SEBI Updates
Clarifications and Procedural changes to aid and strengthen ESG Rating Providers (ERPs)
The Master Circular on ESG Rating Providers (ERPs) dated May 16, 2024, outlines key procedural and disclosure obligations. SEBI’s circular dated April 29, 2025, provides the following clarifications:
- Withdrawal Norms: Revised for both Subscriber-Pays and Issuer-Pays models to align with credit rating requirements.
- Disclosure on ERP Websites: Subscriber-Pays ERPs may share detailed rating rationales with subscribers and must prominently display ESG ratings in the prescribed format.
- Stock Exchange Disclosures: ESG ratings for listed issuers/securities must be prominently disclosed by stock exchanges on the respective issuer or security pages.
- Internal Audit: Applicable to Category-II ERPs after two years from the date of this circular; audit teams must include a CA/CMA and an IT audit specialist (CISA/DISA/DISSA).
- Governance Committees: ESG Ratings Sub-Committee and Nomination & Remuneration Committee required for Category-II ERPs after two years.
These changes are effective immediately and aim to enhance regulatory alignment and industry responsiveness.
Click here to access the circular
Extension of Automated Trading Window Closure to Immediate Relatives of Designated Persons under PIT Regulations
To facilitate compliance with Clause 4 of Schedule B read with Regulation 9 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) and to prevent inadvertent violations by Designated Persons (DPs), clause 3.4.2 of the Master Circular on Surveillance dated September 23, 2024, required Stock Exchanges and Depositories to freeze the PAN of DPs at the security level during trading window closures.
Following the successful implementation of this framework, SEBI has issued a circular dated April 21, 2025 extending the compliance requirements to immediate relatives of DPs.
Implementation Timeline:
- Phase 1: Top 500 listed companies (by BSE market cap as of March 31, 2025) – effective July 1, 2025
- Phase 2: All other listed and newly listed companies – effective October 1, 2025
Implementation details and flowchart are provided in the Annexures. Stock Exchanges and Depositories must operationalize the framework, inform listed companies, and submit quarterly reports to SEBI.
Click here to access the circular
Amendment to Circular for mandating additional disclosures by FPIs that fulfil certain objective criteria
SEBI, through its Master Circular for Foreign Portfolio Investors, Designated Depository Participants, and Eligible Foreign Investors dated May 30, 2024 (as amended), mandated additional disclosures for FPIs that, individually or along with their investor group (as defined under Regulation 22(3) of the FPI Regulations), hold equity AUM exceeding INR 25,000 crore in Indian markets (“size criteria”). Similar disclosure requirements were also extended to ODI subscribers via SEBI’s circular dated December 17, 2024.
Pursuant to SEBI’s circular dated April 9, 2025, this disclosure threshold has now been revised upward from INR 25,000 crore to INR 50,000 crore.
Click here to access the circular
Clarification on the position of Compliance Officer in terms of regulation 6 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015–Reg.
SEBI has clarified that the term “one-level below the board of directors” in Regulation 6(1) of the SEBI (LODR) Regulations, 2015 refers to a position directly reporting to the Managing Director or Whole-time Directors who are part of the Board. If the listed entity does not have a Managing Directors or a Whole-time Director, the Compliance Officer must be not more than one level below the CEO, Manager, or any person managing day-to-day operations.
The Compliance Officer must be in whole-time employment and designated as a Key Managerial Personnel (KMP), as per the amendment notified on December 12, 2024.
Click here to access the circular
RBI Updates
Processing of Regulatory Authorisations/ Licenses/ Approvals through PRAVAAH
The Reserve Bank of India (RBI) has mandated that all Regulated Entities (REs) must submit applications for regulatory approvals, authorisations, and licences exclusively through the PRAVAAH portal (Platform for Regulatory Application, Validation and Authorisation) starting May 01, 2025.
Launched on May 28, 2024, PRAVAAH has already processed nearly 4,000 applications and offers a centralised, secure platform for interacting with RBI. Application forms are available on the portal, along with user manuals, FAQs, and videos to assist users.
