Regulatory Updates_The PULSE_January 2026

SEBI Updates

Securities and Exchange Board of India (Mutual Fund) Regulations, 2026

SEBI vide powers conferred under Section 30 read with clause (c) of Section 2 of Section 11 of the Securities and Exchange Board of India Act, 1992, had introduced Securities and Exchange Board of India (Mutual Funds) Regulations 2026 dated 14^th January 2026. It is a complete overhaul of India’s mutual fund regulations (replacing the 1996 rules), effective 01^st April 2026, aimed at improving transparency, cost clarity, governance, and investor protection while aligning fund manager incentives more closely with investor outcomes.

Key changes:

• Clearer cost structure: Introduces a Base Expense Ratio (BER) as the core management fee, with brokerage, taxes, and statutory costs disclosed separately.
• Lower expense caps: Reduces permissible expense limits across many scheme categories, especially passive funds and fund-of-funds.
• Performance-linked fees allowed: AMCs may charge performance-based expenses, subject to SEBI conditions and disclosures.
• Tighter brokerage limits: Caps brokerage costs for cash and derivatives transactions to control trading expenses.
• Stronger governance: Expands trustee and independent director responsibilities, with closer oversight of AMCs, fees, and related-party arrangements.
• Enhanced disclosures: More detailed, digital-first disclosures so investors clearly see what they pay and why.
• Simplified regulation: shorter, modernised, and consolidated rules designed to be easier to interpret and comply with.

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Master Circular for framework on Social Stock Exchange (SSE)

SEBI vide the powers conferred under Section 11(1) of the SEBI Act, 1992, with the objective of protecting investor interests and promoting orderly regulation and development of the securities market, has introduced the Master Circular for a framework on Social Stock Exchange (SSE) dated 19^th January 2026.

The master circular consolidates all existing SEBI circulars, directions, and guidelines relating to the framework for the Social Stock Exchange (SSE) into a single Master Circular to provide stakeholders with a unified reference.

It compiles procedural, disclosure, compliance, and operational requirements applicable to entities participating in the SSE ecosystem, including non-profit organisations (NPOs) and other eligible entities.

With its issuance, the circulars listed in the appendix are rescinded to the extent they pertain to the SSE framework. However, actions taken, applications filed, rights, obligations, liabilities, and pending proceedings under the rescinded circulars remain valid and enforceable under this Master Circular.

Click here to access the master circular  

Ease of doing investment and Ease of Doing Business- Doing away with the requirement of issuance of Letter of Confirmation (“LOC”) and to effect direct credit of securities in dematerialization account of the investor

To streamline the process for crediting securities pursuant to investor service requests – such as issuance of duplicate security certificates, transmission, transposition, claims from the unclaimed suspense account, and corporate actions – in dematerialised (“demat”) mode, and to reduce timelines as well as the risk of loss or pilferage, it has been decided to dispense with the requirement for issuance of a Letter of Confirmation (LOC).

To operationalise this measure, Depositories shall develop and implement a system/process enabling Registrars and Transfer Agents (RTAs) and Listed Companies to credit securities directly to the investor’s demat account, subject to completion of the necessary due diligence by the RTAs/listed companies.

Each investor service request shall be accompanied by a copy of the latest Client Master List (“CML”) of the investor’s demat account. The CML must not be older than two months and shall be duly attested by the Depository Participant (“DP”).

Accordingly, amendments have been made to Paragraphs 13, 20, 22, and 23, and to Annexures 7, 15, and 20 of the Master Circular. The amended provisions are set out in Annexure A to this Circular.

The provisions of this Circular shall come into force with effect from 02^nd April 2026. Any LOC issued prior to 02^nd April 2026 may be submitted by investors to the DP for dematerialisation within the prescribed timeline of 120 days from the date of issuance of the LOC.

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Ease of doing investment – Special Window for  Transfer and Dematerialisation of Physical Securities

SEBI, vide its circular dated 2^nd July 2025, had introduced a special window for re-lodgement of transfer deeds pertaining to physical securities.

Subsequently, with a view to further facilitating the transfer and dematerialisation (conversion into electronic form) of physical securities that were sold or purchased prior to April 1, 2019 but could not be processed due to procedural or documentation-related issues, SEBI has, vide circular dated 30^th January 2026, introduced an additional special window. The key features of the said circular are set out below:

• The special window shall remain open for a period of one year from 05^th February 2026 to 4^th February 2027.
• It covers fresh lodgements as well as transfer requests that were previously rejected, returned, or remained unattended.
• Only transfer in dematerialised form shall be permitted; the securities will be credited to the transferee’s demat account upon due verification.
• Securities transferred pursuant to this window shall be subject to a lock-in period of one year, during which they shall not be eligible for transfer, pledge, or creation of lien.
• Applicants are required to submit the original share certificates, duly executed transfer deeds (executed prior to 01^st April 2019), KYC documents, the latest Client Master List (CML), and such other documents as may be prescribed, to the concerned Registrar and Transfer Agent (RTA).
• Cases involving disputes or securities that have already been transferred to the Investor Education and Protection Fund (IEPF) shall not be eligible under this special window.

