Comprehensive Guidance Note on TDS Demands

 By CA Surekha S Ahuja

Legal Position, System Behaviour, Consequential Actions and Resolution Framework

(Applicable to all Financial Years under the Income-tax Act, 1961 and the Income-tax Act, 2025)

Purpose and Applicability

This Guidance Note provides a consolidated and authoritative framework for understanding, managing, and resolving all types of TDS demands, irrespective of:

• the financial year involved,

• whether the demand is legacy or current, or

• whether it is system-generated or officer-driven.

It is intended for Boards of Directors, Audit Committees, CFOs, Tax Heads, Chartered Accountants, and Legal Advisors and is designed to serve as a practical operating manual rather than a theoretical exposition.

Executive Overview

TDS demands today operate in a highly automated, time-bound, and system-driven environment.
The scope for post-facto correction has narrowed significantly, and under the Income-tax Act, 2025, it has been further compressed to a two-year statutory window.

Accordingly:

• Certain TDS demands are curable,

• certain demands are disputable, and

• certain demands—particularly time-barred legacy demands—are final and irreversible.

Correct identification of the nature and stage of a TDS demand is therefore critical, as it directly determines the available remedy.

Classification of TDS Demands

Every TDS demand must first be classified into one of the following categories:

Statement-Related Demands

Arising from errors in TDS statements, such as:

• incorrect PAN reporting,

• challan mismatches,

• incorrect section or rate,

• late filing fee under Section 234E, or

• interest computation under Section 201(1A).

Deduction-Related Demands

Arising from substantive defaults, including:

• short deduction,

• non-deduction, or

• non-application of a valid lower or nil deduction certificate.

Time-Barred / Legacy Demands

Demands relating to periods where the statutory window for correction has expired (notably periods up to FY 2018-19 Q3).

Adjustment-Based Demands

Demands arising due to:

• automatic adjustment of refunds under Section 245, or

• CPC-initiated set-offs without fresh adjudication.

This classification governs what can still be done and what is no longer permissible.

How TDS Demands Are Generated

Online System Processing (CPC / TRACES)

1. TDS statement is processed under Section 200A

2. System detects mismatch or default

3. Demand is computed (tax, interest, fee)

4. Demand is reflected across:

   • TRACES

   • CPC portal

   • AIS / TIS

   • Refund adjustment dashboard

This process is fully automated and largely non-discretionary.

Offline Departmental Action (AO / TDS Officer)

Where defaults persist or are substantive:

• orders are passed under Section 201(1),

• interest is levied under Section 201(1A), and

• recovery proceedings may be initiated.

Importantly, once limitation expires, neither CPC nor the AO has authority to permit correction, regardless of merits.

Legal Limits on Correction and Rectification

Correction of TDS Statements

• Under the Income-tax Act, 1961: correction was permitted within six years

• Under the Income-tax Act, 2025: correction is permitted only within two years

Once this window expires:

• correction uploads are system-blocked, and

• rectification under Section 154 is not available.

Special Position of Legacy Periods

For time-barred periods:

• statements are treated as final,

• demands are crystallised, and

• no transition benefit is available under the new Act.

These demands are closed in law and closed in system.

Consequences of an Outstanding TDS Demand

If a TDS demand remains unresolved:

• interest continues to accrue,

• refunds are automatically adjusted under Section 245,

• recovery proceedings may commence under Section 222,

• bank accounts may be attached,

• compliance ratings are adversely impacted, and

• statutory audit and CARO reporting implications arise.

TDS demands therefore represent not merely a tax exposure, but a governance and financial reporting issue.

Permissible Actions – Online and Offline

Online Actions Available

Subject to limitation and facts:

• filing correction statements (where legally open),

• filing appeals under Section 246A,

• applying for stay of demand (Form 13),

• responding to CPC communications, and

• payment of demand through Challan 281.

Offline Actions Available

Limited to:

• representation for instalments or stay,

• personal hearings on merits (not on limitation), and

• collection of deductee confirmations for appellate support.

Offline representations cannot override statutory limitation or system blocks.

Resolution Framework – Decision Approach

Correction (Where Open)

Appropriate for procedural errors and must be undertaken immediately, as delay may permanently foreclose this option.

Appeal

Appropriate where:

• demand is duplicative,

• tax has already been paid by the deductee, or

• jurisdictional or legal infirmities exist.

Interest continues unless a stay is granted.

Payment and Closure

Appropriate where:

• default is clear,

• deductee has already claimed credit, or

• cost of litigation outweighs benefit.

This provides finality and certainty.

Provisioning and Monitoring

Appropriate where:

• demand is disputed, and

• litigation outcome is uncertain.

Such demands generally require accounting provision rather than mere disclosure.

Governance and Internal Control Expectations

Every organisation should:

• maintain a TDS demand register,

• review demands periodically,

• track correction limitation dates,

• document decisions on appeal or payment, and

• keep the Board and Audit Committee appropriately informed.

