexus between the beedi rollers and the petitioner company.

2.3 High Court Ruling

The High Court held that the Regional Provident Fund Commissioner had given adequate and convincing reasons to establish that beedi rollers were, in fact, employees of the petitioner company. The EPF Act is a beneficial piece of legislation intended to safeguard employees’ welfare.

Further, the High Court held that though a dubious method was adopted by the petitioner company in engaging the services of beedi rollers, on a close scrutiny and the reasoning given in the order dated 01.07.2003, it could not be held that beedi rollers were not employees of the petitioner company or that they were not entitled to provident fund benefits.

Accordingly, the order dated 01.07.2003 passed under Para 26B of the EPF Scheme, read with Section 7A, and the consequential order dated 17.08.2004, were liable to be sustained.

Read the Ruling

3. SEBI Introduces ‘Voluntary Debit Freeze’ Facility to Secure Mutual Fund Units from Unauthorised Redemption or Transfer

On March 6, 2026, SEBI introduced a voluntary lock-in/debit freeze facility for mutual fund folios. The facility is intended to strengthen the security framework of mutual fund investments by allowing investors to restrict debit transactions from their folios until the restriction is removed by them.

Under this mechanism, investors may voluntarily place a freeze on their mutual fund folios, preventing units from being redeemed, transferred, or otherwise debited during the period the lock remains active. The measure aims to protect investors against unauthorised transactions and improve the overall safety of mutual fund holdings.

3.1 Background and Regulatory Context

With the rapid digitalisation of financial services, a large proportion of mutual fund transactions are now executed through online platforms. While this shift has significantly improved accessibility and convenience for investors, it has also increased exposure to risks, including unauthorised account access, phishing attempts, and fraudulent redemption requests.

In certain cases, investors may not immediately detect such unauthorised transactions, especially where accounts are not actively monitored. Recognising these concerns, SEBI has introduced the option of a voluntary debit freeze so that investors can proactively safeguard their folios by restricting debit transactions until they choose to unlock the folio.

3.2 Introduction of the Voluntary Debit Freeze Facility

Under the framework introduced by SEBI, mutual fund investors will have the option to lock their folios through a debit freeze facility. Once the facility is activated, no units can be debited from the folio until the investor initiates an unlocking request.

As a result, transactions such as redemption, transfer, or any other debit of units will not be permitted during the period in which the folio remains locked. Importantly, the facility will be available for both demat and non-demat (Statement of Account) folios, ensuring that it covers investors holding mutual fund units in either form.

3.3 Implementation through MF Central Platform

For operationalising this facility, the SEBI has provided that the debit freeze option will initially be made available through ‘MF Central Platform’, an interoperable Registrar and Transfer Agent (RTA) platform developed to provide investors with a single interface for mutual fund transactions and service requests.

In the first phase, investors will be able to access the debit freeze facility through the MF Central platform and submit requests to lock or unlock their folios.

3.4 Eligibility Conditions for Availing the Facility

SEBI has specified certain basic eligibility conditions for investors who wish to avail the debit freeze facility.

The facility will be available only to investors whose KYC status is registered or validated in accordance with applicable regulatory requirements. In addition, investors must have a valid email ID and a mobile number registered in their mutual fund folio, as both communication channels are mandatory to enable this facility.

3.5 Role of AMFI in Operationalising the Framework

The circular also assigns a key role to the Association of Mutual Funds in India (AMFI) in implementing the framework across the industry. AMFI has been advised to prescribe the detailed operational process for locking and unlocking of mutual fund folios and to communicate the same to Asset Management Companies (AMCs) and RTAs. It will also lay down procedures applicable to different categories of investors.

3.6 Transactions During the Lock-in Period

SEBI has further advised AMFI to prescribe a detailed list of financial and non-financial transactions that may be permitted while the folio remains locked. While debit transactions will remain restricted during the lock period, certain transactions may still be allowed depending on the operational framework prescribed by AMFI.

3.7 Disclosure Requirements

To ensure transparency and investor awareness, SEBI has directed AMCs and RTAs to disclose the detailed process for availing the debit freeze facility on their respective websites. Further, the impact of activating the lock-in facility on various financial and non-financial transactions must also be clearly communicated to investors. These details are also required to be disclosed in the Statement of Additional Information (SAI) of mutual fund schemes.

3.8 Effective Date

The circular provides that the voluntary lock-in/debit freeze facility will come into effect from April 30, 2026. Mutual fund industry participants, including AMCs, RTAs, and AMFI, are expected to put in place the necessary operational systems and procedures before this date.

3.9 Conclusion

The introduction of the voluntary debit freeze facility is a practical step toward strengthening the security of mutual fund investments. By enabling investors to restrict debit transactions in their folios, the mechanism offers an additional safeguard against unauthorised redemptions and potential misuse of investor accounts.

As participation in mutual funds continues to expand and transactions increasingly move to digital channels, such preventive security measures play an important role in maintaining investor confidence and ensuring better protection of investor holdings.

Read the Circular

4. Quasi-Judicial Authorities Should Not Blindly Rely on AI-Generated Citations/Judgements Without Reading Actual Judgements: HC

The High Court held that quasi-judicial authorities must not rely on AI-generated case citations or judgments without verifying their authenticity and applicability before incorporating them in adjudication orders. It observed that the Commissioner relied on non-existent or irrelevant AI-generated citations while recording findings under Section 75 of the CGST Act and the Gujarat GST Act. This was held in Marhabba Overseas (P.) Ltd. vs. Union of India – [2026] 183 taxmann.com 743 (Gujarat).

