Black Money Act: Procedural Safeguards, Defence Walls, and Protecting Honest Taxpayers Across Scenarios

A Professional and Authoritative Guide for Deceased Assessees, Legal Heirs, Seniors, and NRIs

By CA Surekha S. Ahuja

Introduction — When the Law Protects the Innocent

The Black Money (Undisclosed Foreign Income and Assets) Act, 2015 (BMA) is India’s most stringent fiscal law. Penalties are severe, including tax and equal penalties, with potential prosecution exposure.

Yet, the law is procedural at its core. Every misstep by authorities — issuing rash SCNs, ignoring replies, failing approvals, or relying on assumptions — can invalidate penalties.

This guide addresses all eventualities where taxpayers are affected:

• Orders issued rashly or mechanically

• Posthumous penalties

• Impact on legal heirs

• Senior citizens or citizens with prior full tax compliance

• NRIs with overseas income/assets

• Prior search or ITAT assessments with clean findings

Key Truth: If the department misapplies the law, how can any honest citizen — young, old, educated, uneducated, resident, or NRI — rest peacefully, having paid full taxes in their lifetime?

This post equips readers with procedural weapons, defence walls, and winning strategies.

Rash or Mechanical SCNs — The Achilles Heel

A majority of BMA penalties fail because SCNs:

• Do not acknowledge submitted replies

• Ignore prior search or ITAT assessments

• Assume ownership or benefit mechanically

• Impose deadlines without statutory justification

Legal Foundation:

• SC – Mohinder Singh Gill: natural justice requires meaningful reply consideration

• Delhi HC – Sabh Infrastructure: mechanical orders without reasoning = null and void

Winning Strategy:

• Document all replies submitted

• Point out non-application of mind

• Emphasize absence of specific evidence

Deceased Assessees — Law Shields the Dead

Orders issued posthumously violate natural justice:

• SCN to deceased = void ab initio

• Legal heirs cannot be penalized without proof of benefit or control

• Prior search-based assessments (AYs 2005-06 to 2015-16) with no adverse finding are binding

Procedure:

• Submit death certificate & succession proof

• Attach prior ITAT or search assessment orders

• Demonstrate absence of beneficial ownership or inflow to heirs

Outcome: Departments issuing posthumous SCNs risk complete nullification of penalties, and courts consistently protect estates.

Legal Heirs — Protecting Innocent Parties

Legal heirs are sometimes implicated without evidence of actual benefit.

• Liability arises only if heirs funded, controlled, or benefited

• Mere inheritance or nominee designation is insufficient

Strategy:

• Affidavits from heirs confirming no benefit received

• Map fund flows and corporate records

• Forensic CA certificates tracing funds and ownership

Verdict Trend: Courts have repeatedly held heirs cannot be penalized for inherited assets or unearned benefits, unless deliberately misused.

Senior Citizens, Law-Abiding Taxpayers, and NRIs

Many honest taxpayers — including seniors, residents, and NRIs — have:

• Paid all taxes fully

• Disclosed income transparently

• Submitted IT returns for decades

Reality: They may still receive rash SCNs alleging foreign assets.

Legal Protection:

• Section 46 & 47 BMA — SCN must provide reason, evidence, hearing, and be time-bound

• Prior assessments (ITAT, search) are binding unless fresh evidence emerges

• Natural justice applies equally to all, irrespective of age, status, or NRI status

A Practical Reality: Many taxpayers save money to ensure their children, settled abroad, can live with dignity or pursue opportunities outside India. They pay full taxes but face harassment from mechanical BMA orders. Children, seeing parents’ age, illness, and tension, often do not wish to return to India, fearing repeated scrutiny.

Policy Insight: The BMA was intended for undisclosed income of corrupt officers, politicians, or powerful individuals, not honest citizens. Punitive action should target procedural lapses by officers, not taxpayers who have lived and complied by the law. “Jiska khaya, usko maro” should never guide law enforcement. Courts increasingly recognize that procedure, evidence, and fairness protect compliant taxpayers from arbitrary action.

Prior Search Assessments — Finality Defence

• ITAT and search-based assessments are final unless fresh evidence exists

• Mechanical reopening of concluded cases = invalid (CIT vs Reliance Industries, SC – Sahara India)

Strategy:

• Attach prior orders as primary evidence

• Emphasize compliance and absence of undisclosed assets

• Challenge posthumous or heir-targeted SCNs as assumption-based

Beneficial Ownership — The Indestructible 10-Layer Defence Wall

Even complex corporate/fund allegations fail when taxpayers produce a comprehensive ownership defence:

1. Domestic & foreign fund-flow trail

2. Foreign bank statements proving credit source

3. Deceased/assessee ITRs + Schedule FA

4. Corporate ownership/trust documents

5. POA or nomination letters

6. Loan/dividend agreements, if applicable

7. Affidavits confirming source of funding

8. Affidavits by heirs confirming no benefit received

9. Evidence of no inflows/dividends

10. Forensic CA certificate mapping all flows

Impact: AO assumptions collapse. Penalties rarely survive this defence.

