Weekly Round-up on Tax and Corporate Laws | 6th to 11th April 2026

This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from April 06^th  to 11^th 2026, namely:

1. RBI Proposes New Safeguards in Digital Payments to Curb Frauds
2. Skill Development & Employability Enhancement Held as ‘Education’ u/s 2(15); Proviso to Section 2(15) Not Applicable: ITAT
3. RBI Issues Guidelines to Facilitate Faster Cross-Border Inward Payments
4. Service as Daily Wager or Contractual Employee Counts for Pension Calculation Regardless of Sanctioned Post: HC
5. Lifting of Bank Account Attachment Denied as TSP Failed to Verify Client Credentials and Aided Gaming Payouts: HC
6. Regulatory Fees Received by Electricity Commission Not Consideration for Business; SCN & Order for Levying GST Without Jurisdiction: HC
7. Ind AS Financial Statement Presentation – Understanding Netting and Disclosure Issues Through Practical Case Studies

1. RBI Proposes New Safeguards in Digital Payments to Curb Frauds

The RBI has released a press note inviting public comments on a Discussion Paper exploring additional safeguards in digital payments to curb rising frauds. This initiative aligns with its objective of promoting digital payments in a safe and secure manner.

Over the past decade, digital payments in India have witnessed significant growth, supported by systems such as UPI, IMPS, NEFT and RTGS. However, this rapid expansion has also been accompanied by increasing instances of fraud, particularly those driven by social engineering and authorised push payment (APP) transactions.

1.1 Regulatory Context

The Reserve Bank has already implemented multiple safeguards including two-factor authentication, tokenisation, transaction controls and customer liability protection frameworks. Further, initiatives such as Mobile Number Revocation List (MNRL), Digital Payment Intelligence Platform and Mulehunter.AI have strengthened fraud detection and prevention mechanisms. Despite these measures, fraud trends indicate a continued rise, necessitating further intervention.

1.2 Need for Additional Safeguards

Digital payment frauds today are largely behavioural rather than system-driven. Customers are often induced to initiate transactions themselves under deception, leaving limited scope for post-transaction recovery. Data indicates a sharp increase in reported frauds in recent years, both in terms of volume and value. This has created a need for preventive controls that act before or during transaction execution rather than after.

1.3 Key Options Proposed in the Discussion Paper

The Discussion Paper outlines four broad mechanisms for stakeholder consideration:

• Introduction of Lag in High-Value Transactions – A time delay may be introduced for certain transactions above a specified threshold (for instance ₹10,000), allowing customers to reconsider or cancel transactions within a defined window.
• Additional Authentication for Vulnerable Sections – For senior citizens and persons with disabilities, high-value transactions may require confirmation through a trusted individual, providing an additional layer of protection.
• Monitoring of Account Credits – Limits may be prescribed on annual aggregate credits in certain accounts, with enhanced due diligence required for transactions beyond specified thresholds to curb misuse of mule accounts.
• Customer-Induced Controls – Customers may be provided with enhanced control mechanisms such as enabling or disabling digital payment channels and a “kill switch” to instantly block transactions in case of suspected fraud.

1.4 Public Consultation

The RBI has invited comments and feedback from stakeholders on the proposed measures through the ‘Connect 2 Regulate’ platform available on its website. The last date for submission of comments is May 8, 2026.

1.5 Conclusion

This is a timely move. Digital payments have become almost second nature now, but frauds have quietly evolved alongside them. What stands out here is that RBI is not rushing into regulation, but is first putting ideas on the table and asking stakeholders to weigh in.

Some of these proposals may add a bit of friction, especially in a system built around instant transactions. But that small pause could make a real difference in preventing losses. At the end of the day, people value convenience, but they value safety even more. If these safeguards are shaped well, they can strike that balance without taking away the ease that made digital payments so popular in the first place.

Read the Press Release

2. Skill Development & Employability Enhancement Held as ‘Education’ u/s 2(15); Proviso to Section 2(15) Not Applicable: ITAT

The assessee, a society registered under section 12A, was engaged in skill development, training, certification and employability enhancement programmes. The assessee filed a nil return claiming exemption under sections 11 and 12.