Failure to do so exposes management to avoidable financial and compliance risk.

Position Going Forward under the Income-tax Act, 2025

The new Act reflects a clear legislative intent:

• faster finality,

• shorter correction windows, and

• minimal tolerance for legacy non-compliance.

Early identification and timely correction will be critical to risk management.

Concluding Professional Position

TDS demands are no longer routine compliance irritants.
They are statutory obligations with direct financial, governance, and reputational consequences.

The law, the system, and departmental practice now operate in unison:

• correction is time-bound,

• discretion is limited, and

• finality is enforced.

Accordingly, the only sustainable approach is early diagnosis, informed decision-making, and decisive resolution.

“Every TDS demand has a limited life cycle. Once the correction stage is missed, only appeal or closure remains.”

Expatriate Taxation in India 2026: Section 115BAC – Legal End-State and Strategic Guidance

 By CA Surekha S Ahuja

This guidance note consolidates statutory analysis, ICAI interpretation, amendments, and practical implications to outline the current end-state of expatriate taxation in India. It is intended for CFOs, global mobility teams, HR, and compliance officers.

Expatriate as Defined by Law
Indian tax law does not explicitly define “expatriate.” Taxation depends on residential status, source of income, employer nexus, and treaty eligibility:

• Residential Status (Sec 6, Sec 6(1A)) – Determines RNOR/NR/Resident classification; triggers global taxation for RNORs.

• Source of Income (Sec 9) – Salary, allowances, and benefits paid by an Indian employer are treated as Indian-sourced income.

• Employer Nexus (Sec 2(24)(ii), Sec 17(1)) – Direct employment by an Indian company triggers full tax liability.

• Treaty Eligibility (DTAA, various articles) – Prevents double taxation but does not reduce slab-based liability under 115BAC.

Reasoning: Legal determination relies on status, source, and employer nexus, not arbitrary policy. Misclassification of residential status can result in automatic RNOR taxation, including global income.
Caution: Regularly audit residential status, especially for NR→RNOR transitions, to prevent unexpected taxation.

Section 115BAC: Default Regime and Restrictions
Finance Acts 2023 and 2024 made 115BAC the default regime for salaried individuals, including expatriates, unless explicitly opted out.

Key Legal Changes:

• HRA (Sec 10(13A)) and LTA (Sec 10(5)) deductions removed

• Chapter VI-A deductions (80C, 80D, etc.) disallowed

• Allowance structuring neutralised

Analysis: Taxable income is now fixed by statute, eliminating the variability historically used for gross-up and mobility planning.
Caution: Expatriates must accept 115BAC as economic reality; traditional gross-up calculations will understate effective tax.

Gross-Up and Tax Equalization
Relevant Sections: Sec 10(10CC) (tax-free allowances and gross-up rules) and Sec 40(a)(v) (disallowance of certain reimbursements).

Implications:

• Multi-stage gross-ups now collide with statutory disallowances

• Net-zero equalization achievable only via flat 45% gross-up

• Old models relying on deductions for offset are invalid

Reasoning: The combination of 115BAC and Section 40(a)(v) mathematically ensures gross-up escalation, making prior planning economically unviable.
Caution: Recalculate all gross-up policies; failure will directly impact P&L.

ESOP Taxation Framework
Sections involved: Sec 17(2)(vi), 115BAC slabs, Sec 10(10CC).

Key Observations:

• Vesting-period apportionment (Keltz ratio) ignored

• FMV at exercise taxed at slab rates

• No Chapter VI-A relief available

Analysis: ESOP compensation is now immediately taxable at high rates, converting deferred incentives into effective cost and cash outflow.
Caution: Pre-India vesting or exercise should be prioritised; post-India vesting carries ~42% effective tax.

DTAA and Short-Stay Rules

• 90-day ITA exemption survives

• 183-day DTAA threshold survives

• Elimination of domestic deductions removes structuring space

Reasoning: DTAA now functions as a compliance shield, not a tax optimisation tool. Deployments beyond 90 days carry PE and RNOR exposure.
Caution: Use the Business Visitor model wherever possible.

Deemed Residency (Section 6(1A))
Indian citizens earning ₹15L+ with no foreign tax liability automatically become RNOR. ICAI data: NR → RNOR conversion probability ~78%.

Analysis: The statute triggers automatic global taxation; there is no discretion. Foreign income is included even for expatriates with minimal Indian presence.
Caution: Evaluate potential RNOR triggers before assigning or extending international employees to India.

Compliance Requirements

• Form 10F (Notification July 2022) – Required for FTC claim; failure denies treaty benefits

• Form 12BB – Legal filing required even if HRA not claimed

• Form 67 + TRC (Sec 90/91, time-barred post-AY) – FTC claims limited if not filed timely

• GST RCM on reimbursements (Sec 9(3), Sec 9(4)) – 18% on secondment reimbursements; TP cross-charges largely unarbitrageable

Reasoning: Compliance obligations now enforce cost certainty, eliminating historical planning flexibility.
Caution: Treat compliance as a cost driver, not an administrative formality.