Limitation and Mandatory Approvals — Jurisdictional Shields

• Section 47 BMA: Penalty must be passed within one year of end of FY of SCN issuance

• Mandatory approvals: JCIT/ACIT depending on case

Strategy:

• Highlight any delay or missing approvals in appeals

• Use as procedural weapon, often neutralizing the penalty before facts are even argued

Evidence and Natural Justice — Core Anchors

• AO must provide all evidence relied upon (CRS, bank statements, audit trails)

• Failure = breach of natural justice → penalty void

• SCs and HCs have repeatedly emphasized speaking orders and reasoning

Strategy: Demand disclosure formally and attach ignored replies in appeal

Departmental Failures — When Law Is Ignored

The department may issue SCNs or orders despite:

• Prior ITAT/search assessments showing no adverse findings

• Deceased or senior citizens being unable to respond

• Legal heirs having no beneficial ownership

• NRIs already compliant under foreign tax regimes

Human and Policy Perspective: Honest taxpayers — including NRIs and heirs — often refrain from returning to India due to harassment and repeated scrutiny, even when assets and income are fully declared. The system, if misapplied, discourages voluntary compliance and lawful savings, forces stress, and may separate families. Courts favor procedure, evidence, and natural justice, ensuring taxpayers are not penalized for officers’ overreach or ignorance of law.

Practical Justice: Those who have lived and paid their taxes fully should not face punitive action. Law should target actual wrongdoers — politicians, government officers, or persons concealing assets, not compliant seniors, NRIs, or heirs. “Jiska khaya, usko maro” has no place in law.

Strategic Steps — Your Stepwise Defence

1. Track timeline: SCN, replies, orders, deadlines

2. Gather documentation: ITAT/search orders, death/succession certificates, fund flows

3. Review procedural compliance: Section 46 & 47, approvals, hearing, limitation

4. Apply the 10-layer beneficial ownership defence

5. Prepare formal appeal: NFAC or writ petition highlighting procedural and jurisdictional defects

6. Engage professional representation for technical evidence and fund tracing

Conclusion — Procedure, Evidence, and Jurisprudence Are Your Arsenal

The Black Money Act is draconian, but it is procedural to its core.

• Rash SCNs, posthumous notices, or mechanical penalties are prime candidates for appeal

• Deceased persons and legal heirs are protected under natural justice

• Senior citizens, law-abiding taxpayers, and NRIs cannot be penalized for lawful disclosure

• Prior search/ITAT assessments create a legal fortress

• Comprehensive beneficial ownership mapping, affidavits, and procedural compliance crush AO assumptions

Verdict Pattern: Courts consistently strike down orders where:

• Procedure is ignored

• Replies are not considered

• Beneficial ownership is incorrectly assumed

• Prior clean assessments exist

Key Takeaway: Procedure, law, and evidence are your strongest weapons — ensuring peace of mind for taxpayers, heirs, and deceased estates, no matter how harshly or rashly a BMA order is issued.

Policy Note: The BMA should target actual tax evaders — officers or politicians hiding income, not law-abiding taxpayers who “have eaten according to law” and wish to live peacefully with family. Arbitrary enforcement disrupts lives, causes tension, and may separate families unnecessarily. Courts and procedural safeguards exist to protect the innocent and compliant.

MCA Expands Small Company Definition to ₹10 Cr Capital & ₹100 Cr Turnover

Notification No. G.S.R. 880(E) | Effective 01 December 2025

By CA Surekha S Ahuja

The Ministry of Corporate Affairs has issued the Companies (Specification of Definition Details) Amendment Rules, 2025, significantly widening the category of Small Companies under Section 2(85) of the Companies Act, 2013.

Revised Thresholds for Small Companies

Criteria	Earlier Limit	Revised Limit (Effective 01.12.2025)
Paid-up Capital	≤ ₹4 crore	≤ ₹10 crore
Turnover (preceding FY)	≤ ₹40 crore	≤ ₹100 crore

Mandatory ‘AND’ Condition for Classification

A company will be treated as a Small Company only if both limits are satisfied:

Condition	Requirement
Paid-up Capital	Must be ≤ ₹10 crore
Turnover	Must be ≤ ₹100 crore (preceding FY)
Interpretation	Both conditions must be met together (AND condition)

Even if one condition is breached, the company does not qualify as a Small Company.

