Latest Tax Law Updates

The GST Appellate Tribunal (GST Order No. 156/2026, dated 10 July 2026) has introduced a token mechanism allowing appellants to preserve their appeal filing deadline. An appellant who generates a token on or before 31 July 2026 is treated as having complied with the filing due date, provided the actual appeal is completed within 60 days of token generation.

Practical impact: If you have a GST appeal due around this deadline (including appeals arising from DRC-07 demand orders) and are not yet ready to file the complete appeal, generate a token before 31 July 2026 to protect your limitation period, then complete filing within the following 60 days.

How to respond to GST DRC-07 →

CBDT Notification No. 80/2026 (dated 10 July 2026) exempts specified payments — interest, dividend, professional fees, commission and other prescribed receipts — made to 14 categories of eligible IFSC units from TDS, where the recipient claims deduction under Section 147 of the Income-tax Act, 2025. The relief runs for 20 consecutive tax years as opted by the payee, subject to filing Form No. 1(N) and meeting prescribed conditions, and applies retrospectively from 1 April 2026.

Practical impact: Payers to IFSC-unit recipients should confirm the recipient has filed Form 1(N) before applying nil TDS — deducting no tax without a valid Form 1(N) on record can itself trigger a TDS default notice.

Read the IT Act 2025 guide →

Courts and tribunals continue to strike down reassessment notices that fall outside settled boundaries. Three rulings this month are worth noting:

• Bombay HC (Zaheer Syed Abbas v. Union of India) — a Section 148 notice and reassessment order issued in the name of a company already struck off the register is void; assessments cannot proceed against a non-existent entity.
• Chennai ITAT (DCIT v. Paypal India (P.) Ltd.) — reopening after four years based on an issue already examined in the original scrutiny, with no tangible material and no failure to disclose, is a mere change of opinion and impermissible.
• Bangalore ITAT (Sonnenahalli Venkataramanappa Narayana Swamy v. ITO) — Section 150(1) cannot be used to reopen a year based on a Tribunal order that contains no actual finding or direction; where the normal limitation under Section 149 had already expired, the notice was void.

If you've received a reassessment notice: check whether the entity named still exists, whether the AO has any material beyond what was already examined earlier, and whether the notice relies on an appellate order that doesn't actually direct reopening.

How to respond to a reassessment notice →

The Tripura High Court (Sri Shekhar Chandra Podder v. Union of India, [2026] 188 taxmann.com 71) has held that a Section 74(1) demand-cum-show cause notice and the resulting order, issued for FY 2017-18 after the five-year limitation period under Section 74(10) had already expired, are without jurisdiction and void — since no notification under Section 168A extended the deadline for that year.

Why this matters if you have a pending DRC-01/DRC-07 for 2017-18 or similar older years:

• Check whether your SCN was issued within 5 years of the due date for filing your annual return for that year
• If issued late, verify whether any Section 168A notification specifically extended the limitation period — if not, the notice may be challengeable as void
• The Court also held that parallel CGST and State GST proceedings on the identical ITC mismatch issue are barred under Section 6(2)(b) — proceedings on genuinely distinct issues (e.g., short payment vs. GSTR-1/3B mismatch) may still continue separately

How to respond to GST DRC-07 →

The Supreme Court (Rakesh Kumar v. Union of India, [2026] 188 taxmann.com 181 (SC)) has reaffirmed — following its 2025 ruling in Radhika Agarwal v. Union of India — that Section 69 of the CGST Act, which empowers GST officers to arrest persons for specified offences, is constitutionally valid. A writ petition challenging the provision was disposed of in line with this binding precedent.

This closes off a common ground of challenge in GST prosecution matters. If you or your business face arrest proceedings under Section 69, the focus should now be on procedural safeguards (grounds of arrest in writing, production before a magistrate within 24 hours, bail conditions) rather than challenging the provision itself.

All GST Notices — overview →

The Finance Act, 2026 (effective 1 April 2026) amended the IT Act 2025 in 56 places. These amendments address ambiguities in the original text and introduce new policy measures. Key changes relevant to taxpayers receiving notices:

Penalty & Prosecution Rationalisation:

• Certain offences have been decriminalised — including failure to produce books of account and TDS defaults where the amount does not exceed ₹10 lakh
• Proportionality principle introduced — penalty amounts now calibrated to the severity of default
• Procedural relief provisions added for first-time technical defaults

New Exemptions:

• Foreign companies earning from data centre services in IFSC units exempt from Indian tax — effective 1 April 2026

Reassessment Clarifications:

• Parallel amendments to Section 281 (reassessment) clarify the meaning of "information" that triggers the show-cause process — narrowing arbitrary use

CBDT has also released a user-friendly booklet on IT Act 2025 as amended by Finance Act 2026 — available on incometaxindia.gov.in.

Read the IT Act 2025 guide → | Check your penalty exposure →

GSTN has issued an advisory announcing changes to the APIs of both the e-Invoice and e-Way Bill systems, effective 1 August 2026. Businesses using third-party accounting or ERP software for GST compliance should take note.

What this means:

• Your GST software vendor needs to update API integrations before 1 August 2026 — check with them immediately
• Failure to update may result in e-Invoice generation or e-Way Bill creation failures from 1 August 2026
• If e-Invoices fail to generate, the underlying supply may be treated as non-compliant — triggering ASMT-10 scrutiny notices
• Businesses generating e-Invoices manually via the IRP portal are not affected

Action required: Confirm with your software/ERP provider that their API integration is updated before August 1st.