Click here to access the circular
Amendments to Directions – Compounding of Contraventions under FEMA, 1999
The Reserve Bank of India (RBI) has amended the Master Directions on Compounding of Contraventions under FEMA, 1999, introducing a monetary cap for certain violations. As per the newly inserted Para 5.4.II.vi, the compounding authority may, in appropriate cases involving exceptional circumstances and public interest considerations, limit the compounding amount to INR 2,00,000 per contravention (per regulation/rule) for cases falling under Row 5 of the prescribed computation matrix.
This measure aims to ensure fairness and proportionality in penal actions. The amendment is applicable with immediate effect and has been issued under Sections 10(4) and 11(1) of FEMA, 1999.
Click here to access the circular
Master Directions- Compounding of Contraventions under FEMA, 1999
Government of India vide Notification G.S.R. 566 (E); dated September 12, 2024, had notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 in supersession of the Foreign Exchange (Compounding Proceedings) Rules, 2000.
Accordingly, the Reserve Bank of India vide circular dated April 24, 2025 has issued a Master Direction consolidating all instructions issued on “Compounding of Contraventions under FEMA, 1999” and the list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix.
Click here to access the circular
Exports through warehouses in ‘Bharat Mart’ in UAE- Relaxations
To facilitate export through warehouses in ‘Bharat Mart’, a multimodal logistics network based marketplace in United Arab Emirates (UAE) that will provide Indian traders, exporters, and manufacturers access to the markets in UAE as well as worldwide, the Reserve Bank of India has vide circular dated April 23, 2025 has provided the following relaxations:
- AD banks may allow exporters to realise and repatriate the full export value of goods exported to ‘Bharat Mart’ within nine months from the date of sale of the goods from the warehouse.
- AD banks may allow the following without any pre-conditions, after verifying the reasonableness of the same:
- Opening/hiring of a warehouse in ‘Bharat Mart’ by an Indian exporter with a valid Importer Exporter Code.
- Remittances by the Indian exporter for initial as well as recurring expenses for the setup and continuing business operations of its offices.
Click here to access the circular
Amendments to Directions – Compounding of Contraventions under FEMA, 1999
The Reserve Bank of India vide circular dated April 22, 2025 has deleted Paragraph 5.4.II.v of the A.P. (DIR Series) Circular No. 17/2024-25 dated October 1, 2024, which allowed the compounding amount payable to be linked to a previous compounding order. To streamline processing and reduce turnaround time for compounding applications, the following additional details are now required in Part B of Annexure I to the above circular:
- Mobile number of the applicant/ authorised representative.
- Office of the Reserve Bank (i.e., Central Office, Regional Office, or FED CO Cell) to which the payment was made.
- Mode of submission of application (through PRAVAAH/ Physical).
Click here to access the circular
Other Regulatory Updates
MSMEs: A Cornerstone of India’s Economic Growth
Introduction
Micro, Small, and Medium Enterprises (MSMEs) are key to India’s economy, with 5.93 crore MSMEs employing over 25 crore people, contributing significantly to industrial output.
Legal Framework
The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) is a comprehensive law in India that aims to promote and develop micro, small, and medium enterprises (MSMEs).
Section 405 of the Companies Act, 2013 empowers the Central Government to direct companies to provide prescribed information or statistics, ensuring compliance, transparency, and the timely filing of forms like MSME-I. Accordingly, the Ministry of Corporate Affairs (MCA) introduced a half-yearly filing requirement for companies through the notification dated January 22, 2019. Under Section 9 of the MSMED Act, specified companies must submit a half-yearly return in form MSME-I to the MCA, detailing the amount due and reasons for any delays. This form must include dues outstanding for more than 45 days to Micro or Small enterprise suppliers. The filing deadlines are:
For the period April to September: 31st October
For the period October to March: 30th April
Revision of Limits
The Union Budget 2025-26 raises MSME investment and turnover limits as follows, to foster growth and efficiency:
|
TYPE |
INVESTMENT |
ANNUAL TURNOVER |
||
|
Old |
Revised (w.e.f. 1st April 2025) |
Old |
Revised (w.e.f. 1st April 2025) |
|
| Micro Enterprise | Rs.1 crore | Rs.2.5 crore | Rs.5 crore | Rs.10 crore |
| Small Enterprise | Rs.10 crore | Rs.25 crore | Rs.50 crore | Rs.100 crore |
| Medium Enterprise | Rs.50 crore | Rs.125 crore | Rs.250 crore | Rs.500 crore |
Some key Government Initiatives and Budget Highlights (FY 2025-26):
- Udhayam Registration Portal: serves as a pivotal platform for facilitating the registration of enterprises across India
- MSME SAMADHAAN: An online platform to address delayed payments, enabling MSEs to file complaints.
