Tax INFORM- August 2026

The sixty-seventh 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:

• Karnataka High Court holds that the Finance Act, 2010 amendment to Section 9 cannot retrospectively create withholding liability for offshore services rendered in earlier assessment years.
• Allahabad High Court holds that the 18-month limit for settlement proceedings is mandatory and does not restart when a pending application is transferred between Interim Boards.
• Bombay High Court holds that, for Assessment Year 2016–17, Section 194A(3 (v) exempted a co-operative bank from deducting tax at source on interest paid to non-member co-operative
  societies.
• Supreme Court upholds application of Section 44B to the cruise operations in question and sustains presumptive income at 7.5% of gross cruise fare receipts.
• Rajasthan High Court sets aside benami orders concerning 79 properties and remands the matter for fresh inquiry after finding material evidentiary and natural justice deficiencies.

Notifications/Circulars:

• The Central Government has notified rules operationalising the Foreign Assets of Small
  Taxpayers – Disclosure Scheme, 2026, for time-bound disclosure of eligible undisclosed foreign assets and income.
• The Central Government has brought into force the Protocol amending the India-Sri Lanka tax treaty, including a principal purpose test for treaty benefits.

Indirect Tax: 

Goods & Services Tax

Case Laws:

• Supreme Court upholds Section 16(2)(c) and rejects protection for bona fide purchasers where the supplier fails to deposit Goods and Services Tax.
• Supreme Court holds that omission of Rule 96(10) without a saving clause removes the restriction from all pending refund proceedings.
• Delhi High Court holds that the enhanced pre-deposit for penalty-only Goods and Services Tax appeals cannot apply to proceedings initiated before the amendment.
• Gujarat High Court upholds Goods and Services Tax on continuing corporate guarantees from October 26, 2023, but bars earlier levy and reads down the “whichever is higher” condition in Rule 28(2).
• Supreme Court requires communication of a Section 69 arrest authorisation before arrest and bars post-dismissal protective relief in anticipatory bail proceedings.

Notifications/Circulars:

• The Central Board of Indirect Taxes and Customs has clarified the reviewing authority, filing jurisdiction and proper Goods and Services Tax Appellate Tribunal Bench for departmental appeals arising from Directorate General of Goods and Services Tax Intelligence cases adjudicated by a Common Adjudicating Authority.
• The Central Board of Indirect Taxes and Customs has automated Section 27 refund claims for courier imports through the Express Cargo Clearance System, with electronic filing required for fresh claims from October 1, 2026, subject to a limited Commissioner-approved exception for manual filing.