4.1 Facts

The petitioner challenged the show cause notice (SCN) and the impugned order issued by the Commissioner. During the hearing, the petitioner submitted that the Commissioner had rejected four core defences cited, which were either non-existent or unrelated to the issues raised in the defence statement. It was contended that the reasoning and findings recorded by the Commissioner were flawed and deceptive, as they appeared to be based on AI-generated citations without reading the actual judgments. It sought that guidelines be prescribed for quasi-judicial authorities to prevent reliance on non-existent or irrelevant AI-generated judgements. The matter was accordingly placed before the High Court.

4.2 Held

The High Court held that the reliance placed by the Commissioner on the aforementioned judgements was incorrect, as the cited authorities were either non-existent. It was observed that the findings recorded by the Commissioner under Section 75 of the CGST Act, and the Gujarat GST Act, were flawed due to unverified reliance on AI-generated case law. It was held that quasi-judicial authorities must ensure that the judgements and citations they refer to are factually accurate, directly applicable, and verified before incorporation in orders. The Court directed that appropriate guidelines be prescribed to prevent reliance on AI-generated or irrelevant judgement.

Read the Ruling

5. Duplicate GST Proceedings on Same GSTR-2A/3B Mismatch Led to Double Taxation; Order Quashed, Matter Remanded: HC

The High Court held that passing two separate assessment orders on the identical issue of mismatch between Form GSTR-2A and Form GSTR-3B for the same tax period resulted in duplication of proceedings and double taxation. It observed that the SCN was served only through portal upload without furnishing the original notice or granting personal hearing, violating principles of natural justice under Sections 75 and 169 of the CGST Act.

5.1 Facts

The petitioner challenged two assessment orders passed for the same tax period concerning mismatch between Form GSTR-2A and Form GSTR-3B. It was submitted that pursuant to a show cause notice, the first authority passed an order on the sole issue of GSTR-2A and GSTR-3B mismatch. Subsequently, another show cause notice (SCN) was issued and the second authority passed an order covering two issues, including the same mismatch, thereby separately quantifying the tax demand for the identical issue in both orders. It was contended that such duplication resulted in double taxation for the same subject matter. The matter was accordingly placed before the High Court.

5.2 Held

The High Court held that the proceedings arose from an assessment under Section 73 of the CGST Act and the Tamil Nadu GST Act and that passing two separate orders on the identical issue of mismatch between Form GSTR-2A and Form GSTR-3B for the same period resulted in duplication and double taxation. The Court observed that service of SCN only through portal upload without furnishing the original notice and without granting personal hearing violated the principles of natural justice in the context of Section 75 read with Section 169 of the CGST Act and the Tamil Nadu GST Act. Accordingly, the Court quashed the order. The matter was remanded to the jurisdictional authority for fresh consideration subject to payment of 25% of the disputed tax.

Read the Ruling

6. Lease Term Re-Assessment Under Ind AS 116 and Its Impact on Lease Liability Measurement

Under Ind AS 116, the lease term includes the non-cancellable period of a lease together with periods covered by extension or termination options when the lessee is reasonably certain to exercise or not exercise such options. This assessment is made at the commencement date after considering all relevant economic incentives, and it directly affects the measurement of the lease liability and the right-of-use asset. However, business conditions may change after the lease has commenced, which may raise questions as to whether the lease term should be reassessed.

Ind AS 116 clarifies that reassessment is not required for every change in business performance or economic environment. The standard requires a lessee to reassess the lease term only when a significant event or significant change in circumstances occurs that is within the control of the lessee and affects the earlier assessment of reasonable certainty regarding the exercise of an extension or termination option.

Let us understand the above case with an example:

Navratan Retail Limited, which enters into a lease agreement for a retail store in a prime commercial mall for a non-cancellable period of five years with an option to renew the lease for an additional five years. The annual lease rental is Rs. 10,00,000, and the lessee incurs initial direct costs of Rs. 30,00,000 towards store fit-outs and customisation that are expected to generate benefits over ten years.

Considering the strategic importance of the location and the recovery period of the improvements, management concludes at the commencement date that it is reasonably certain to exercise the renewal option. Accordingly, the lease term is determined as ten years, and using an incremental borrowing rate of 8%, the lessee recognises a lease liability of approximately Rs. 2,68,40,000 based on the present value of lease payments over ten years.

In the third year of operations, the store experiences a 40% decline in sales due to adverse economic conditions, leading management to question whether the lease term should be reassessed. However, the decline in sales arises from external market conditions and reduced consumer demand, which are not events within the control of the lessee.

Since Ind AS 116 requires reassessment only when a significant event within the control of the lessee affects the earlier assessment, such deterioration in economic performance does not by itself trigger reassessment of the lease term. Accordingly, the lease should continue to be accounted for based on the originally determined ten-year lease term, unless a future event or decision within the control of the lessee changes the assessment regarding the renewal option.

Read the Story

7. IRDAI issues Exposure Draft for Ind AS Implementation in Insurance Sector from 1 April 2026

The Insurance Regulatory and Development Authority of India (IRDAI) has issued an Exposure Draft on 3^rd March 2026 proposing amendments to the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 to facilitate the implementation of Indian Accounting Standards (Ind AS) in the insurance sector.

The proposal follows the notification of Ind AS 117, Insurance Contracts and Ind AS 109, Financial Instruments by the Ministry of Corporate Affairs and aims to align the financial reporting framework of Indian insurers with IFRS-based standards. IRDAI has proposed that all insurers, including life, general, health insurers and reinsurers, transition to Ind AS from 1^st April 2026.

To support this transition, IRDAI has issued draft amendment regulations to align the regulatory framework with Ind AS and a consultation paper outlining the proposed implementation approach, transitional arrangements and key policy considerations. Stakeholders have been invited to submit their comments and suggestions by 24^th March 2026.

Read the News