Post-Analysis Impact – Government & Taxpayer
Government Gains: Predictable revenue with no deduction-based gaming; simplified slab-based audits; real-time visibility of planners via Form 12BB.

Taxpayer Reality: The Business Visitor model is the only viable deployment strategy; Form 12BB remains operationally painful; 115BAC must be accepted as economic reality; all other structures reach mathematical exhaustion.

This is not a policy debate. This is arithmetic finality.

Strategic Action Points

• Freeze or renegotiate all expatriate contracts immediately

• Limit India presence to ≤90 days wherever feasible

• Prioritise pre-India ESOP exercises

• Recalculate gross-ups and net-zero policies to reflect 115BAC reality

• Audit TRC, Form 10F, Form 12BB, and GST compliance before claiming credits

• Monitor residential status changes to avoid RNOR-triggered taxation

Analytical Verdict
Expatriate taxation in India is now statutorily deterministic. Planning levers are removed, gross-ups have escalated, and compliance obligations enforce certainty. Only Business Visitor deployments survive. The ICAI 6th Edition is not guidance for future policy but a confirmation of final equilibrium: expat tax planning in India has mathematically and legally reached its endpoint.

Makar Sankranti 2026: The Kite Doctrine — Why Family Businesses Rise Together or Fall Apart

“Makar Sankranti is not a festival for family businesses. It is a governance deadline.”

By CA Surekha S Ahuja

It is a moment of reckoning.

As the Sun begins its northward journey (Uttarayan), Indian tradition marks the shift from inertia to movement. In family enterprises, the same moment defines whether leadership evolves into an institution—or remains trapped in personality.

Surya to Shani: Authority Must Become Order

Makar Sankranti marks the Sun’s entry into Capricorn, governed by Shani.

In Vedic understanding:

• Surya symbolises the founder—vision, command, presence.

• Shani symbolises succession—discipline, systems, accountability.

This transition is not a reduction of power.
It is the formalisation of power.

Family businesses fracture when authority is retained emotionally instead of transferred structurally.

The Rig Veda offers no ambiguity:

“Sangachhadhwam samvadadhwam”
Progress is collective—or it is not progress.

Uttarayan in the Gita: Detachment Is Leadership

The Bhagavad Gita (8.24) describes Uttarayan as the path of transcendence. In enterprise terms, it demands detachment from ego and attachment to order.

This is why nearly 70% of Indian family businesses do not survive beyond the second generation. Governance postponed inevitably becomes conflict accelerated.

The Kite Doctrine

A kite does not rise because it is free.
It rises because it is controlled.

Vision (The Kite): One institutional direction, not competing ambitions.
Governance (The Thread): Defined ownership, succession clarity, compliance discipline, and capital logic.
Purification (The Fire): Periodic removal of inefficiencies, legacy burdens, and unresolved egos.

When the thread weakens, collapse is only a matter of time.

Conclusion

Family businesses do not break in courts.
They break in silence.

Makar Sankranti does not ask families to celebrate.
It demands that they align.

Hold the thread together—or watch the kite fall.

 

TCS on Sale of Scrap to Manufacturing Units – Legal, Procedural & TRACES Compliance

By CA Surekha S Ahuja

Section 206C(1) | Form 27C | Rule 37CA | Form 27EQ | TRACES | CPC-TDS

Tax Collected at Source (TCS) on sale of scrap under Section 206C(1) is one of the most procedurally sensitive areas in Indian tax compliance. In real-world practice, TCS demands rarely arise due to incorrect taxability; they arise due to procedural lapses, particularly incorrect or non-reporting of Form 27C in Form 27EQ on TRACES. This guidance note is designed as a litigation-safe, CPC-aligned, and practitioner-ready manual, with special emphasis on TRACES-based reporting mechanics, which is the most common failure point.

Statutory Framework – At a Glance

Provision	Subject
Section 206C(1)	TCS on specified goods including scrap
Explanation (b) to 206C	Definition of scrap
First Proviso to 206C(1)	Exemption via Form 27C
Rule 37C	Declaration by buyer
Rule 37CA(3)	Electronic reporting of Form 27C
Form 27C	Buyer declaration
Form 27EQ	Quarterly TCS return
Form 27D	TCS certificate

Meaning of ‘Scrap’ – Legal Precision Required

As per Explanation (b) to Section 206C:

“Scrap” means waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such.

Practical Implication:

• Scrap must arise from manufacturing or mechanical processes

• It must be commercially unusable in original form

• Sale of usable items, obsolete machinery, or surplus goods does not qualify as scrap

Misclassification invalidates Form 27C exemption and exposes the seller to full TCS liability.