Complete Benefits & Exemptions for Small Companies 

Benefit / Exemption	Provision	Advantage
Abridged Board’s Report	Rule 8A	Simplified reporting, fewer disclosures
No Cash Flow Statement	Schedule III exemption	Reduced audit & reporting burden
Lower Penalties (50% reduction)	Section 446B	Reduced financial exposure for non-compliance
Only Two Board Meetings per year	Section 173(5)	Ease of management for closely-held entities
No IFC reporting by auditors	CARO exemption	Lower audit complexity
No Auditor Rotation	Section 139(2) exemption	Cost savings and stability
Relaxed disclosures	Rules 5, 8 exemptions	Less documentation and compliance work
CSR not applicable	Outside Section 135 thresholds	No CSR reporting or spend
Easy Strike-Off / Closure	Section 248	Quicker exit process
Eligible for Fast-Track Merger	Section 233	NCLT-free merger, faster approval

Who Benefits Most?

Category of Companies	Why They Benefit
MSMEs	Lower compliance cost and simpler governance
Family Businesses	Simpler reporting structure
Startups	Compliance-light environment as they scale
Professional firms (CA/Legal/Consulting)	Easier corporate structure maintenance
Manufacturing & Trading Units	Flexibility in growth without extra compliance

Conclusion

With G.S.R. 880(E), companies meeting both conditions —

Paid-up Capital ≤ ₹10 crore AND Turnover ≤ ₹100 crore —

will now enjoy reduced compliance, lower penalties, simplified reporting, and faster restructuring routes.

This is one of the most impactful ease-of-doing-business reforms for small and growing companies in recent years.

When Numbers Are Not Enough: Supreme Court Flags Section 74 GST SCNs Without Facts as Prima Facie Unsustainable

 Case: GR Infra Projects Limited Ratlam v. State of Madhya Pradesh & Ors., Order dated 21.11.2025

By CA Surekha S Ahuja

Introduction: Section 74 Is Not Routine – It Is Penal and Serious

Section 74 of the CGST/SGST Act represents the sharpest instrument in the GST adjudication toolkit. It is invoked only when the department alleges:

• Fraud

• Wilful misstatement

• Wilful suppression of facts

• Intent to evade tax

These are intention-based penal charges. Unlike normal tax adjustments, Section 74 attracts:

• Extended limitation of five years

• Penalties equal to the tax evaded

• Potential quasi-criminal implications

• Reversal of input tax credits

Because of this, the notice itself must be speaking, fact-based, and reasoned. Mere numerical discrepancies or computations cannot substitute for allegations of fraud or suppression.

The Supreme Court’s recent order in GR Infra Projects Limited has clarified, definitively, that a Section 74 SCN without foundational facts is prima facie unsustainable.

Background: The Defective SCN

The petitioner received a Section 74 SCN which:

• Contained only numerical tax differentials

• Did not disclose:

  • The acts constituting alleged suppression or misstatement

  • The documents relied upon

  • The reasoning for invoking the extended limitation period

  • Any basis for alleging intent to evade

The Madhya Pradesh High Court refused to quash the notice, requiring the assessee to respond to the Department. The petitioner moved the Supreme Court via SLP (C) No. 33594/2025.

The Core Issue

Whether a Section 74 SCN containing only tax figures, without allegations, factual bases, or material particulars, can create jurisdiction or is void ab initio.

Supreme Court’s Prima Facie Findings

The Supreme Court held:

• The assessee had “no idea” why fraud, wilful misstatement, or suppression was alleged.

• The SCN lacked foundational facts required under Section 74.

• Mere numerical discrepancies do not establish suppression or intent.

• The SCN failed to justify the extended limitation period.

Consequently:

• The Court issued notice to the Revenue (returnable in four weeks)

• Stayed all proceedings arising from the impugned SCN

• Highlighted that non-speaking, cryptic SCNs under Section 74 are prima facie unsustainable

While the Court did not decide the ultimate validity, its observations serve as a strong signal to taxpayers and authorities.

Legal Analysis: Why the Notice Fails

A. Section 74 Requires Specific Allegations

• Fraud, suppression, and wilful misstatement require active conduct and mens rea.

• Mere differences in tax figures cannot establish intention.

• Courts have consistently held this principle, including:

  • Pushpam Pharmaceuticals – suppression must be deliberate

  • Continental Foundation Joint Venture – intent must be proven

  • Oudh Sugar Mills – factual allegations cannot be inferred from numbers alone

B. Natural Justice Demands a Speaking Notice

• A taxpayer cannot respond meaningfully to a blank notice.

