Tax INFORM- June 2026

The sixty-fourth 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:

• Madras High Court allows deduction under Section 37(1) for an ascertainable provision towards mandatory site restoration costs and holds that Section 33ABA does not bar such deduction.
• Rajasthan High Court holds that the enhanced tax rate of 60% under Section 115BBE applies prospectively from Financial Year 2017–18 and cannot be imposed on income arising during Financial Year 2io016–17.
• Madras High Court holds that reimbursements to a foreign subsidiary for online advertising costs do not attract equalisation levy.
• Madras High Court condones the delay in filing returns and preserves the cooperative societies’ entitlement to claim deduction under Section 80P.
• Madras High Court declines writ interference with the assessment and penalty orders, while leaving the applicability of Section 68 and the identity of the proper taxable person to be determined in a statutory appeal.

Notifications/Circulars:

• The Ministry of Law and Justice Ordinance exempts specified income from Government securities earned by Foreign Institutional Investors and the Bank for International Settlements.
• The Central Board of Direct Taxes prescribed the parameters and procedure for compulsory selection of income-tax returns for complete scrutiny during Financial Year 2026–27.

Indirect Tax: 

Goods & Services Tax

Case Laws:

• Supreme Court holds that online games involving monetary stakes constitute taxable supplies of actionable claims, irrespective of whether the underlying games predominantly involve skill or chance.
• Calcutta High Court holds that proceedings alleging contravention of Rule 96(10) cannot survive its unconditional omission without a saving clause.
• Kerala High Court holds that Input Service Distributor registration was not mandatory before April 1, 2025 and upholds the availment and cross-charge of input tax credit by the Kerala unit.
• Allahabad High Court declares an arrest under the Central Goods and Services Tax Act, 2017 illegal where the arrest documents lacked a mandatory Document Identification Number and failed to comply with prescribed safeguards.
• Kerala High Court quashes best judgment assessments where the Revenue failed to establish service of the mandatory statutory notices.

Notifications/Circulars:

• The Goods and Services Tax Network deferred implementation of the mandatory Ship-to GSTIN and voluntary e-Way Bill closure functionalities to August 1, 2026.
• The Government prescribed nil rates of central excise duties and cesses on qualifying E22, E25, E27 and E30 ethanol-blended petrol.