Applicability of TCS on Scrap – Absolute Charge

• Scrap is covered only under Section 206C(1)

• No monetary threshold applies

• Section 206C(1H) is not applicable to scrap under any circumstance

TCS is required at the time of receipt or debit, whichever is earlier.

Rate of TCS on Scrap

Particulars	Rate
PAN furnished	1%
PAN not furnished	5%

TCS collected is not an expense of the seller and is credited to the buyer’s tax account.

Exemption for Sale of Scrap to Manufacturing Units

Statutory Basis:

First Proviso to Section 206C(1) provides that no TCS shall be collected if:

• Buyer purchases scrap for:

  • Manufacturing

  • Processing of articles or things

  • Generation of power

• Goods are not for trading or resale

• Buyer furnishes Form 27C to the seller

Form 27C – Nature, Responsibility & Legal Effect

Form 27C does not automatically grant exemption. Exemption becomes effective only when the declaration is correctly reported in Form 27EQ.

Responsibility Matrix:

Activity	Responsible Party
Furnishing Form 27C	Buyer
Verification of declaration	Seller
Reporting to Income-tax Dept.	Seller
Consequence of default	Seller

Reporting of Form 27C – Correct TRACES-Based Procedure

Important Clarification:

❌ Form 27C is not filed separately with Assessing Officer, Commissioner, CPC, or TRACES as an independent form.

Statutory Authority:

📌 Rule 37CA(3) mandates that particulars of Form 27C must be furnished electronically in the quarterly TCS statement (Form 27EQ). Failure results in automated TCS demand, interest under Section 206C(7), and fee under Section 234E.

Correct & Mandatory Compliance Flow:

• Buyer furnishes Form 27C to Seller before sale/receipt containing Buyer PAN, Purpose of purchase, Declaration of non-trading use, and Verification.

• Seller verifies PAN validity, nature of buyer’s business, and consistency with scrap usage.

• Seller files Form 27EQ (Quarterly TCS Return), reporting the transaction.

• In Form 27EQ/ TRACES, select “No TCS collected” with reason “Declaration received under Form 27C”.

• No ITNS 281 challan is required.

CPC Verification:

• Scrap transaction reported in Form 27EQ

• TCS amount

• Exemption reason

• Form 27C indicator

Physical Form 27C is examined only during assessment, not by CPC.

Common Errors Triggering Demand:

• Transaction not reported

• Exemption flag missing

• Wrong section selected

• Late filing of Form 27EQ

• PAN mismatch

Golden Rule: If Form 27C is not reported in Form 27EQ, it is deemed non-existent for CPC.

Interaction with Section 194Q

• Scrap is specifically covered under Section 206C(1)

• Section 194Q applies only when Form 27C is not furnished

• Once valid Form 27C exists, neither TDS nor TCS applies

CBDT Circular No. 13/2021 supports this interpretation.

Seller’s Procedural Compliance Checklist

Before Sale: Identify whether goods qualify as scrap, Obtain Form 27C in advance, Verify buyer PAN and purpose.

Quarterly: Report transaction in Form 27EQ, Select Form 27C exemption flag, File within due date.

Record Retention: Preserve Form 27C, Reconcile with AIS / TCS ledger.

Consequences of Procedural Lapses

Even without tax intent, seller may face Interest under Section 206C(7), Fee under Section 234E, Penalty under Section 271CA, CPC rectification, and litigation burden.

Final Professional Takeaway

In scrap transactions, the law is clear, but procedure is decisive.

A correctly obtained but incorrectly reported Form 27C is legally ineffective. For CPC and TRACES, compliance is data-driven, not document-driven.

Closing the Balance Sheet, Opening the Future

Lohri 2026 — Strategy, Stability, and Hope in an Unsettled World

Lohri has always symbolised more than a seasonal transition. In its deeper essence, it represents closure with consciousness—the completion of one cycle and preparedness for the next. For businesses and professionals, Lohri 2026 coincides meaningfully with another ritual of accountability: the closure of the balance sheet.

A balance sheet is not merely a financial statement. It is a record of decisions, discipline, restraint, ambition, and learning. As one year closes, Lohri offers a moment to pause—not to celebrate prematurely, but to assess, cleanse, and recalibrate.

The Current Global Reality: Economics Driven by Geopolitics

Entering 2026, the global business environment is no longer shaped purely by market forces. Geopolitics now actively determines:

• Trade routes and tariffs

• Capital movement and currency stability

• Energy pricing and logistics reliability

• Technology access and data governance

Persistent US–China tensions, regional conflicts, shifting alliances, and protectionist undercurrents have redefined global certainty. Businesses today must plan not only for demand cycles, but for disruption resilience.

In this evolving order, predictability is scarce—but preparedness is possible.

