RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

 RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

KEY REGULATORY CHANGES:

1. Resident individual service exporters: EDF deemed filed upon submission of payment-credit information to the authorised dealer bank.

2. Other service exporters: Simplified EDF treatment for inward remittances up to ₹10 lakh per service.

3. Service imports: IDPMS reporting applies only to non-individual resident importers where invoice/contract value exceeds ₹10 lakh.

4. Bank reporting timeline: Five working days after receipt of relevant information.

Regulatory reference: FEMA (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026.

# R V SECKAR, FCS, LLB 79047 19295

OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

 OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

A historical TDS default can trigger direct recovery action against your bank account under Section 416(5) of the Income-tax Act, 2025.

This is a serious development for companies, directors, CFOs and tax professionals.

The Income Tax Department can issue a written notice directly to a bank holding money on behalf of an assessee, requiring it to remit money towards outstanding tax arrears.

WHY SHOULD COMPANIES BE CONCERNED?

1️ BANK ACCOUNTS EXPOSED TO RECOVERY PROCEEDINGS

The Department can invoke the garnishee mechanism and direct the bank to remit amounts towards outstanding tax arrears. This can disrupt salaries, vendor payments and working capital.

2️ HISTORICAL DEFAULTS CAN CREATE CONTINUING COMPLIANCE PROBLEMS

Unresolved TDS defaults may prevent proper reconciliation and correction of earlier statements, increasing the risk of further demands.

3️ TDS CORRECTION DEADLINES HAVE BECOME CRITICAL

Section 397(3)(f) of the Income-tax Act, 2025 prescribes a two-year correction window.

The Income Tax Department has specifically advised that correction statements for:

FY 2018–19: Quarter 4

FY 2019–20 to FY 2022–23: All quarters

FY 2023–24: Quarters 1 to 3

were to be filed by 31 March 2026.

These specified periods are now time-barred for ordinary correction statement filing.

4️ DOCUMENTARY EVIDENCE BECOMES CRUCIAL

For historical demands, companies should preserve:

·       TDS challan and payment proofs.

·       Vendor confirmations and declarations.

·       PAN and transaction records.

·       Evidence that the recipient/payee has paid the applicable tax, wherever relevant.

5️ INTEREST CAN SUBSTANTIALLY INCREASE THE LIABILITY

Under Section 411(3), interest at 1% per month or part thereof may apply to unpaid demand amounts.

Section 411(7) provides a mechanism to seek reduction or waiver of interest, subject to prescribed conditions, including genuine hardship and circumstances beyond the assessee's control.

WHAT SHOULD COMPANIES DO IMMEDIATELY?

✅ Download year-wise TDS defaults from TRACES.

✅ Reconcile Form 26AS, challans and TDS returns.

✅ Identify short deduction, short payment and interest defaults.

✅ Obtain documentary evidence for disputed historical demands.

✅ Pay admitted liabilities and examine eligibility for interest waiver.

✅ If a bank attachment notice is received, immediately obtain the notice and verify the demand with the jurisdictional officer.

✅ Where an appeal has been filed, seek appropriate protection under Section 411(12), which permits the Assessing Officer, at their discretion, to treat the assessee as not being in default in respect of the disputed amount.

CORPORATE GOVERNANCE TAKEAWAY

TDS compliance is no longer merely a quarterly filing obligation.

It is a matter of financial discipline, internal controls, treasury management and board-level oversight.

An old TDS default can become a present-day cash-flow crisis. Prevention, reconciliation and documentary evidence are essential.

# R V SECKAR, FCS, LLB, 79047 19295

#RBI DELEGATES FEMA COMPOUNDING POWERS TO REGIONAL OFFICES OF RBI ,

 #RBI DELEGATES FEMA COMPOUNDING POWERS TO REGIONAL OFFICES OF RBI ,

Compounding applications for Overseas Investment, Borrowing and Lending, and Guarantees were earlier received at RBI's Central Office.

These powers have now been delegated to select Regional Offices of RBI.