- Credit Guarantee: Increased cover from INR 10 crore to INR 20 crore to improve credit access.
- Credit Card Scheme: Offers ₹5 lakh credit for micro enterprises, with 10 lakh cards issued in the first year.
- Support for Entrepreneurs: INR 10,000 crores allocated for first-time and underprivileged entrepreneurs.
- PM Vishwakarma Scheme: A ₹13,000 crore initiative to support artisans and craftspeople, integrating them into global value chains.
- Make in India: A National Manufacturing Mission will provide policy support and roadmaps for small, medium, and large industries under the Make in India initiative.
Conclusion
The above mentioned initiatives, along with the revised investment and turnover limits, aim to create a more conducive environment for MSMEs, ensuring their continued contribution to India’s economic development.
Key Indices of regulatory framework: SEBI, RBI & MCA
Size-wise Classification of Capital Raised through Public and Rights Issues (Equity)
Source- SEBI Bulletin (April 2025)
Chart showing Region-wise Distribution of Capital Mobilised through Public and Rights Issues (Equity)
Source- SEBI Bulletin (April 2025)
Country wise Outward Investment from India from 01.01.2025 to 31.03.2025
Source- RBI Overseas Investment Division- Summary (March 2025)
Kinds of Companies Incorporated in March 2025
Source: Ministry of Corporate Affairs
Income Tax Updates
Section 37(1) of the Income-tax Act, 1961 – Business Expenditure – Deduction Not Permitted for Certain Settlements – Notification Dated 23-04-2025
Pursuant to the authority granted under clause (iv) of Explanation 3 to sub-section (1) of Section 37 of the Income-tax Act, 1961 (Act No. 43 of 1961), the Central Government hereby declares that any expenditure incurred in connection with the settlement of proceedings arising from violations or defaults under the laws listed below shall not be considered as expenditure incurred wholly and exclusively for business or professional purposes. Accordingly, such expenses shall not be eligible for any deduction or allowance:
- The Securities and Exchange Board of India Act, 1992 (Act No. 15 of 1992);
- The Securities Contracts (Regulation) Act, 1956 (Act No. 42 of 1956);
- The Depositories Act, 1996 (Act No. 22 of 1996);
- The Competition Act, 2002 (Act No. 12 of 2003).
This notification shall take effect from the date it is published in the Official Gazette.
Section 54EC of the Income-tax Act, 1961 – Exemption of Capital Gains on Investment in Specified Bonds – Notified Bonds – Notification Dated 07-04-2025
In exercise of the powers granted under clause (ba) of the Explanation to Section 54EC of the Income-tax Act, 1961, the Central Government hereby notifies that bonds issued by the Housing and Urban Development Corporation Limited (HUDCO)—a public financial institution notified under Section 2(72) of the Companies Act, 2013—and redeemable after five years, if issued on or after April 1, 2025, shall be treated as ‘long-term specified assets’ under the said section.
Income-tax (Ninth Amendment) Rules, 2025 – Amendment to Rule 114 – Notification Dated 03-04-2025
In exercise of the powers conferred under sub-section (2A) of section 139AA, read with section 295 of the Income-tax Act, 1961 the Central Board of Direct Taxes hereby inserts clause 5AA to Rule 114 of the Income Tax Rules, 1962
“(5AA) Any individual who has been allotted a Permanent Account Number (PAN) based on the Enrolment ID of an Aadhaar application submitted before October 1, 2024, must furnish their Aadhaar number to the Principal Director General of Income-tax (Systems), the Director General of Income-tax (Systems), or any person authorized by these authorities.”