This initiative is intended to streamline the investment process and enable shareholders to secure rightful ownership of their legacy physical securities by facilitating their conversion into dematerialised form.

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Master Circular for compliance with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 by listed entities

SEBI has issued an updated Master Circular on compliance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), consolidating all operative circulars issued up to 30^th December 2025 into a single, comprehensive reference document.

The Master Circular consolidates existing circulars pertaining to periodic, event-based, and annual disclosures, as well as corporate governance and other compliance requirements under the LODR Regulations, thereby serving as an integrated compliance framework for listed entities.

This updated Master Circular supersedes earlier versions, including those dated 11^th July 2023 and 11^th November 2024, and incorporates provisions in force as of the end of 2025. Upon its issuance, the circulars listed in the appendix stand rescinded to the extent they relate to compliance under the LODR Regulations, without prejudice to any actions taken, liabilities incurred, or proceedings initiated pursuant to such earlier circulars.

The Master Circular addresses, inter alia, requirements relating to financial reporting, related party transactions, corporate governance norms, and Business Responsibility and Sustainability Reporting (BRSR). It is applicable to all listed entities, recognised stock exchanges, depositories, and other stakeholders governed by the LODR Regulations.

Click here to access the master circular   

RBI Updates

Foreign Exchange Management (Export and Import of Goods and Services) Regulations 2026

In exercise of the powers conferred under Section 7, Section 8, sub-section (6) of Section 10, and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India has notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026. The Regulations shall come into force with effect from 1 October, 2026.

These Regulations establish a unified and updated regulatory framework under FEMA governing all foreign exchange transactions relating to the export and import of goods and services. They supersede the earlier 2015 export regulations and consolidate the regulatory provisions applicable to exports and imports into a single comprehensive framework, with a view to enhancing clarity, consistency, and compliance.

Key Features:

• The Regulations govern exports, imports, and merchant trade transactions in respect of both goods and services, including software.
• A unified Export Declaration Form (EDF) has been introduced for reporting exports of goods and services, replacing multiple legacy reporting forms.
• Specific timelines have been prescribed for the realisation and repatriation of export proceeds, along with detailed conditions governing advance payments and third-party payments.
• All inward and outward remittances related to trade transactions are required to be reported through designated digital platforms such as the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS), to facilitate enhanced monitoring.
• Authorised Dealer banks have been entrusted with enhanced responsibilities for ensuring compliance, due diligence, and accurate reporting of transactions.

The consolidated framework aims to streamline procedural requirements, strengthen regulatory oversight and accountability, and promote ease of doing business for exporters and importers while ensuring robust compliance under FEMA.

Click here to access the regulation   

Export and Import of Goods and Services

The Reserve Bank of India (RBI), after a comprehensive review of the regulatory framework governing export and import of goods and services under FEMA, 1999, has issued the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, in consultation with stakeholders. The Regulations aim to promote ease of doing business, particularly for small exporters and importers, and to enable Authorised Dealers (ADs) to provide faster and more efficient services. The Regulations will come into effect from 1^st October 2026, and the accompanying directions will also be effective from the same date.

Key Points:

• Authorised Dealers must ensure strict compliance with FEMA, 1999, the rules and regulations issued thereunder, and the prevailing Foreign Trade Policy while handling export, import, and merchanting trade transactions.
• All references to the RBI must be submitted through the PRAVAAH portal.
• Any doubtful transactions must be reported to the Directorate of Enforcement (DoE).
• Upon the coming into force of these directions, the existing Master Directions on Export and Import of Goods and Services, along with the circulars listed in the Annex, shall stand superseded.
• Authorised Dealers are required to inform their customers/constituents of the contents of the circular.
• The directions are issued under Sections 10(4) and 11(1) of FEMA, 1999, and are without prejudice to approvals required under any other applicable law.

Click here to access the circular   

Foreign Exchange Management (Guarantees) Regulations, 2026

The Reserve Bank of India (RBI), vide notification dated January 6, 2026, has issued the Foreign Exchange Management (Guarantees) Regulations, 2026, superseding the earlier regulations governing guarantees. The Regulations have been framed under the Foreign Exchange Management Act, 1999 (FEMA) to regulate guarantees involving persons resident in India and persons resident outside India, with the objective of streamlining the regulatory framework for cross-border guarantees, enhancing transparency, and strengthening compliance mechanisms.