What to do if you receive a GST ASMT-10 notice →

CBDT Circular No. 4/2026 reaffirms that every communication issued by an Income Tax authority — including notices, show-cause notices, summons, letters, and assessment orders — must carry a Document Identification Number (DIN) on its face. Any communication without a DIN is deemed to have never been issued.

Why this matters when you receive a notice:

• Check the notice for a DIN — it is typically a 20-digit alphanumeric number printed at the top
• Verify the DIN on the Income Tax portal: incometax.gov.in → e-Verify DIN
• If the notice has no DIN, or if the DIN is invalid on verification, the notice is legally void — you can raise this in your response
• This applies to all notice types: Section 268(1), 270(8), 281, 319, 263(9), and 368

Exception: Only notices issued on the e-Proceedings portal (which auto-generate DINs) and those issued during search/survey operations are exempt from this requirement.

Step-by-step guide to handling IT notices →

The Income Tax Act, 2025 came into force on 1 April 2026, replacing the Income Tax Act, 1961 after 65 years. The new Act restructures all provisions with new section numbering, simplified language, and a tabular/formula-based drafting style.

Key changes affecting notices:

• Section 139(9) (Defective Return) → Now Section 263(9)
• Section 142(1) (Inquiry Before Assessment) → Now Section 268(1)
• Section 143(2) (Scrutiny Notice) → Now Section 270(8)
• Section 148A (Pre-Reassessment SCN) → Now Section 281
• Section 156 (Demand Notice) → Now Section 319
• Section 245 (Refund Adjustment) → Now Section 334

What this means for you: Notices issued from 1 April 2026 will carry the new section numbers. Your response procedures remain the same — only the section references change. All pages on this site have been updated with both old and new section numbers for easy reference.

Read the full IT Act 2025 Guide → | View Section Mapping Table →

Under the new IT Act 2025, the reassessment framework (formerly Section 148A) is now governed by Section 281. The time limits for issuing reassessment notices are:

• 3 years from the end of the relevant assessment year — for all cases
• 5 years from end of relevant AY — where income escaping assessment exceeds ₹50 lakh
• 10 years from end of relevant AY — where the AO has evidence of assets/expenditure not disclosed exceeding ₹50 lakh

The mandatory show-cause procedure before issuing notice u/s 281 continues — the AO must share the "information" with you and give you 7 days to respond before the notice is formally issued.

How to respond to a reassessment notice →

The IT Act 2025 codifies faceless assessment as the default procedure. All communications — notices, show-cause notices, assessment orders — are routed exclusively through the e-Proceedings portal on incometax.gov.in.

What this means for responding to notices:

• Never submit documents physically to the Assessing Officer's office
• All responses must be uploaded on the portal under e-Proceedings → relevant notice type
• Acknowledgement of response is auto-generated — save it
• Personal hearings may be requested via the portal if needed (not automatically available)

Full step-by-step response guide →

The GST Amnesty Scheme under Section 128A, which waived interest and penalties on Section 73 demands (non-fraud cases) for FY 2017-18 to 2019-20, has now closed. The deadline for full tax payment was 31 March 2025 and the application deadline was 30 June 2025 — both have passed.

If you missed the scheme and still have a pending DRC-01 for these years:

• The waiver benefit is no longer available — interest and penalty will apply
• Section 73 demands can still be contested if the tax demand itself is incorrect
• Paying admitted tax before the adjudication order is issued may still result in reduced penalties at the AO's discretion
• Engage a CA immediately if an adjudication hearing has been scheduled

How to respond to GST DRC-01 →

From FY 2022-23 onwards, Input Tax Credit (ITC) claims are validated only against GSTR-2B (system-generated, auto-populated). GSTR-2A is no longer an acceptable basis for ITC claims in case of a mismatch notice.

If you received a GST ASMT-10 notice for ITC mismatch:

• Download your GSTR-2B for the disputed period — this is your primary defence document
• If GSTR-2B shows the ITC, your claim is valid — attach it with your reply
• If supplier filed late and didn't appear in your GSTR-2B — the ITC is not claimable for that period (must be claimed in the month supplier files)
• Timing differences between GSTR-2A and GSTR-2B are a common source of ASMT-10 notices

How to respond to GST ASMT-10 →

GST authorities have intensified cancellation proceedings under Rule 22 where a registered person has not filed returns for 6 or more consecutive tax periods. A REG-17 notice is issued with a 7-day response window.

Critical: Cancellation blocks ITC for your customers. If your GSTIN is cancelled, every business that purchased from you and claimed your GST as ITC faces a notice. This makes timely response to REG-17 non-negotiable.

• File ALL pending GSTR-3B returns before submitting your reply — even if you have to pay late fees
• Attach proof of all return filings with your revocation application
• Revocation must be applied within 30 days of cancellation order

How to respond to GST REG-17 →

The IT Act 2025 restructures penalty provisions. Key changes relevant to notices:

• Failure to comply with notice u/s 268(1) [old 142(1)] — Penalty of ₹10,000 per default (unchanged)
• Concealment of income — Penalty range remains 100%–300% of tax on undisclosed income; the new Act clarifies "misreporting" vs "under-reporting" with separate penalty rates
• Misreporting of income — 200% of tax (same as before)
• Under-reporting of income — 50% of tax on under-reported income
• Failure to file return — Late fee u/s 234F continues; ₹1,000 if total income ≤ ₹5 lakh, ₹5,000 otherwise

Calculate your penalty →

The Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) are now the primary data sources used by the Income Tax Department for scrutiny case selection. Mismatches between your ITR and AIS/TIS trigger automated notices.

Before responding to any scrutiny notice (Sec 270(8) / old 143(2)):

• Download your AIS and TIS fr WhatsApp Us