The Assessing Officer (AO) held that the assessee was engaged in activities falling under the limb of ‘advancement of any other object of general public utility’ as specified in section 2(15). He invoked the proviso to section 2(15), which provides that such activities were in the nature of trade, commerce, or business. Consequently, the assessee’s activities were treated as non-charitable, leading to the denial of exemption under section 11.

On appeal, CIT(A) held that the activity carried out by the assessee qualified as ‘education’ in terms of section 2(15), and thus entitling the assessee to claim exemption under section 11. The AO filed an appeal to the Chennai Tribunal.

The Tribunal held that it is an admitted fact that the assessee is a society registered under section 12A and is engaged in activities relating to skill development, training, certification, and the enhancement of employability of students and faculty, in coordination with Government bodies and educational institutions. The nature of activities, as borne out from the record, indicates that the assessee conducts structured training programmes, faculty development initiatives and vocational courses aligned with national skill development policies.

The dominant object of the assessee is to impart skill-based education and training to enhance employability. Such activities, in the present socio-economic context, form an integral part of the educational framework. The programmes conducted by the assessee are structured, curriculum-based and aimed at systematic development of skills and knowledge.

Therefore, the same cannot be equated with mere commercial or business activities. The mere presence of receipts from training or certification programmes cannot, in isolation, lead to the conclusion that the proviso to section 2(15) is attracted. Consequently, the assessee is entitled to an exemption under sections 11 and 12.

Read the Ruling

3. RBI Issues Guidelines to Facilitate Faster Cross-Border Inward Payments

The RBI has released a press release outlining guidelines to facilitate faster cross-border inward payments, in line with its Payments Vision 2025 and the G20 roadmap. The objective is to make cross-border payments more efficient by ensuring they are faster, transparent, accessible and cost-effective.

In this context, while global payment systems have evolved, certain frictions continue to persist, particularly at the stage where funds reach the beneficiary bank.

3.1 Key Challenges Identified

In this regard, it is noted that one of the key challenges relates to the time taken from receipt of funds at the beneficiary bank till credit to the beneficiary account. A review of the extant processes indicates that delays are primarily attributable to operational practices such as reliance on end-of-day nostro account statements, delayed reconciliation and absence of prompt customer intimation.

Accordingly, there is a need to streamline processes at the beneficiary bank level to ensure timely communication and credit of funds to customers.

3.2 Directions Issued to Banks

To address the above concerns, banks have been advised as under:

• Immediate Customer Intimation – Banks shall inform customers immediately upon receipt of inward cross-border payment messages. Messages received after banking hours should be communicated at the start of the next business day.
• Faster Nostro Reconciliation – Banks are advised to undertake reconciliation of nostro accounts on a near real-time basis or at frequent intervals. The reconciliation cycle should normally not exceed one hour.
• Timely Credit to Beneficiaries – Payments received during foreign exchange market hours should be credited on the same business day. Payments received after market hours should be credited on the next business day. This remains subject to compliance with FEMA and other regulatory requirements.
• Straight Through Processing (STP) – Banks may introduce automated systems for crediting inward payments to resident individuals, based on internal risk assessment and regulatory compliance.
• Digital Interface for Customers – Banks are encouraged to provide digital interfaces enabling customers to submit documents, provide information and track inward remittances.

3.3 Implementation Timeline

These directions shall come into effect six months from the date of the circular.

3.4 Conclusion

This is a practical step towards improving how cross-border payments are experienced on the ground. Often, the delay is not in the transfer itself but in the final credit to the customer. By addressing this last mile, RBI is nudging banks to become more responsive and system-driven.

If implemented properly, customers will not just receive funds faster, but will also stay better informed throughout the process. Over time, this can make cross-border transactions feel less uncertain and more dependable, which is what most customers actually look for.

Read the Circular

4. Service as Daily Wager or Contractual Employee Counts for Pension Calculation Regardless of Sanctioned Post: HC

The High Court of Bombay High Court, in the case of Nagpur Municipal Corporation vs. Bhimrao [2026] 184 taxmann.com 640 (Bombay) [26-03-2026], held that service rendered by employees as daily-wage or contractual workers prior to regularisation is liable to be counted as qualifying service for pension. The Court further clarified that where such service was paid from contingency funds, only half of the period would be considered, whereas in other cases, the entire service would be counted.

