Monthly Tax Bulletin: January 2026

Key highlights:

Direct taxes:

• The SC reaffirms the DTAA override over Section 206AA for TDS rates and applies strict “derived from” test for Section 36(1)(viii) deductions.
• The CBDT reiterates mandatory disclosure of foreign assets and income under the CRS/FATCA, supported by step-by-step ITR guidance and e-campaigns.
• The Capital Gains Accounts (Second Amendment) Scheme, 2025, notified – expands eligible banks, enables electronic deposits, statements, and closures.

Transfer pricing:

• The ITAT rejects the recharacterisation of captive software service provider as contract R&D entity, relying on consistency and binding APA.
• The TP adjustment on out-of-pocket expenses deleted for failure to apply the prescribed ALP methods.

FEMA:

• The RBI liberalises the rules for carrying Indian currency to/from Nepal and Bhutan – higher denomination notes permitted up to prescribed limits.
• An amendment easing cross-border travel and trade compliance effective from 28 November 2025.

Indirect Taxes:

• The Supreme Court holds that customs duty cannot be imposed on electricity supplied from a SEZ to a DTA.
• India and New Zealand conclude their Free Trade Agreement (FTA).
• India and Oman sign their Comprehensive Economic Partnership Agreement (CEPA).
• The government of Maharashtra announces the Maharashtra Industries, Investment & Services Policy, 2025.
• The GSTAT withdraws the staggered filing for GST appeals.
• The DGFT launches export credit support schemes for MSMEs under the Export Promotion Mission.

Monthly Tax Bulletin: January 2026

The January 2026 edition of the Grant Thornton Bharat Monthly Tax Bulletin captures key developments under the direct taxes, transfer pricing, indirect taxes, and FEMA, for December 2025.

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