• Violation of audi alteram partem and Article 14 renders the SCN void.

C. Jurisdictional Defect Cannot Be Cured

• If the SCN lacks foundational facts, the authority has no jurisdiction to proceed.

• The defect cannot be remedied during adjudication.

D. Extended Limitation Period Requires Justification

• Section 74(1) permits 5-year limitation only when fraud or suppression is established.

• A mechanical invocation without factual explanation is illegal.

E. Numbers Cannot Substitute Narrative

• Section 74 is penal and intention-based.

• Numerical tables alone cannot trigger the provision.

Illustrative Comparison: Defective vs Proper SCN

A. Typical Defective SCN

• “Difference found in GSTR-1 vs GSTR-3B: ₹65,32,110”

• “Tax short paid; pay under Section 74”

• No acts, no allegations, no reasoning

B. Legally Sustainable SCN

• Specific invoice/transaction suppressed

• How concealment occurred

• Evidence relied upon

• Establishment of intent to evade

• Justification for invoking Section 74 instead of Section 73

• Annexures with detailed computations

Observation: Numbers are data, not allegations. A valid SCN must read like a charge-sheet, not a spreadsheet.

Practitioner’s 10-Point Validity Checklist

1. Are acts constituting suppression/fraud specifically described?

2. Are the foundational facts disclosed?

3. Are the documents relied upon identified/annexed?

4. Is intent (mens rea) specifically pleaded?

5. Is the extended limitation period justified with reasons?

6. Are quantifications linked to evidence?

7. Is the SCN internally consistent?

8. Does it distinguish between Section 73 and 74 applicability?

9. Can the assessee give an effective reply?

10. Is the SCN templated or mechanical?

If any of the first five fail → SCN is prima facie void.

Courtroom-Ready Defence Draft for Taxpayers

I. Preliminary Objection:

“The impugned SCN is cryptic, mechanical, and devoid of foundational facts. It merely presents figures without narrating acts constituting fraud, misstatement, or suppression. It is void ab initio.”

II. Section 74 Cannot Be Invoked Without Mens Rea:

“Section 74 is penal and intention-based. The SCN does not identify any transaction allegedly suppressed, nor establish intent. Invocation is arbitrary.”

III. Extended Period of Limitation Unjustified:

“Without factual narration, invocation of the extended period is legally unsustainable.”

IV. Reliance on Precedents:

Oryx Fisheries (SC), Mohinder Singh Gill (SC), Dharampal Satyapal (SC), GSP Power Ltd. (Allahabad HC) – Notices must be self-contained; defects cannot be cured during adjudication.

V. Relief Sought:

“Quash the SCN as void ab initio or stay proceedings until a valid, reasoned notice is issued.”

Key Takeaways for Taxpayers and Professionals

• Section 74 cannot be invoked mechanically; it requires fact-based allegations.

• Taxpayers now have a Supreme Court-tested defense shield.

• SCNs lacking particulars can be challenged on jurisdictional, constitutional, and procedural grounds.

• Compliance teams should vet SCNs for speaking, reasoned content before responding.

• Future GST litigation will focus on the quality of SCN as much as the alleged figures.

Conclusion

The GR Infra judgment reaffirms a simple yet powerful principle:

Numbers do not make allegations; allegations require facts, reasoning, and evidence.

A Section 74 SCN is a legal weapon and must be wielded with precision, reasoning, and fairness. Cryptic notices without material particulars collapse under their own insufficiency, protecting taxpayers from arbitrary action.

This judgment is a definitive guidepost for GST professionals, practitioners, and taxpayers seeking clarity on what constitutes a valid Section 74 show cause notice.

Geeta Jayanti Reflection: A Dharma Framework for Conflict Management in Family Businesses

How Parents Become the Silent Centre of the See-Saw

By CA Surekha S Ahuja

The Pain No One Sees

Every family business has two balance sheets—
one financial, one emotional.
The first is audited yearly.
The second is carried silently by parents.

When siblings disagree, parents stand in the centre—
not as judges
but as the fulcrum trying to balance two worlds.

Their suffering remains unspoken:
the guilt of being “unfair,”
the fear of losing harmony,
the heartbreak of watching children drift apart,
the silent tears when their life’s work becomes a battlefield.

In every conflict, parents bend first… and break deepest.

Why Geeta Jayanti Makes This Reflection Necessary

The Gita begins with Arjuna’s emotional collapse—
not due to lack of skill,
but due to attachment, confusion, and inner conflict.

This is exactly how family disputes unfold.