Key Elements:

• The Regulations provide a comprehensive definition of “guarantee,” including counter-guarantees, and prescribe the conditions under which a person resident in India may act as a surety, principal debtor, or creditor in a guarantee involving a non-resident.
• As a general rule, a person resident in India is not permitted to be a party to a guarantee where any other party is a non-resident, except in specified circumstances or where exemptions apply.
• Exemptions include guarantees issued by overseas branches of Authorised Dealer banks or units operating in International Financial Services Centres (IFSCs), certain irrevocable payment commitments issued by Authorised Dealers in their capacity as custodians, and guarantees issued in accordance with the Foreign Exchange Management (Overseas Investment) Regulations, 2022.
• The Regulations introduce detailed reporting requirements, mandating that particulars of guarantees issued, modifications thereto, and instances of invocation be reported in the prescribed format (Form GRN) on a quarterly basis to the designated Authorised Dealer banks, which shall in turn report the same to the RBI.
• A late submission fee has been prescribed for delays in reporting to ensure timely compliance.
• Consequential amendments have been made to related RBI circulars and Master Directions to align them with the revised regulatory framework.

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GST Updates

Advisory on Interest Collection and Related Enhancements in GSTR-3B

The GSTN has issued an advisory dated January 30, 2026, introducing key system enhancements in Form GSTR-3B, primarily related to the calculation of interest on delayed tax payments. The portal will now auto-compute interest in Table 5.1 by giving credit for the minimum cash balance available in a taxpayer’s Electronic Cash Ledger between the due date and the actual payment date, in line with the proviso to Rule 88B of the CGST Rules. This auto-populated interest represents the minimum payable amount and cannot be reduced by the taxpayer, though it may be increased if required. The advisory also provides for auto-population of the tax liability breakup, improved flexibility in ITC utilisation, and collection of interest on late returns for cancelled registrations through GSTR-10, thereby enhancing accuracy and compliance in GST filings.

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Advisory on RSP-Based Valuation of Notified Tobacco Goods under GST

An advisory has been issued to guide taxpayers on reporting taxable value and tax liability for notified tobacco goods under the RSP-based valuation mechanism in e-Invoice, e-Way Bill, and GSTR-1 / GSTR-1A / IFF. The advisory clarifies the method of reporting transaction value, tax calculated on the basis of RSP, and total invoice value to ensure correct GST compliance and avoid reporting errors.

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Advisory on Filing Opt-In Declaration for Specified Premises, 2025

An advisory has been issued informing taxpayers that declarations under Notification No. 05/2025 – Central Tax (Rate) are now available for electronic filing on the GST Portal. Eligible taxpayers supplying hotel accommodation services can opt to declare their premises as “specified premises” by filing Annexure VII (for existing registered taxpayers) or Annexure VIII (for new registration applicants) within the prescribed timelines. The advisory outlines eligibility conditions, filing windows, portal navigation steps, and other key points, and clarifies that the option will continue for subsequent years unless an opt-out declaration is filed.

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DGFT Updates eBRC Format for Stronger GST-Export Data Linkage, Effective Jan 2026

The Directorate General of Foreign Trade (DGFT) has amended Appendix 2U of HBP 2023 to enhance the GST–export data connection through an updated eBRC format, effective January 13, 2026. The new format adds critical fields such as GSTIN, GST Invoice Number, and GST Invoice Date to improve traceability of export proceeds and GST invoices, reducing mismatches in audits and claims. Exporters are advised to align invoicing, banking instructions, and internal records well before the implementation date. In a related update, GSTAT has also announced lenient scrutiny of appeals for the next six months due to portal rollout challenges.

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GST Portal to Block GSTR-3B Filing Over ITC and RCM Ledger Issues from Jan 2026

Starting from January 2026, the GST portal will block the filing of GSTR-3B returns in cases of discrepancies in ITC Reclaim and RCM Ledgers. For ITC Reclaim, the value entered in Table 4(D)(1) cannot exceed the closing balance of the ITC Reclaim Ledger, plus ITC reversed in Table 4(B)(2) of the current period. Similarly, for RCM, the ITC in Table 4A(2) / 4A(3) cannot exceed the RCM liability paid in Table 3.1(d), plus the available balance in the RCM Ledger. A negative ledger balance in either of these areas will block the GSTR-3B filing, requiring accurate ledger management to avoid delays.