This intimation must be provided on or before December 31, 2025, or by such other date as may be specified by the Central Board of Direct Taxes.
Income-tax (Tenth Amendment) Rules, 2025 – Insertion of Rule 12AE and Form ITR-B – Notification Dated 07-04-2025
In exercise of the powers conferred by Section 158BC, read with Section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby introduces a new Rule 12AE, which provides for the ITR Form and the mode of filing in search cases. The extract of the Rule is provided below for reference:
“12AE. Filing of Return of Income under Section 158BC”
- Any person required to file a return of income under clause (a) of sub-section (1) of Section 158BC—pertaining to a search conducted under Section 132 or requisition made under Section 132A on or after September 1, 2024—shall do so using Form ITR-B, duly verified in the manner specified in the form.
- The manner of furnishing the return of income referred to in sub-rule (1) shall be as specified in the table below, indicating the category of person in column (2) and the prescribed mode of filing in column (3).
| S.
No. |
Category of Person | Mode of Filing Return of Income |
| 1 | (a) Individuals or entities whose accounts are subject to audit under Section 44AB of the Income-tax Act
(b) Companies (c) Political parties |
Return must be filed electronically using a digital signature. |
| 2 | Any person not falling under the categories listed in Serial No. 1. | Return may be filed either: (a) Electronically using a digital signature; or (b) By electronically transmitting the return data under an electronic verification code. |
- The Principal Director-General of Income-tax (Systems) or the Director-General of Income-tax (Systems) shall prescribe the procedures, formats, and technical standards required to securely capture and transmit return data. They shall also be responsible for developing and implementing suitable policies for data security, storage, and retrieval with respect to the methods of return submission specified in column (3) of the Table.
- In cases where a taxpayer claims credit for tax payments against undisclosed income of the block period-excluding self-assessment tax for that period-such claims and their admissibility shall be subject to verification and satisfaction by the Assessing Officer.
Section 206C of the Income-tax Act, 1961 – Tax Collection at Source (TCS) – Notified Goods Exceeding Specified Value under Sub-section (1F) – Notification Dated 22-04-2025
The Central Government hereby notifies the following goods, where the value exceeds ten lakh rupees, as being subject to tax collection at source in accordance with the provisions of the said section.
- any wristwatch
- any art piece such as antiques, painting, sculptures
- any collectibles such as coins, stamps
- any yacht, rowing boat, canoe, helicopter
- any pair of sunglasses
- any bag such as a handbag, purse
- any pair of shoes
- any sportswear and equipment such as golf kit, ski wear
- any home theatre system
- any horse for horse racing in race clubs and a horse for polo
GST Updates
Notification No. 11/2025 – Central Goods and Services Tax (Second Amendment) Rules, 2025 – Amendment to Rule 164 – Dated 27-04-2025
Key Changes in the Central Goods and Services Tax (Second Amendment) Rules, 2025:
- Amendments to Rule 164: Changes to Sub-rule (4):
- No Refund: No refund will be issued for any tax, interest, or penalty already paid for periods prior to the 2025 amendment.
- Partial Appeal Withdrawal: In cases where an appeal covers both eligible periods (1st July 2017 – 31st March 2020) and non-eligible periods, the applicant may choose to withdraw only for the eligible period.
- Changes to Sub-rule (7):
- No Full Withdrawal Required: The applicant is not required to withdraw the entire appeal; they need only notify the authority about their decision to opt out for the eligible period.
- Deemed Withdrawal: The appeal will be considered withdrawn only for the eligible period (1st July 2017 to 31st March 2020).
