Asia: Tax

In a significant move to deepen foreign participation in India’s sovereign debt market, the Government of India promulgated the Income-tax (Amendment) Ordinance, 2026 on 5 June 20261, introducing a comprehensive tax exemption for eligible foreign investors investing in Government securities. Effective retrospectively from 1 April 2026, the Ordinance exempts specified income arising from Government securities from withholding tax and long-term capital gains tax, thereby addressing one of the principal tax-related barriers to foreign investment in Indian debt markets.

For multinational companies with established GCCs in India, profit repatriation is a natural extension of a successful operating model. When approached strategically, it allows businesses to optimize global cash flows while remaining aligned with India's tax and FEMA regulations.

The Mumbai ITAT held that Fair Market Value(‘FMV’) of ESOP shares on the exercise date would constitute the cost of acquisition under section 49(2AA) of the Income-tax Act, 1961 (the ‘Act’), notwithstanding that the related ESOP perquisite was not taxable in India. The Tribunal ruled that section 49(2AA) of the Act does not require actual taxation of the perquisite in India and directed recomputation of capital gains by considering FMV of ESOP shares as the cost of acquisition.

India is a key destination for cross-border investments, acquisitions and commercial transactions. In this regard, several foreign law firms partner or collaborate with Indian law firms and financial advisors or act independently to advise Indian clients and multinational groups on transactions, arbitrations and various matters requiring foreign law inputs. Such collaborations have resulted in an increased frequency of foreign law firm personnel visits to India.

The European Commission issued, on 30 April, an official Guidance Note to clarify the customs and tax treatment of pleasure craft — boats, vessels and private aircraft – under EU customs and VAT rules across all 27 Member States.

In Income Tax Department v. Vikas Chaudhary & Ors., 2026:DHC:6605-DB, a Division Bench of the Delhi High Court set aside the judgment of the learned Single Judge which had quashed a Look Out Circular (“LOC”) issued against Vikas Chaudhary at the instance of the Income Tax Department.

India is a key destination for cross-border investments, acquisitions and commercial transactions. In this regard, several foreign law firms partner or collaborate with Indian law firms and financial advisors or act independently to advise Indian clients and multinational groups on transactions, arbitrations and various matters requiring foreign law inputs. Such collaborations have resulted in an increased frequency of foreign law firm personnel visits to India.

In a significant move to deepen foreign participation in India’s sovereign debt market, the Government of India promulgated the Income-tax (Amendment) Ordinance, 2026 on 5 June 20261, introducing a comprehensive tax exemption for eligible foreign investors investing in Government securities. Effective retrospectively from 1 April 2026, the Ordinance exempts specified income arising from Government securities from withholding tax and long-term capital gains tax, thereby addressing one of the principal tax-related barriers to foreign investment in Indian debt markets.

For multinational companies with established GCCs in India, profit repatriation is a natural extension of a successful operating model. When approached strategically, it allows businesses to optimize global cash flows while remaining aligned with India's tax and FEMA regulations.

The European Commission issued, on 30 April, an official Guidance Note to clarify the customs and tax treatment of pleasure craft — boats, vessels and private aircraft – under EU customs and VAT rules across all 27 Member States.

Supreme Court holds that there are no grounds to declare Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) as unconstitutional, or read down the provisions thereof; Distinguishes judgements delivered in the context of the Delhi Value Added Tax Act, 2004 (Delhi VAT Law) by holding that a purchaser under the Delhi VAT Law and a purchaser under the CGST Act could not be treated at par with each other, in cases where their suppliers fail to pay tax.

The Chennai Bench of CESTAT examined whether diagnostic kits using Enzyme-Linked Fluorescent Assay (ELFA) technology qualify for the same customs duty and IGST exemptions granted to Enzyme-Linked Immunosorbent Assay (ELISA) kits under Indian tax notifications.