Tax INFORM- January 2026

The sixtieth issue of our monthly tax newsletter, Tax Inform, is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month, impacting entities and individuals operating in India.

The highlights of the current issue are:

Direct Tax:

Domestic Tax Rulings:

• SC upheld rejection of the advance ruling as the transaction was prima facie tax-avoidant.
• SC held that shares received on amalgamation in substitution of stock-in-trade may constitute taxable business income under Section 28.
• SC held that non-compete fees are allowable as revenue expenditure under Section 37(1).
• Delhi HC held that remote services rendered from outside India do not create a “virtual service permanent establishment” under the India–UK DTAA.
• Madras HC held that subsidy received under a rehabilitation scheme is a capital receipt not chargeable to tax.
• Delhi HC held that payments for use of the ICC mark constitute royalty under the India–Singapore DTAA and are subject to withholding tax.

Notifications/ Press Releases:

• CBDT launched a data-driven “NUDGE” initiative to encourage voluntary correction of ineligible deduction or exemption claims.

Indirect Tax: 

Goods & Services Tax

Case Laws:

• Telangana HC struck down the same-month ITC distribution requirement for Input Service Distributors as ultra vires the CGST Act.
• Bombay HC held that assignment of long-term leasehold rights is not a taxable supply under GST and quashed the show cause notice.
• Gujarat HC quashed the deficiency memo rejecting refund of interest paid under protest and directed fresh adjudication.
• Kerala HC held that GST exemption applies only to individual health insurance policies and not to group policies.
• Andhra Pradesh HC held that electricity supplied to an Indian intermediary for onward export is not a zero-rated supply and upheld the denial of ITC refund.
• Punjab and Haryana HC granted regular bail in a fake ITC case, reiterating that GST arrests must comply with Article 21 safeguards and the “reasons to believe” requirement.

Notifications/ Circulars:

• CBIC introduced retail sale price–based valuation for specified tobacco and pan masala products and aligned Rule 86B accordingly.
• CBIC extended the SCMTR transitional period and outlined steps for full pan-India implementation.
• CBIC enabled electronic export incentives for postal exports through ICEGATE integration.