Circular No. 248/05/2025 – GST: Clarifications on Various Issues Concerning the Availment of Benefits under Section 128A of the CGST Act, 2017 – Dated 27-04-2025
| Sno | Section | Details |
| 1 | Background | Section 128A and Rule 164, effective from 1st November 2024, have been introduced to offer a waiver of interest and penalty for demands under Section 73 for the period from 1st July 2017 to 31st March 2020. Earlier, Circular No. 238/32/2024-GST was issued to facilitate its implementation. |
| 2 | Issues Raised |
|
| 3 | Issue 1: Payments through GSTR-3B |
|
| 4 | Issue 2: Appeals for Mixed Periods |
|
| 5 | Instructions |
|
Instruction No. 3/2025 – GST: Guidelines for Processing GST Registration Applications – Dated 17-04-2025
| Sl. No. | Topic | Key Points |
| 1 | Background | There have been complaints regarding delays and requests for additional documents. The aim is to prevent the registration of fake firms while protecting legitimate applicants. |
| 2 | Problems Identified | Inconsistent checks, Unnecessary requests for clarifications, Problems related to Place of Business (PPOB), business constitution, and identity proofs
|
| 3 | Documents Officers May Request |
|
| 4 | Proof of Business Constitution |
|
| 5 | Processing Applications |
|
| 6 | Clarifications (Form REG-03) | Issued only for cases involving incomplete, illegible, mismatched, unclear addresses, or cancelled GSTINs. |
| 7 | Applicant Response (Form REG-04) | You must respond within 7 working days; failure to do so may result in application rejection. |
| 8 | Officer Action |
|
| 9 | Timely Action | Deemed approvals are not permitted; officers are required to take prompt action. |
| 10 | Restrictions on Queries | Minor or irrelevant queries are not allowed unless approved by the Deputy/Assistant Commissioner. |
| 11 | Senior Officer Supervision | Ongoing monitoring of registrations, physical verifications, and compliance. |
| 12 | Adequate Staffing | Ensure sufficient staff to prevent delays. |
| 13 | Trade Notices | Issue local clarifications regarding acceptable documents. |
Press Release: Government Clarifies No GST on UPI Transactions Over INR 2000 – Dated 18-04-2025
The government has clarified that there are no plans to impose Goods and Services Tax (GST) on UPI transactions exceeding INR 2,000. Claims suggesting otherwise are unfounded and misleading.
GST is applicable only on payment service charges, such as the Merchant Discount Rate (MDR), not on UPI transactions themselves. Since January 2020, the Central Board of Direct Taxes (CBDT) has exempted MDR for Person-to-Merchant (P2M) UPI transactions.
Since no MDR is charged on UPI P2M payments, GST does not apply to these transactions.
The government continues to support the growth of UPI through an Incentive Scheme, which backs low-value P2M transactions:
- FY 2021-22: INR 1,389 crore
- FY 2022-23: INR 2,210 crore
- FY 2023-24: INR 3,631 crore
India is a global leader in digital payments, accounting for 49% of all real-time transactions worldwide, as reported by ACI Worldwide in 2024.
The value of UPI transactions has surged dramatically:
- From INR 21.3 lakh crore in FY 2019-20 to INR 260.56 lakh crore in FY 2024-25.
- P2M transactions alone reached INR 59.3 lakh crore.
S.R. 256(E) – GST Appellate Tribunal Rules, 2025 – Dated 24-04-2025
| Sr. No. | Topic | Summary |
| 1 | Effective Date | Applicable from 24th April 2025 for procedures related to GSTAT. |
| 2 | Appeal Filing | Appeals must be submitted electronically via the GSTAT Portal along with certified copies. |
| 3 | Registrar’s Role | The Registrar is responsible for managing appeal registrations, hearings, and records. |
| 4 | Hearings | Hearings may be conducted physically, virtually, or in a hybrid format; cases will be dismissed if parties are absent. |
| 5 | Conduct Rules | Tribunal members and representatives must adhere to a dress code and conduct standards. |
| 6 | Applications | Stay, rectification, and other applications should be filed using GSTAT Form-01. |
| 7 | Document Management | Proper maintenance of records is required; special rules apply for affidavits and evidence. |
| 8 | Order Pronouncement | The Tribunal must issue orders within 30 days following the final hearing. |
| 9 | Fees and Costs | Fees are prescribed for filing and inspection; no fees apply for government-related cases. |
| 10 | Record Retention | Case records must be kept for 15 years; special procedural directions are permitted. |