Krishna’s teachings offer a clear path:

• Ego is the real enemy, not the other person.

• Decisions made in emotional fog always cause damage.

• Dharma is choosing what preserves harmony, not what satisfies the ego.

• True leadership is emotional clarity, not authority.

Today, more than ever, this wisdom is needed in family businesses.

Parents: The Unseen Shock Absorbers

In most families with two children:

• both are educated

• both are capable

• both feel right

• both want space

And parents get stuck in the middle—
absorbing hurt from both ends.

They don’t choose sides.
They only choose peace.

But peace comes at a cost:
their own emotional wellbeing.

Children Suffer Too

Sibling conflict is rarely about business.
It is about feeling:

• unheard

• unequal

• overshadowed

• insecure

Both children hurt.
Both fear losing their place.
Both fear disappointing their parents.

But neither says it aloud.

A Simple Dharma Framework for Family Harmony

1. Saankhya — See Clearly

Understand the real cause of conflict before reacting.

2. Nishkaam Karma — Act Without Ego

Decide for the family, not personal victory.

3. Samatvam — Stay Emotionally Balanced

Not every difference needs escalation.

4. Swadharma — Right Role, Right Person

Let competence decide responsibilities, not entitlement.

Geeta Jayanti: A Day to Reset

Ask yourself:

• Are our words hurting our parents?

• Is ambition getting louder than affection?

• Are we fighting for roles or for recognition?

• Are we reacting from ego or responding from wisdom?

Krishna didn’t remove conflict.
He removed confusion.
Families must do the same.

Final Reflection

A business can recover from losses.
A family may not recover from broken relationships.

On this Geeta Jayanti, choose:

• wisdom over ego

• communication over assumptions

• understanding over pride

• unity over victory

Because the strongest family businesses are not the ones that earn the most—
but the ones that hurt the least.

The Silent Compliance That Activates a Company: An Analysis of Form INC-20A (Commencement of Business)

By CA Surekha S Ahuja

A refined examination of law, interpretation, procedure, defaults, and defence positions

A company’s Certificate of Incorporation does not automatically grant it the right to operate. Modern corporate regulation in India follows a two-stage corporate birth: incorporation, and then activation. The second stage is achieved only through Form INC-20A, the statutory declaration of commencement of business.

This requirement, introduced to curb shell entities, is often underestimated—but legally, it forms the very foundation of the company’s capacity to transact, borrow, and assume obligations.
Failure to comply invites penalties, director liability, and even the possibility of strike-off.

What follows is a comprehensive professional commentary, integrating statutory law, procedural mandates, interpretational nuances, practical examples, and legitimate defence strategies.

Statutory foundation and legal effect

Section 10A of the Companies Act, 2013 mandates that every company incorporated on or after 02.11.2018 must file a declaration confirming:

• Receipt of subscription money as per the Memorandum of Association, and

• Verification of its registered office.

The declaration must be filed within 180 days of incorporation in Form INC-20A, certified by a practising professional.

Legally, Section 10A is not a procedural afterthought. It is a condition precedent to a company exercising any commercial or borrowing powers. Until the declaration is filed, the company remains a corporate entity “in existence” but not “in operation”.

Applicability and specific clarification regarding OPC

A common misunderstanding persists that One Person Companies (OPCs) are exempt. The statutory language admits no such exemption.
Section 10A applies to “every company incorporated after the commencement of this Act”, without differentiation.

Thus, OPC is fully covered.
Other structures such as Section 8 companies, small companies, or start-ups are also equally bound unless they were incorporated before 02.11.2018 or are companies without share capital.

For OPCs, the single subscriber’s capital must be deposited through banking channels and must match the MOA subscription amount.

Legal interpretation and deeper implications

Nature of the requirement

Filing INC-20A is akin to statutory affirmation of corporate credibility. It demonstrates:

• Capital is genuinely infused,

• The registered office exists at the declared location,

• The company is operationally ready.

The objective is regulatory sterilisation—preventing incorporation of entities not backed by real promoters or funds.

Effect on corporate acts

Without INC-20A:

• The company cannot legally borrow.

• Business transactions may be treated as ultra vires.

• Banks may flag the entity as non-operational.

• Input–output GST credit linkages may appear suspicious.

• Any invoice raised may lack legal backing.

A company operating without filing INC-20A is often perceived by regulators as functioning without legal competence.

Procedure and documentation

Capital introduction

Subscription money must come only from the subscriber’s bank account, matching the MOA. Cash, book entries, or third-party deposits typically invite queries or rejection.

