Monthly Tax Bulletin: May 2026

Key highlights:

Direct taxes:

• The Supreme Court dismisses the Revenue’s SLP in the Coursera case, affirms that online aggregation platform receipts are not taxable.
• The CBDT issues detailed FAQs on interplay and transition to the IT Act 2025.
• The CBDT amends Rule 10U of the Income-tax Rules 1962 (IT Rules 1962) and Rule 128 of the IT Rules 2026.
• The Ministry of Finance notifies the amending protocol between India and Brazil.

Transfer pricing:

• The HC rejects the Revenue's submission that limitation consequences operate only qua issues remanded, not decided by the Tribunal.
• The TP adjustment on the RSUs issued by the parent company without cost to the assessee is invalid.
• Royalty on the export sales is restricted to 1%; the assessee’s reliance on regulatory approvals and inconsistent year-to-year positions was rejected.

FEMA:

• The RBI prescribes a reporting framework for guarantees.
• Amendments to the Master Direction on non‑resident investment in debt instruments were finalised.

Indirect taxes:

• The GST registration in one state can be denied due to a compliance default in another state – Rajasthan HC.
• The ITC cannot be availed where the supplier defaults in tax payment; Section 16(2)(c) upheld – Gujarat HC.
• Introduction of the IMS offline tool for bulk invoice-level actions by recipients.
• ‘Re-compute interest’ functionality enabled in Table 5.1 of Form GSTR-3B.
• India and New Zealand sign a comprehensive FTA with enhanced market access and investment commitments.
• US CBP operationalises the CAPE tool for electronic filing of reciprocal tariff refund claims.

Monthly Tax Bulletin

The May 2026 edition of the Grant Thornton Bharat Monthly Tax Bulletin provides a concise summary of key developments in direct taxes, FEMA, transfer pricing, and indirect taxes for April 2026.

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