India’s Position: Strategic, Not Accidental

India stands at a structurally strong and strategically balanced position:

• Infrastructure expansion continues at scale

• Manufacturing depth is strengthening under global supply chain diversification

• Digital public infrastructure has matured into an economic backbone

• Policy direction remains focused on stability, compliance, and long-term capacity building

India is neither overexposed nor inward-looking. It is positioning itself with strategic autonomy—a critical advantage in an uncertain global environment.

For Indian enterprises, this creates opportunity—but only for those entering the next cycle with clean books, prudent leverage, and governance discipline.

Lohri and the Scriptural Lens: Direction Matters

Traditionally, Lohri marks the movement towards Uttarayan—the northward journey associated with progress, growth, and clarity. The scriptures state:

“Uttarayanam devanam”
— the northward path is the path of constructive forces.

The interpretation is powerful: progress does not come from speed alone, but from directional alignment. Growth without grounding leads to fragility. Expansion without balance leads to collapse.

Business Strategy for the Year Ahead

The year ahead is not for aggressive risk-taking driven by optimism alone. It calls for:

• Strong liquidity management

• Thoughtful capital allocation

• Market diversification over concentration

• Risk-adjusted expansion, not blind scale

• Governance as a strategic asset, not a compliance cost

Those who have closed the year honestly—acknowledging errors, provisioning adequately, and resisting cosmetic balance sheets—will be best positioned to move forward with confidence.

Closure with Clarity, Hope with Discipline

Lohri teaches us that fire does not destroy—it transforms. Similarly, closing a year is not about endings, but about intentional release: of inefficiencies, outdated strategies, and misplaced assumptions.

As the balance sheet closes, efforts stand accounted for. As the new cycle begins, prospects emerge—not as promises, but as possibilities shaped by preparation.

The future belongs to those who combine analysis with faith, strategy with restraint, and ambition with responsibility.

Final Reflection

Lohri 2026 invites businesses to move forward—not hurriedly, but wisely. With books closed, lessons absorbed, and direction clarified, the coming year can be approached with measured optimism and strategic confidence.

Happy Lohri.
May this closure open stronger, more resilient horizons ahead.

Shifting Registered Office from Delhi to Gurgaon (ROC Delhi → ROC Haryana)

 By CA Surekha S Ahuja

Shifting a company’s registered office from Delhi to Gurgaon involves a change in Registrar of Companies (ROC) jurisdiction, governed by Section 12(5) of the Companies Act, 2013 read with Rule 28 of the Companies (Incorporation) Rules, 2014.

This guide assumes a pure registered office relocation, where:

• Business operations are already or continue to be carried out from Gurgaon, and

• Only statutory records and legal domicile move.

Accordingly, employee retrenchment affidavits are not required.

Indicative timeline: 60–90 days
Indicative cost: ₹25,000–50,000 (government & incidental costs; professional fees extra)

Legal Framework & Interpretation

Section 12(5) – Companies Act, 2013

Mandates prior approval of the Regional Director (RD) where the registered office is shifted outside the existing State/Union Territory or ROC jurisdiction.

Rule 28 – Companies (Incorporation) Rules, 2014

Prescribes:

• Filing of Form INC-23

• Service of notices on ROCs and State authorities

• Newspaper advertisement (INC-26)

• RD hearing and approval

Important Clarification

• Delhi (UT) and Haryana are distinct jurisdictions → RD approval is mandatory.

• State name in MOA does not change, but Clause II (Registered Office Clause) must be altered through a special resolution.

Step-by-Step Professional Roadmap

Step 1: Board Meeting (Day 1–3)

Purpose

• Approve proposal for shifting registered office

• Fix date of Extraordinary General Meeting (EGM)

• Authorise directors/CS for filings

Documents

• Certified Board Resolution

• Draft EGM Notice and Explanatory Statement (reason for shift + new address)

Cost

• ₹500–1,000 (notary / DSC incidental)

Step 2: EGM & MGT-14 Filing (Day 22–30)

Purpose

• Pass Special Resolution, expressly stating “subject to approval of RD”

• File Form MGT-14 within 30 days

Documents

• Certified Special Resolution

• EGM Minutes

• Note: MOA is not filed at this stage (only Clause II is proposed to be altered)

Cost

• MGT-14 filing fee: ₹600 (share capital < ₹1 crore)

• Drafting / preparation: ₹2,000–5,000

Step 3: Proofs & Affidavits (Day 31–45)

Purpose

• Establish bona fide registered office in Gurgaon

• Confirm creditor protection and absence of default

Documents

• Owner’s NOC

• Lease/Rent Agreement (minimum 1 year)

• Utility Bill (not older than 2 months)

• Ownership deed (if applicable)

• Creditor & Debenture Holder List (not older than 30 days)

• Affidavit from Directors/CS (₹100 stamp):

  • No defaults

  • Creditors’ interests not prejudiced

• Company affidavit verifying application

Cost

• ₹600–1,000 (stamp papers & notarisation)

Step 4: Filing of INC-23 with RD-North (Day 46–60)