Mandatory evidence

• Bank statement or certificate showing capital receipt

• Proof of registered office verification (supporting INC-22)

• Board resolution for opening the bank account

• Professional certification confirming correctness

Delay in opening a bank account—though common—does not extend the 180-day statutory limit.

Consequences of non-compliance

Statutory penalties

• Company: ₹50,000

• Directors: ₹1,000 per day, capped at ₹1 lakh

Regulatory action under Section 248

If the ROC forms an opinion that the company has not commenced its business within 180 days, it may initiate strike-off proceedings.
Companies with no bank activity and no INC-20A filing are the primary targets.

Practical consequences

• Banks deny loans or account upgrades

• Vendors decline contracts requiring proof of business commencement

• Start-ups face funding delays due to incomplete compliance

• GST authorities question early transactions

INC-20A thus becomes the first test of promoter genuineness.

Illustrative real-world examples

Capital introduced in cash

A private company files INC-20A attaching a cash deposit slip. ROC issues a notice citing lack of traceability.
Outcome: Capital was reintroduced through banking channels.

OPC presuming exemption

An OPC applying for collateral-free loan discovers the portal shows “INC-20A not filed”.
Outcome: Bank classification marked the company as “inactive”; loan proposal closed.

ROC strike-off notice

A new company with no bank account and no filings receives a notice under Section 248(1).
Outcome: Filing INC-20A with reasons and proof of business intent stopped strike-off.

Defence strategies and reasonable cause

Bank-related delay

If the promoter demonstrates bank delay (email trails, KYC escalations, system errors), the ROC may consider it a valid “reasonable cause”.

Delayed capital infusion

Where funds were introduced late due to liquidity issues, the company should maintain:

• Board minutes showing intent to infuse capital earlier,

• Email correspondences evidencing financial planning,

• Evidence of subsequent compliance.

Preventing strike-off

When replying to Section 248 notices:

• Demonstrate commercial intent (agreements, GST correspondence)

• Show bank proof of capital deposit

• Highlight that delay was procedural, not deliberate

• Emphasise upcoming business activity

Regulators generally prefer compliance over strike-off if a company evidences genuineness.

Professional observations and subtle compliance issues

• Capital must mirror the amount stated in the MOA—no enhancements before 20A.

• Invoices should not be generated before filing INC-20A as this may be treated as pre-commencement activity.

• Foreign subscribers must complete FIRC and reporting before filing.

• A company filing other forms before 20A (like GST registration or EPFO registration) may attract questions on how operations commenced.

Professionally, the form serves as the earliest indicator of whether the company is compliant or merely existing on paper.

Closing insight

Among all company law compliances, Form INC-20A is the shortest in length but the strongest in legal effect.
It is the statutory bridge between incorporation and operation—the declaration that separates a functioning business from a dormant shell.

When filed correctly, it establishes corporate legitimacy.
When ignored, it places the company on the regulatory radar long before it begins business.

For promoters and professionals, the guiding principle is simple:
Treat INC-20A not as a formality, but as the company’s official entry into lawful commerce.

December 2025 – Statutory Compliance Calendar

The Year-End Month with the Most Critical Income Tax, GST & MCA Deadlines

December marks the final compliance stretch of the year — a month that closes the filing window for belated ITRs, brings GST annual returns to a finish, and (in 2025) carries the MCA extended deadline for AOC-4 & MGT-7/7A.

This integrated calendar by Sandeep Ahuja & Co. provides a fully verified, law-aligned tracker for all statutory filings across:

• Income Tax & TDS

• GST (Monthly, QRMP, Annual)

