Direct Tax

The CBDT has prescribed a due date for furnishing a statement by Non-Residents (NRs) having a liaison office in India through an amendment in Rule 114DA

Notificaiton NO. G.S.R. 125(E) [NO. 14/2025/F.NO. 370142/2/2025-TPL], dated 07 February 2025

  1. As per Rule 114DA, non-resident entities are required to file an annual statement in Form No. 49C under Section 285 for each financial year and such statement is furnished in Form 49C which Rule 114DA prescribes.
  2. The CBDT has amended Rule 114DA to specify that the due date for furnishing Form 49C, which was previously sixty days from the end of the financial year under Section 285, shall now be extended to eight months from the end of the financial year.

Income-tax rule 2F amended for infrastructure debt funds

  1. Central Board of Direct Taxes specifies that Infrastructure Debt Funds (IDFs) must operate as Non- Banking Financial Companies (NBFCs).
  2. Investment by IDFs is now restricted to infrastructure projects that have been operational for at least a year or toll-operate-transfer projects as direct lenders.
  3. IDFs can raise funds through rupee or foreign currency bonds, zero-coupon bonds, or external commercial borrowings (ECBs), subject to Reserve bank of India (RBI) and Foreign Exchange Management Act, 1999 (FEMA) regulations.
  4. External commercial borrowing tenors must be at least five years, and funds cannot be sourced from foreign branches of Indian banks.
  5. The amendments also introduce restrictions on IDF investments in projects where their significant shareholders or associated enterprises hold substantial interests. Additionally, the definition of “specified shareholder” has been revised to include entities holding at least 30% voting power in an IDF.

Amendment in form no. 10|H, substitution of rules 12CA, 12CC and form nos. 64A, 64B, 64C, 64D 64E and 64F

Notificaiton G.S.R. 145(E) [NO. 17/2025/F. NO. 370142/28/2024-TPL], dated 24 February 2025

  1. The amendments discussed in the below points primarily focus on revising reporting requirements for business trusts and securitization trusts.
  2. Under Rule 12CA, the statement of income distributed by a business trust to its unit holder shall be furnished to:
    1. The Principal Commissioner or the Commissioner of Income-tax, as the case may be, within whose jurisdiction the principal office of the business trust is situated by the 15th day of June of the financial year following the previous year during which the income is distributed electronically under digital signature, in Form No. 64A duly verified by an accountant; and
    2. The unit holder by the 30th day of June of the financial year following the previous year during which the income is distributed in Form No. 64B.
  3. Under Rule 12CC, the statement of income paid or credited by a securitization trust to its investor shall be furnished to:
    1. The Principal Commissioner or the Commissioner of Income-tax, as the case may be, within whose jurisdiction the principal office of the securitization trust is situated by the 15th day of June of the financial year following the previous year during which the income is paid or credited electronically under digital signature, in Form No. 64E duly verified by an accountant; and
    2. The investor by the 30th day of June of the financial year following the previous year during which the income is paid or credited in Form No. 64F.
  4. The said notification also updates Form No. 10IH and replaces Forms 64A to 64F with revised formats in Appendix-II, streamlining the reporting of income distributions and payments by these trusts. These changes aim to enhance transparency and compliance in the taxation of income distributed by business trusts and securitization trusts to their unit holders and investors.

Clarification on income-tax deduction from salaries during financial year 2024-25 under section 192

Circular NO. 3/2025 [F. NO. 275/107/2024-IT(B)], dated 20 February 2025

This circular outlines the amendments made by the Finance (No. 2) Act of 2024, Finance (No. 1) Act of 2024, and Finance Act of 2023 regarding the income tax deduction rates under Section 192 for "Salaries." Where no amendments have been made, Circular No. 24 of 2022 will remain applicable for the Financial Year 2024-25.

Indirect Tax

Customs

Automation of Customs Refunds

Circular No. 05/2025-Customs, dated 17 February 2025

The Central Board of Indirect Taxes and Customs (CBIC) has announced the automation of the procedure for claiming customs duty refunds through the Indian Customs Electronic Gateway (ICEGATE) portal. Said move seeks to enhance transparency and expedite the disbursal of refunds in electronic mode. Some of the key features of the new system include:

  • Electronic filing of refund applications and generation of a unique Application Reference Number (ARN) for tracking purposes.
  • Option to request re-assessment of bill of entry in case required before refund.
  • Credit of approved refund to the applicant’s bank account through the Public Financial Management System (PFMS) system.
  • Realtime status updates, intimation of deficiency, issuance of show cause notice, if any, electronically through the ICEGATE portal.
  • Post-audit mechanism, in place of concurrent audits for improved efficiency.