Purpose

• Seek formal approval for inter-jurisdictional shift

Key Compliance

• File INC-23 within 60 days of special resolution

• Serve copies to:

  • ROC Delhi

  • ROC Haryana

  • Chief Secretary, Government of Haryana (at least 14 days prior)

Attachments (15+ mandatory)

• Board & Special Resolutions

• MGT-14 challan

• MOA/AOA (relevant extracts)

• Premises proofs & NOC

• Creditor list & affidavits

• Company affidavit

• Optional: SR-1 / No-litigation declaration

Cost

• INC-23 filing fee: ₹5,000

• Stamp duty: ₹500–1,000

• Professional handling: ₹10,000–20,000

Step 5: INC-26 Public Notices (Day 61–75)

Purpose

• Provide opportunity for objections, if any

Requirement

• One English + one vernacular newspaper:

  • English: Times of India

  • Vernacular: Dainik Bhaskar

• Editions covering Delhi/Gurgaon

• Publication at least 14 days before RD hearing

• RPAD notices to all creditors

Documents

• Two newspaper clippings

• RPAD dispatch proofs & affidavit

Cost

• ₹5,500–11,000

Step 6: RD Hearing & Order (Day 76 onwards)

Process

• Hearing before Regional Director, Northern Region (Delhi)

• Physical or virtual appearance

• If no objections, order typically issued within 15–60 days

Cost

• ₹2,000–5,000 (travel / incidental)

Step 7: Post-Approval Filings (Approval + 1 to 30 Days)

Mandatory Filings

• INC-28: RD order with ROC Delhi & ROC Haryana

• INC-22: New registered office address with ROC Haryana

Documents

• Certified RD order

• Gurgaon address proofs

Cost

• ₹400–1,200 (government fees)

Step 8: Statutory & Regulatory Updates

To be completed within 30 days:

• Income Tax (PAN data / Form 49A, if required)

• GST registration amendment

• Bank KYC & statutory records

• Reflect new address in AOC-4 & MGT-7

• Verify MCA master data post-approval

Cost

• ₹500–2,000 (administrative)

Cost & Timeline Summary

Step	Day Range	Cost (₹)	Cumulative (₹)
Board Meeting	1–3	500–1,000	500–1,000
EGM & MGT-14	22–30	2,600–5,600	3,100–6,600
Proofs & Affidavits	31–45	600–1,000	3,700–7,600
INC-23	46–60	15,500–26,000	19,200–33,600
INC-26 Notices	61–75	5,500–11,000	24,700–44,600
RD Hearing	76+	2,000–5,000	26,700–49,600
Post-Filings	+1–30	400–1,200	27,100–50,800
Final Updates	+1–30	500–2,000	27,600–52,800

Practical Insights & Risk Notes

Key Cost Drivers

• Professional handling of INC-23

• Newspaper advertisements

Common Risks

• Incomplete or outdated creditor lists

• Defective affidavits

• Missed service on State authorities

Strategic Advantages

• No disruption of operations

• No employee retrenchment documentation

• Limited MOA alteration (Clause II only)

Conclusion

A Delhi-to-Gurgaon registered office shift, when executed with proper sequencing and documentation, is a procedural—not disruptive—exercise. With disciplined compliance under Section 12(5) and Rule 28, companies can complete the transition smoothly within 60–90 days, maintaining business continuity and regulatory certainty.

Binny Bansal ITAT Ruling: Exit Date Now Determines Lifetime NRI Residency

By CA Surekha S Ahuja

Sec.6(1)(c) Interpretation, Strategic Implications for NRIs, Founders, and ESOP Holders

Introduction

The ITAT Bengaluru ruling in Binny Bansal vs DCIT (IT(IT)A No.571/Bang/2023, decided 9 January 2026) has fundamentally reshaped NRI tax planning in India.

Key outcome: The date of departure for employment abroad now dictates permanent residency status for all subsequent years, irrespective of the number of days spent abroad in future.

This is a decided case, not hypothetical, and is critical for:

• Salaried employees working overseas

• Founders and start-up executives

• ESOP beneficiaries

Statutory Framework

Section 6(1) – Resident Determination

A person is a resident if any of the following conditions apply:

1. 6(1)(a): Stayed in India ≥182 days in the FY; or

2. 6(1)(c): Stayed ≥60 days in the FY and ≥365 days cumulatively in the preceding 4 years.

Explanation 1(b) – Employment Abroad Relief

For an Indian citizen “being outside India, coming on a visit”, Section 6(1)(c)’s 60-day threshold is replaced by 182 days, allowing longer visits without triggering residency.

Conventional understanding: NRIs could visit India up to 181 days/year without losing NRI status.

Facts of the Case

• Exit year (FY 2019-20 in Bansal’s case): Binny Bansal spent >182 days in India before moving to Singapore → Resident under 6(1)(a).