• MCA / ROC

• PF & ESI

• Extended Due Dates

December 2025 Compliance Calendar

Date	Compliance / Return / Payment	Pertains To	Law / Form	Tracker
07 Dec 2025 (Sun)	Deposit of TDS / TCS	Nov 2025	Income-tax – Rule 30	☐ Pending ☐ Done ☐ Verified
10 Dec 2025 (Wed)	GSTR-7 (TDS) & GSTR-8 (TCS by E-commerce)	Nov 2025	GST Act	☐ Pending ☐ Done ☐ Verified
10 Dec 2025 (Wed)	ITR for Audit Cases – AY 2025-26 (Extended Deadline)	AY 2025-26	CBDT Circular	☐ Pending ☐ Filed ☐ Verified
11 Dec 2025 (Thu)	GSTR-1 (Monthly)	Nov 2025	GST – Sec 37	☐ Pending ☐ Filed ☐ Verified
13 Dec 2025 (Sat)	IFF (QRMP) / GSTR-5 (NRTP) / GSTR-6 (ISD)	Nov 2025	GST Rules	☐ Pending ☐ Filed ☐ Verified
15 Dec 2025 (Mon)	3rd Advance Tax Instalment (75%)	FY 2025-26	Income-tax Act	☐ Computed ☐ Paid ☐ Verified
15 Dec 2025 (Mon)	PF Contribution & ECR Filing	Nov 2025	EPF Act	☐ Pending ☐ Filed ☐ Verified
15 Dec 2025 (Mon)	ESI Contribution	Nov 2025	ESI Act	☐ Pending ☐ Paid ☐ Verified
18 Dec 2025 (Thu)	CMP-08 (Composition Taxpayers)	Q3 FY 2025-26	GST Act	☐ Pending ☐ Filed ☐ Verified
20 Dec 2025 (Sat)	GSTR-3B (Monthly)	Nov 2025	GST Sec 39	☐ Pending ☐ Filed ☐ Verified
20 Dec 2025 (Sat)	GSTR-5A (OIDAR Services)	Nov 2025	GST Act	☐ Pending ☐ Filed ☐ Verified
30 Dec 2025 (Tue)	TDS Challan-cum-Statements – 194-IA / 194-IB / 194M / 194S	Nov 2025	Income-tax Act	☐ Pending ☐ Filed ☐ Verified
31 Dec 2025 (Wed)	GSTR-9 – Annual Return	FY 2024-25	Sec 44 CGST Act	☐ In Process ☐ Filed
31 Dec 2025 (Wed)	GSTR-9C – Reconciliation Statement	FY 2024-25	Rule 80(3)	☐ In Process ☐ Filed
31 Dec 2025 (Wed)	Belated & Revised ITR – Final Cut-Off	AY 2025-26	Income-tax Act	☐ Pending ☐ Filed ☐ Verified
31 Dec 2025 (Wed)	AOC-4 (Financial Statements)	FY 2024-25	MCA / Companies Act	☐ Pending ☐ Filed ☐ Verified
31 Dec 2025 (Wed)	MGT-7 / MGT-7A (Annual Return)	FY 2024-25	MCA / Companies Act	☐ Pending ☐ Filed ☐ Verified

Extended Due Dates Applicable in December 2025

Compliance Type	Original Due Date	Extended Due Date	Authority
ITR for Audit Cases (AY 2025-26)	31 Oct 2025	10 Dec 2025	CBDT Circular
AOC-4 (FY 2024-25)	30 Oct 2025	31 Dec 2025	MCA General Circular 06/2025
MGT-7 / 7A (FY 2024-25)	30 Oct 2025	31 Dec 2025	MCA General Circular 06/2025
GSTR-9 / 9C	31 Dec 2025	No Extension	CBIC

OIDAR Services Under GST: The Complete Legal, Compliance & Liability Blueprint for 2025 -2026

By CA Surekha S Ahuja

“In the digital economy, compliance is not a choice—every click creates a tax consequence.”

The GST framework treats Online Information and Database Access or Retrieval (OIDAR) services—automated, electronically supplied digital services delivered online with minimal human intervention—as a specialised class of cross-border supplies governed by distinct statutory provisions, liability mechanisms, registration requirements, documentation standards, and audit triggers.

With the rise of SaaS platforms, AI tools, online gaming, cloud-based software, e-learning subscriptions, OTT platforms, and digital repositories, OIDAR has become one of the most misinterpreted areas of indirect taxation.
One misclassification—whether a service is truly automated OIDAR or human-driven consultancy—can reverse the tax liability, deny ITC, force foreign suppliers to register in India, and trigger notices under Sections 73/74.

This Guidance Note is designed as a complete professional reference, covering classification logic, legal tests, RCM vs forward charge, compliance flow, documentation, NTOR checks, risk flags, and interplay with Income Tax (Section 195 & DTAA).

Statutory Framework & Meaning of OIDAR

Definition — Section 2(17), IGST Act

OIDAR refers to services that:

• are delivered over the internet or an electronic network,

• are essentially automated,

• require minimal human intervention, and

• cannot be provided without information technology.

Typical OIDAR Examples

• SaaS subscriptions

• AI-based automated tools

• Online gaming platforms

• Streaming/OTT services

• Digital databases, online libraries

• Cloud management tools

• Automated design, translation, analytics utilities

The “minimal human intervention” test is the core of all classification disputes.

OIDAR vs Human-Dependent Services — The Key Differentiator

A service is not OIDAR if meaningful human judgment, analysis, review, or expertise is essential.

Not OIDAR (Even if delivered online)

• Legal advisory

• Tax consultancy

• Branding, management consultancy

• Immigration advisory

• Live training by experts

These are treated as import of services, not OIDAR.

OIDAR requires both:

• automation, and

• electronic delivery.