As a transitional measure, applicants may submit refund applications either manually or online until 31 March 2025. However, post the said date, no manual refund applications will be accepted unless explicitly permitted by the concerned Principal Commissioner/Commissioner of Customs, with the reasons recorded in writing.

CBIC introduces Single All-India Multipurpose Electronic Bond – ‘Ekal Anubandh’

Circular No. 04/2025-Customs, dated 17 February 2025

The CBIC has introduced a Single All-India Multipurpose Electronic Bond (SEB) for importers and exporters in lieu of transaction-based Bonds being submitted across different ports, under the project ‘Ekal Anubandh’. SEB can be used towards various obligations vis-à-vis provisional assessment (including CAROTAR, Chemical tests etc.), export promotion schemes, re-exports, warehousing under Section 59 and Manufacturing & Other Operations in Warehouse Regulations, 2019 (MOOWR) Scheme. Some of the key features are as follows:

  • Importers and exporters can electronically submit bonds via the ICEGATE portal, with the flexibility to include additional obligations or bond amounts over time.
  • Stamp duty payments and bond execution will be integrated with the National E-Governance Services Limited (NeSL), allowing electronic signatures and eliminating the need for notarization.
  • Electronic Bank Guarantees (e-BGs) can be linked and verified online for seamless compliance.

However, the National Bond under the Import of Goods at Concessional Rate of Duty (IGCR) procedure would continue to be provided separately.

A detailed advisory has been provided for industry stakeholders, along with a comprehensive guide on the Bank Guarantee requirements. The project will be implemented in phases with regular advisories.

Customs (On-Arrival Movement for Storage & Clearance) Regulations 2025 for AEO T-2 & T-3 importers

Notification No. 11/2025-Customs (N.T.), dated 17 February 2025

The Central Government has introduced a new set of regulations to allow designated importers to store and clear goods at authorized premises instead of ports. The facility will apply to:

  1. Importers satisfying the following conditions:
    1. Importers recognized as AEO under Tier II or Tier III status.
    2. The designated storage location should be within an already licensed warehouse under Sections 58 (private warehouse), 58A (special warehouse), or 65 (MOOWR) of the Customs Act.
    3. Resultant goods pertain to goods classified under CTH 8517-8548.
  2. Imported goods where no order is made under Section 47 (clearance for home consumption) or Section 60 (permission to deposit in a warehouse) and the importer intends to avail clearance at Authorized Importer Premises.

Failure to comply with the regulations can result in the suspension of the facility and imposition of a penalty which can extend up to INR 0.2 million.

Foreign Trade Policy

DGFT’s guidelines for Advance Authorisation closure issues

Trade Notice No. 32/2024-25, dated 28 February 2025

Given the system constraints in capturing the complete description of export items (due to characters limit) in shipping bills thereby leading to raising of deficiencies by Regional Authorities, the Directorate General of Foreign Trade (DGFT) has directed to corroborate the same basis of the self-attested copies of GST system generated e-invoices. In such cases, the aforesaid documents may be uploaded along with all other prescribed documents for redemption/Export Obligation Discharge Certificate (EODC) of Advance Authorizations.

DGFT digitizes the process of Enforcement-cum-Adjudication under the FTD&R Act

Trade Notice No. 29/2024-25, dated 11 February 2025

As part of the Government's paperless trade initiative associated with the lifecycle of Duty Exemption/Remission Authorizations, the DGFT has mandated online submission of replies to show cause notices and other information requests under Adjudication, Appeal, and Review processes of the Foreign Trade Development and Regulation (FTD&R) Act. Paper-based submissions will no longer be entertained.

Similarly, payment of penalties levied by orders under the FTD&R Act shall be mandatorily made online against Export Credit Agency (ECA)/Appeal or Review file as applicable. The use of the Miscellaneous payments feature may be avoided to ensure proper accounting of penalties paid and to avoid unintended future action.

Tax Street February 2025