4.1 Brief Facts of the Case

In the instant case, the respondents were engaged by Nagpur Municipal Corporation as daily-wage or contractual workers between 1991 and 1996 and were subsequently regularised in the years 2006 and 2015.

The respondents claimed that the services rendered prior to their regularisation should be counted for the purpose of pension and gratuity. They also contended that the date of completion of 240 days of service should be treated as their date of entry into service.

The Industrial Court declined to grant retrospective permanency. However, it directed that the date of completion of 240 days be considered for the limited purpose of computing pension and gratuity.

Aggrieved by this direction, the petitioner preferred a writ petition before the High Court.

4.2 High Court Observations

The High Court observed that the issue was governed by Rule 30, read with Rules 38 and 57 of the Maharashtra Civil Services (Pension) Rules, 1982.

It was held that the services rendered by employees as daily-wage or contractual workers cannot be ignored for the purpose of pension merely on the ground that such employment was not against sanctioned posts.

The Court further noted that the nature of engagement and continuity of service were relevant factors in determining qualifying service.

It was also observed that where the salary for such period was paid out of contingency funds, only half of such service would be counted towards pensionable service. However, where the salary was not drawn from contingency funds, the entire period of service rendered prior to regularisation would be liable to be counted.

4.3 High Court Ruling

The High Court upheld the direction to consider pre-regularisation service for computing pensionary benefits.

It directed the petitioner to examine the case of each respondent individually and determine the qualifying service, including the period rendered as daily-wage or contractual employee, even if such service was against non-sanctioned posts.

Further, in cases where the total qualifying service exceeded the minimum requirement for pension, the petitioner was directed to compute and disburse pension to the eligible employees who had already superannuated, at the earliest.

Read the Ruling

5. Lifting of Bank Account Attachment Denied as TSP Failed to Verify Client Credentials and Aided Gaming Payouts: HC

The High Court held that provisional attachment of bank accounts under Section 83 was valid where the petitioner, engaged in facilitating payout transactions, failed to verify client credentials, resulting in its platform being used to route gaming or betting transactions. It reasoned that reliance solely on undertakings without independent due diligence, coupled with the scale of transactions and ongoing investigation, justified the invocation of attachment powers. This was held in Buckbox Infotech (P.) Ltd. vs. Director General of GST Intelligence [2026].

5.1 Facts

The petitioner, a GST-registered technology service provider (TSP) filed a writ petition challenging the provisional attachment of its bank accounts and seeking de-freezing thereof, contending that it had acted as a TSP for Digihub by facilitating payouts through its current account with virtual accounts, and that such attachment was unjustified. The Department of Revenue submitted that Digihub was under investigation for tax evasion in gaming and betting activities, and that the petitioner’s accounts were used for routing payouts to beneficiaries. The petitioner had admitted that it had not verified the credentials or business activities and had relied solely on an undertaking, without conducting any independent verification. The matter was accordingly placed before the High Court.

5.2 Held

The High Court held that provisional attachment of bank accounts under Section 83 of the CGST Act, read with Rule 159 of the CGST Rules, was justified in the facts of the case, as the material on record clearly established that Digihub had utilised the petitioner’s platform and bank accounts for routing gaming or betting-related payouts. The Court held that the petitioner had admittedly failed to verify the credentials and nature of the business, and mere reliance on an undertaking was insufficient due diligence. Considering the magnitude of transactions and the ongoing investigation involving multiple linked accounts, the exercise of powers by the jurisdictional officer under CGST. Accordingly, the request to de-freeze bank accounts was rejected, and the writ petition was dismissed.

Read the Ruling

6. Regulatory Fees Received by Electricity Commission Not Consideration for Business; SCN & Order for Levying GST Without Jurisdiction: HC

The High Court held that regulatory fees collected by an Electricity Commission in discharge of its statutory functions do not constitute consideration for ‘supply’, rendering the SCN and confirmatory order for levy of GST without jurisdiction. It reasoned that statutory, regulatory, and adjudicatory functions fall outside the scope of ‘business’ under Section 7 read with Schedule III, and in the absence of a taxable supply, Section 9 cannot be invoked, nor can notifications override such exclusion. This was held in Karnataka Electricity Regulatory Commission vs. Joint Commissioner Central Tax [2026].