#A.P. (DIR SERIES) CIRCULAR 28/2026-27, 23 OCTOBER 2026),

#R V SEKAR FCS, LLB 79047 19295,

#PC JEWELLER SHARES DECLINE OVER 4% AFTER SEBI FLAGS FAILURE TO MAINTAIN A STRUCTURED DIGITAL DATABASE FOR UNPUBLISHED PRICE-SENSITIVE INFORMATION,

 #PC JEWELLER SHARES DECLINE OVER 4% AFTER SEBI FLAGS FAILURE TO MAINTAIN A STRUCTURED DIGITAL DATABASE FOR UNPUBLISHED PRICE-SENSITIVE INFORMATION,

PC Jeweller Ltd acknowledged the lapse but stated that its trading window remained closed for designated persons and their immediate relatives during the relevant period.

The company also clarified that the warnings carry no financial penalty and will not affect its financial position or operations.

#R V SEKAR FCS, LLB 79047 19295,

 

IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

 IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

IL&FS KNOCKS NCLT TO RECOVER RS 185 CRORE EXCESS #REMUNERATION PAID TO 23 ERSTWHILE (IL&FS, IFIN, AND ITNL) DIRECTORS , MANAGERS & INDEPENDENT DIRECTORS.

LOSSES DUE TO RECASTED ACCOUNTS

This has been exposed after the recasted accounts of these companies (FY13-18) unveiled significant losses in its financials as compared to profits recorded earlier.

MANAGERIAL REMUNERATION RECOVERY UNDER SECTION 199 OF THE COMPANIES ACT

IL&FS said #recovery from managing directors, whole-time directors, managers and CEOs is being pursued under Section 199 of the Companies Act,

RECASTING OF ACCOUNTS

Section 199 of CA authorizes the recovery of excess remuneration paid to managerial personnel when a company is forced to restate its financial statements.

RECOVERY FROM INDEPENDENT DIRECTORS

Section 197(9) obligates "any director", including non-executive and independent directors, to refund sums drawn beyond prescribed limits.

APPLICATION TO NCLT MUMBAI

In an application filed before the Mumbai Bench of the NCLT, IL&FS has sought directions to its former directors and two key subsidiaries, IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL), to return the excess remuneration.

RECASTED ACCOUNTS SHOWS A CUMULATIVE LOSS OF Rs 9,415.24 crore.

The recast accounts showed that IL&FS actually had a cumulative loss of Rs 9,415.24 crore from FY14 to FY18 against a reported profit of Rs 1,865.73 crores.

MCA DIRECTION

The Ministry of Corporate Affairs had directed IL&FS to recover the excess remuneration paid, following which IL&FS had issued notices to all 23 erstwhile directors.

RETALIATION BY IL&FS FORMER DIRECTORS

The former directors have disputed the notices on grounds including that the recast financials cannot retrospectively invalidate pay approved under duly audited original accounts, that the recast accounts are not audited statements and that the notices are vague because amounts differed between the first and later notices.

MAIN QUESTION

SHOULD IL&FS DIRECTORS, MANAGERS & INDEPENDENT DIRECTORS BE REQUIRED TO REFUND RS 185 CRORE EXCESS REMUNERATION WHEN PROFITS ON WHICH THEIR REMUNERATION WAS CALCULATED ARE SUBSEQUENTLY REVERSED THROUGH LEGALLY APPROVED RESTATEMENT OF FINANCIAL STATEMENTS?

CONCLUSION

The IL&FS case could become an important test of Sections 197 and 199 of the Companies Act, 2013, particularly concerning the recovery of excess remuneration from former independent directors. It sends a strong message that boardroom accountability must be substantive, not merely procedural.

#R V SEKAR FCS, LLB 79047 19295,

MISUSE OF IBC FRAMEWORK

MISUSE OF IBC FRAMEWORK

Key Finding

: The Insolvency and Bankruptcy Board of India (IBBI) has expressed concern that the Insolvency and Bankruptcy Code, 2016 (IBC) is being misused in certain cases for purposes other than genuine insolvency resolution or liquidation of corporate debtors.

- Important Facts: 

IBBI has identified several potential misuse patterns, including mitigating tax liabilities, closing or merging companies without regulatory scrutiny, avoiding investigations, prosecution and penalties under various statutes, and monetising or ring-fencing corporate assets.

- Analysis: 

The IBC is intended to facilitate time-bound insolvency resolution or liquidation, not to provide an alternative mechanism for avoiding statutory liabilities, regulatory oversight or legal proceedings. Using insolvency proceedings for such collateral purposes could undermine the objectives and integrity of the insolvency framework.