Correct classification affects who pays GST, at what time, and under which provision.

GST Liability Mechanism — RCM vs Forward Charge

The liability depends entirely on the status of the recipient.

Liability Matrix

Recipient Type	GST Mechanism	Who Pays?	Legal Basis
Registered business in India	RCM	Recipient	Sec 5(3), IGST + Notif. 10/2017
Unregistered individual/consumer	Forward Charge	Foreign supplier	Sec 14, IGST + Sec 24 CGST
Government/PSU/Local Authority (post-Oct 2023)	Forward Charge	Foreign supplier	47th GST Council
Unregistered importing non-OIDAR professional services for business	RCM (temporary registration)	Recipient	Sec 24(iii) CGST
Individuals taking services for personal use	No GST	None	No business nexus → RCM does not apply

Liability Triggers Explained

Registered Businesses → RCM

Indian business recipient must pay IGST under RCM for all OIDAR imports.

Reason:
Section 5(3), IGST Act + Notification 10/2017.

Unregistered Individuals → Foreign Supplier Liable

Foreign suppliers must:

• take REG-10 registration,

• file GSTR-5A,

• pay 18% IGST.

Reason:
Section 14, IGST Act.

Government and Non-Business Entities

Post-October 2023, liability fully shifted to forward charge.

Unregistered Importing Human-Dependent Professional Services

Example: hiring foreign legal/tax experts.

• Not OIDAR

• Temporary registration required

• IGST under RCM

Personal-Use Advisory

Where service has no business nexus → no GST.

Foreign Supplier Registration (REG-10)

Mandatory — No Threshold

Every foreign OIDAR supplier must register, regardless of turnover.

Documents

• Passport

• Foreign bank details

• PAN of Indian authorised representative

• Authorisation letter

Timelines

• Approval in ~3 working days

• Validity: 90 days (extendable)

Returns

• GSTR-5 (monthly)

• GSTR-5A (quarterly)

Late fee applies automatically.

No ITC

Foreign suppliers cannot claim input tax credit.

Documentation & Invoicing Requirements

For Foreign Suppliers (Forward Charge)

Invoice must contain:

• SAC 9983

• IGST @18%

• Place of Supply (India)

• Mandatory NTOR evidence:

  • IP address

  • Payment instrument location

  • Billing address

  • Device country code

For Indian Businesses Under RCM

Must issue:

• Self-invoice (Rule 46)

• Payment voucher

• RCM challan

• Service contract / subscription email

• Bank/SWIFT proof

Record Retention

72 months from the due date of annual return.

Input Tax Credit Eligibility

Registered Businesses

Full ITC available if service is used for business.
Mixed use → reversal under Rule 42/43.

Individuals / Non-Business

No ITC allowed.

Foreign Suppliers

ITC permanently blocked.

Pros and Cons of the OIDAR Framework

Pros

• Full ITC for businesses

• Clear liability mechanism

• Strong audit trail via NTOR

• Prevents revenue leakage

Cons

• Heavy compliance burden on small foreign suppliers

• Forward charge increases consumer cost

• Documentation is extensive

• Severe penalties for misclassification

Risk Flags & Audit Triggers

• Misclassification of human-dependent services as OIDAR

• Incorrect recipient verification (GSTIN, IP logs, billing data)

• Non-registration under REG-10

• Non-filing of GSTR-5/5A

• Incorrect SAC, PoS, or IGST rate

• ITC claimed on services not qualifying as OIDAR

• Missing NTOR documentation

Interplay With Income Tax Act — Section 195

TDS Applicability

TDS applies only if income is chargeable to tax in India.

DTAA Relief

Under treaties (e.g., India–UK), professional income taxable only if:

• fixed base in India,

• or stay ≥90 days,

• or Permanent Establishment arises.

OIDAR services, being automated, often do not fall under FTS under many DTAAs.

Compliance

• Form 15CB (if applicable)

• Form 15CA before remittance

• Maintain invoice + agreement trail

Disallowance possible under Section 40(a)(i).

Closing Statement

As India strengthens its digital tax environment, OIDAR classification and compliance have become foundational for every business consuming global technology platforms and every foreign supplier delivering digital services into India.

The distinction between automated OIDAR and human-dependent consultancy is the single most critical determinant of GST liability.
Accurate classification, meticulous documentation, NTOR verification, and timely registration and return filing are now essential for audit-proof compliance.

For Indian businesses, these rules protect ITC integrity and prevent litigation.
For foreign suppliers, they ensure lawful market access without penalty exposure.

In a world powered by digital ecosystems, GST liability flows wherever the service flows—and precision is the only defence.