6.1 Facts

The petitioner was issued a show cause notice (SCN) proposing the levy of GST on regulatory fees collected in discharge of its statutory functions, which was subsequently confirmed by order. It was contended that its regulatory and adjudicatory functions were statutory and did not constitute ‘business’ under GST and were excluded under Schedule III, and that such fees were not consideration. Reliance was placed on ‘Central Electricity Regulatory Commission v. Additional Director Directorate General of GST Intelligence (DGGI) [2025] 170 taxmann.com 406 (Delhi)’. The matter was accordingly placed before the High Court.

6.2 Held

The High Court held that Section 7 read with Schedule III of the CGST Act excludes statutory functions performed by regulatory authorities from the scope of ‘supply’ and that Section 9 cannot be invoked in the absence of a taxable supply. It held that the regulatory and adjudicatory functions of electricity commissions do not constitute ‘business’ and that fees collected for such functions are not consideration in the course or furtherance of business. It was further held that notifications issued under the GST framework cannot override the statutory exclusion provided under Schedule III. It was concluded that the SCN and the confirmatory order issued by the jurisdictional officer under CGST were without jurisdiction and liable to be quashed.

Read the Ruling

7. Ind AS Financial Statement Presentation – Understanding Netting and Disclosure Issues Through Practical Case Studies

The presentation of financial information under the Ind AS framework is as critical as its recognition and measurement. The way income and expenses are disclosed, whether separately or on a net basis, can significantly influence how users interpret an entity’s financial performance. Ind AS places strong emphasis on transparency, discouraging arbitrary netting or aggregation that may obscure material information. The following practical scenarios highlight how these principles apply.

7.1 Netting of Interest Income and Interest Expense

Entities often have simultaneous borrowing costs and surplus fund investments, leading to both interest expense and interest income. This raises the question of whether such amounts should be netted to present a “Net Finance Cost”?

Ind AS 1 lays down a fundamental rule that income and expenses shall not be offset unless specifically permitted by an Ind AS. This is supported by Ind AS 107, which requires clear disclosure of financial instrument-related income and expenses, and the Guidance Note on Division II – Ind AS Schedule III, which mandates separate presentation of finance costs and other income.

In this context, presenting only the net impact may appear intuitive from a managerial perspective, but it fails to reflect the gross financial activities of the entity. Netting conceals the scale of borrowing and investment operations, thereby reducing transparency. Accordingly, such a presentation is not in compliance with Ind AS, and interest income and interest expense must be disclosed separately.

7.2 Non-disclosure of the Cost of Materials Consumed

For manufacturing entities, understanding the cost structure is essential to evaluating operational efficiency. This raises the issue of whether raw material consumption can be merged with other expense heads.

The Guidance Note on Division II – Ind AS Schedule III explicitly requires separate disclosure of “Cost of Materials Consumed” for manufacturing entities. This is further supported by Ind AS 1, which emphasises the separate presentation of material items where relevant to understanding financial performance.

Thus, combining raw material consumption with purchases and inventory changes obscures the distinction between trading and manufacturing activities. This aggregation limits the ability of users to analyse cost behaviour and operational margins effectively. Hence, the cost of materials consumed should be presented distinctly.

7.3 Netting of Purchase Cost with Revenue in Trading Transactions

In certain industries, especially trading businesses, entities may consider presenting only the net margin instead of gross revenue and corresponding costs. This brings into focus the principal vs agent assessment under Ind AS.

Ind AS 115 permits net presentation of revenue only when the entity acts as an agent, earning a commission. Where the entity acts as a principal, assuming significant risks and rewards, revenue must be presented on a gross basis. Additionally, the Guidance Note on Division II – Ind AS Schedule III discourages netting of expenses against revenue except in limited cases.

Thus, the purchase cost of traded power against revenue effectively understates both revenue and expenses. Unless the company can clearly demonstrate that it acts purely as an agent, such a presentation misrepresents the scale of operations.

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