- Impact: 

Resolution Professionals (RPs), creditors, directors and other stakeholders must exercise heightened vigilance to identify transactions or insolvency applications that may conceal improper motives, facilitate asset transfers or circumvent statutory obligations.

- Conclusion / Action 

Required: IBBI emphasises that vigilance by Resolution Professionals is paramount. RPs should independently examine the commercial purpose of transactions, scrutinise asset monetisation and transfers, identify potential regulatory circumvention, and ensure that insolvency proceedings are conducted strictly in accordance with the IBC, 2016.

SUNDARAM-CLAYTON: COMPANY SECRETARY’S RESIGNATION AND REAPPOINTMENT REVERSED WITHIN 72 HOURS – CORPORATE GOVERNANCE CONCERNS

 SUNDARAM-CLAYTON: COMPANY SECRETARY’S RESIGNATION AND REAPPOINTMENT REVERSED WITHIN 72 HOURS – CORPORATE GOVERNANCE CONCERNS

POWER STRUGGLE IN SUNDARAM CLAYTON BOARD

KEY FINDING:

On 27 March 2026, Sundaram Clayton’s Board accepted the Company Secretary’s resignation and approved a replacement appointment, with three of the four Independent Directors present supporting the decisions; however, both decisions were reversed at an emergency Board meeting on 30 March 2026.

- IMPORTANT FACTS:

The company disclosed the Friday decisions to BSE and NSE on the same day. On 30 March, the Company Secretary withdrew his resignation, the replacement appointment was cancelled,

R Gopalan attended and voted for reinstatement, stepped down as Chairman, and continued as a Non-Executive Independent Director; Venu Srinivasan was redesignated Chairman.

- ANALYSIS:

The reversal within 72 hours raises questions about the stability of Board decisions, the independence of Board oversight and the circumstances surrounding the emergency meeting convened by Venu Srinivasan, then Chairman Emeritus. One of the Independent Directors who approved the original decisions also changed position.

- IMPACT:

Such rapid reversals can create uncertainty for investors, employees and stakeholders regarding leadership continuity and corporate governance. They also highlight the importance of transparent Board deliberations, proper documentation of decisions and clear disclosures to stock exchanges.

HERE IS AN ACTUAL FAMILY SUCCESSION DISPUTE

Recent reporting confirms a serious disagreement within the immediate Venu Srinivasan family.

The family has effectively split into two groups:

WHAT IS THE ACTUAL DISPUTE ABOUT?

The central issue is division of family wealth and economic ownership between the son and daughter.

- Venu Srinivasan's position is that succession arrangements have already been made.

- Sudarshan is associated with TVS Motor Company and TVS Holdings.

- Lakshmi is associated with Sundaram-Clayton and TAFE.

- Mallika and Lakshmi contend that allocation of management responsibilities does not amount to a final settlement of family wealth.

- They want a transparent and fair determination of the economic ownership interests.

THE MARCH 2024 FAMILY MOU IS A MAJOR POINT OF DISAGREEMENT

A memorandum of understanding was signed on 20 March 2024 by the four family members.

The disagreement concerns its scope:

LATEST DEVELOPMENT – OCTOBER 2026: THE DISPUTE REACHES THE COURTS

Major development

The dispute has moved beyond internal family discussions.

According to reports dated 27–31 October 2026:

- Venu Srinivasan and Sudarshan Venu have filed caveats.

- Mallika Srinivasan and Lakshmi Venu have also filed caveats.

- The filings were made in Chennai civil and commercial courts on 12 and 13 October.

- Venu and Sudarshan are seeking to protect their legal interests against possible proceedings.

- Mallika and Lakshmi have reiterated their preference for an amicable settlement through transparent discussions.

- The dispute concerns inheritance, economic ownership and division of family business interests.

A caveat is a precautionary legal filing intended to ensure that a court hears the caveator before passing an order affecting their interests. It is not itself a court judgment or proof that a lawsuit has been decided.

- CONCLUSION / ACTION REQUIRED:

Companies should ensure that key managerial personnel appointments and resignations are supported by documented Board deliberations and sound governance processes. The circumstances and rationale for reversing the original decisions should be clearly documented and appropriately disclosed to stock exchanges to maintain investor confidence.

#R V SEKAR FCS, LLB 79047 19295,