• Subsequent years: Returned for 60–181 days → Did not qualify for Explanation 1(b) substitution.

• DTAA Relief (India–Singapore): Denied, as domestic law governs residency first.

ITAT Holding: Explanation 1(b) applies only to those who were non-resident at the start of the year.

Result: Post-October 1 departures face a permanent 60-day residency trap, applicable indefinitely.

Key Legal Interpretation

1. Exit-Year Residency is Decisive

   • Leaving on or after 2 October with ≥182 days in India → Resident for that FY.

   • Pre-October exits can qualify as non-resident immediately.

2. Explanation 1(b) Cannot Apply Post-October

   • Post-October exits lose the 182-day substitution permanently.

3. Section 6(1)(c) Governs Future Visits

   • Any visit ≥60 days in a year triggers resident status.

   • 365-day rolling rule ensures repeated taxation across years.

4. DTAA Relief is Secondary

   • Domestic law determines residency first; DTAA tie-breakers cannot override.

5. RNOR Status Offers Limited Relief

   • Post-exit RNOR (2–3 years) may reduce Indian taxation on foreign salary, but does not revive Explanation 1(b) for future visits.

Illustrative Examples – Salaried Employees vs Founders/ESOP Holders

Profile	Exit Date	Days in India (Exit FY)	FY Exit Status	Subsequent Visit (days)	Status	Tax Impact
Salaried Employee	25 Sept 2025	180	Non-Resident	90	Non-Resident	Foreign salary exempt; India salary taxed normally
Salaried Employee	7 Oct 2025	200	Resident	90	Resident	Foreign salary fully taxable; India salary taxed; cap visits <60 days/year
Founder / ESOP	25 Sept 2025	180	Non-Resident	120	Non-Resident	ESOP exercises exempt; foreign income exempt
Founder / ESOP	7 Oct 2025	200	Resident	120	Resident	ESOP vesting & foreign salary fully taxable; must cap India stays <60 days/year

Observation: Even a single post-October 1 exit can permanently subject global income, ESOP gains, and salary to Indian taxation.

Practical Advisory – Managing Exit & Visits

1. Exit Timing is Critical

   • Leave before 2 October → secure Non-Resident status; future visits up to 181 days allowed.

   • Leave on/after 2 October → permanent 60-day visit cap; future global income exposed.

2. Track Cumulative Days

   • Post-October exits must maintain ≤59 days/year in India.

   • Monitor 4-year rolling total to avoid Section 6(1)(c) trigger.

3. Salary and ESOP Planning

   • Post-October exits: ESOP exercises & vesting, foreign salary, and other global income are fully taxable.

   • Pre-October exits: ESOPs & foreign salary generally remain exempt.

4. DTAA & RNOR Strategy

   • DTAA cannot override domestic residency rules.

   • RNOR status can reduce taxation but does not restore 182-day substitution.

5. High Court Appeal Considerations

   • Restrictive interpretation of “being outside India” could be challenged.

   • Permanent forfeiture of Explanation 1(b) may be argued as overreach.

Assessment Year Exposure

Exit Type	Exit FY Status	Subsequent FY Risk	Future Years
Pre-October Exit	Non-Resident	Low	Visits up to 181 days/year; NRI benefits continue
Post-October Exit	Resident	High	Any visit ≥60 days triggers Resident; global income taxed indefinitely

Bottom line: FY of departure sets the stage for all future assessment years, making timing more important than total days.

Conclusion – Exit Date Rules the Game

The Binny Bansal ruling is a structural shift in NRI tax planning:

• Pre-October exits: Safe NRI path; 182-day visit flexibility; ESOP/salary benefits preserved.

• Post-October exits: Lifetime 60-day cap; global income fully taxable; ESOPs & foreign salary exposed.

Actionable:

• Plan exit date carefully.

• Monitor future visits & rolling presence.

• Structure salary, ESOP, and foreign income to mitigate permanent Indian tax liability.

Ignoring this ruling could permanently subject your worldwide income to Indian taxation—even with minimal visits.

 

 

5 Major GST Changes Live from January 1, 2026 + Complete January Compliance Calendar with MCA Extension

 By CA Surekha S Ahuja

January 2026 marks a decisive shift in India’s compliance ecosystem. Multiple GST enforcement measures have gone live simultaneously, portal-level controls have replaced discretionary flexibility, and the Ministry of Corporate Affairs has granted what is widely viewed as a final extension for annual filings.

This is no longer a routine compliance cycle. It is a system-driven enforcement phase where mismatches, delays, or assumptions result in instant financial and operational consequences.

This professionally curated guide is designed for Chartered Accountants, CFOs, founders, and compliance leaders, covering:

• The 5 most critical GST changes effective from 1 January 2026

• A complete and consolidated January 2026 compliance calendar

• The practical impact of the MCA extension and last-mile action points

Five Major GST Changes Effective from 1 January 2026

These are not draft proposals or future amendments. Each change discussed below is live on the GST portal and operationally enforced.

GSTR-3B Auto-Blocking under Rule 88C – The Single Biggest Risk

What has fundamentally changed

The GST system now performs real-time cross-validation between:

• Output tax liability reported in GSTR-1, and

• Tax actually discharged through GSTR-3B

Where the variance exceeds system thresholds, the portal automatically issues Form DRC-01B.

Failure to respond or pay results in the automatic invocation of Rule 59(6), leading to:

• Blocking of subsequent GSTR-1 filings

• Inability to file GSTR-3B

• Disruption of outward supply reporting and ITC flow

Why this change is transformational

• Blocking is system-driven, not officer-driven

• Post-filing explanations have minimal utility

• Cash flow, compliance rating, and buyer confidence are immediately impacted

Immediate professional action

Before filing GSTR-1 due on 11 January:

• Reconcile sales registers with GST liability line by line

• Validate amendments, credit notes, debit notes, and advances

• Ensure absolute parity between books and portal data

This is no longer a compliance formality — it is a risk-control exercise.

Automatic Late Fee Computation for GSTR-9 and GSTR-9C

What has changed

For annual returns not filed by 31 December 2025, the GST portal now:

• Automatically computes late fees (₹200 per day or turnover-based caps)

• Prevents filing unless the late fee is paid upfront

The earlier strategy of filing first and contesting penalties later is no longer available.

Mandatory Biometric Aadhaar Authentication for High-Risk GST Registrations

What has changed

For registrations flagged as high-risk:

• Physical biometric authentication is compulsory

• Verification must be completed at designated GST Suvidha Kendras

• OTP-based Aadhaar authentication is not permitted as an alternative

Business and advisory impact

• New GST registrations may face 15–30 day delays

• Startup and fund-raise timelines require recalibration

• Vendor onboarding and invoicing schedules are affected

Advisory note

GST registration timelines must now be factored into commercial contracts, go-live dates, and investor commitments.

Sin Goods Rate Changes – Notification No. 19/2025

What is changing

For specified goods such as tobacco, pan masala, and allied products:

• Rate revisions have been notified

• HSN-level scrutiny has intensified

• System validations will tighten ahead of February 2026 implementation

Immediate actions required

• Update HSN masters and ERP mappings

• Re-evaluate pricing and margin structures

• Prepare for heightened departmental audits

Shift to Purely System-Led GST Enforcement

The most understated yet profound change

GST administration has now decisively moved to:

• Auto-intimations

• Auto-penalties

• Auto-blocking of returns

Officer discretion has largely been replaced by portal logic and data analytics.

Compliance errors now trigger consequences instantly, predictably, and without negotiation.

January 2026 – Master Compliance Calendar

Due Date	Form / Compliance	Applicability
11 Jan	GSTR-1	Monthly filers (Turnover > ₹5 Cr)
13 Jan	GSTR-1 (IFF)	QRMP Scheme (Optional)
15 Jan	Form 27EQ	TCS Return – Q3 (Oct–Dec 2025)
15 Jan	PF / ESI	December 2025 Payments
18 Jan	CMP-08	Composition Dealers – Q4
20 Jan	GSTR-3B	Monthly filers
22 / 24 Jan	GSTR-3B	Quarterly filers (Staggered)
30 Jan	Forms 26QB / 26QC	Property / Rent TDS
31 Jan	TDS Returns	Q3 – Forms 26Q / 24Q
31 Jan	AOC-4 & MGT-7 / 7A	FY 2024–25 (MCA Extension)

MCA Extension – Final Opportunity till 31 January 2026

What has been extended

• AOC-4 – Filing of financial statements

• MGT-7 / MGT-7A – Annual return

Extension status

• Second extension formally notified

• No additional fees till 31 January 2026

• V3 portal functionality has stabilised

Recommended action

• Clear all pending ROC filings well before the deadline

• Avoid last-day congestion and technical failures

TCS Return – Form 27EQ (Due 15 January 2026)

Applicable under Section 206C(1H) for the quarter ended December 2025.

Why this quarter demands precision

• Festive season turnover spikes

• Threshold breaches under 206C(1H)

• Direct impact on buyers’ Form 26AS and ITC reconciliation

Professional checklist

• Reconcile collections with ledger data

• Validate buyer PAN details

• Prevent downstream ITC disputes and notices

Pre-Budget 2026 Perspective (1 February 2026)

The upcoming Union Budget is expected to emphasise:

• Tax certainty and litigation reduction

• Green energy and ESG-linked incentives

• Initial frameworks for AI and digital economy taxation

Early compliance discipline ensures smoother absorption of budget-driven changes.

Three Immediate Actions Before the Next Working Week

1. File GSTR-1 by 11 January to avoid Rule 88C auto-blocking

2. Check the GST portal for DRC-01B intimations without delay

3. Complete all ROC annual filings by 31 January