Volume #17 | IssueNo. 316/2025 | September 2025
Transformation to Excellence
“Have you ever wondered why Navratri is 9 days / nights and not 5 or 6 or 7 ?”
Asked our versatile, vivacious, witty ‘Queen of drama’, my good friend and a public speaker par excellence Ms. Bhawna Shah. The audience at our Toastmasters meeting responded : Numbers are 0 to 9. 9 planets. Nava (9) rasas. Acknowledging all of them, she enthusiastically went on to explain
It is 9 becos you need to cross 9 levels for any kind of transformation. Each day is represented by a Goddess signifying 9 virtues or attributes required for the transformation :
- Shailaputri – Goddess of Courage to overcome vulnerabilities & weaknesses
- Brahmacharini – Goddess of Discipline and practice to gain consistency
- Chandraghanta – Goddess of Confidence to overcome self-doubt
- Kushmanda – Goddess of Creativity and variety
- Skandamata – Goddess of Knowledge to impart maturity to uplift and mentor others
- Katyayani – Goddess of Determination to take up challenges and get out of comfort zone
- Kaalaratri – Goddess who destroys fear and helps you stand no matter how many times you fail
- Mahagauri – Goddess of Grace, calmness and composure
- Siddhidhatri – Goddess of Success who helps you achieve your purpose
While Bhawna highlighted the above divine forms of feminine energy as a Pathway to excellence in a Toastmasters setting, I believe these virtues, if cultivated carefully will help anyone become distinguished in their chosen path.
But what does one require to do this ? It is the right MINDSET, correct ATTITUDE !
This reminds me of a discourse I heard long ago. Actually a parable of 3 sculptors in the reign of King Vishnuvardhana, the visionary ruler of the Hoysala dynasty. Legend has it that the king once went incognito to inspect the progress of the Chennakeshava Temple in Belur — a temple that would take nearly 200 years to complete, a marvel of devotion carved in stone.
He met the sculptors at work one by one and asked what they were doing.
- First Sculptor – Replied grudgingly: “I’m just cutting stones. I don’t even know why.”
→ Represents lack of purpose and disengagement. - Second Sculptor – Said with neutrality: “I’m earning my living.”
→ Reflects transactional engagement. Mere job for survival. - Third Sculptor – With tears of joy: “I am a mere instrument in His hands. It’s just happening.”
→ Embodies surrender, devotion, and alignment with a higher purpose.
This mirrors the journey of Transformation and Power of Purpose :
From Disengagement to devotion || Transaction to transcendence || Mundane to miraculous
All reflecting one’s mindset !!
As we celebrate Practising Company Secretary’s (PCS) Day on 4th October, both the parable as well as the 9 levels of change remind us of the ATTRIBUTES to cultivate, MINDSET to develop and ATTITUDE to inculcate to achieve Professional Excellence. Every single task we undertake, however big or small must result in a Masterpiece !
Talking of creating masterpieces, I am grateful to CS Ramaswami Kalidas, our well wisher and Company Law expert for crafting a masterpiece on “Resignation of Directors”. Don’t miss out on reading this nuanced article as also the hero-story on expanded scope of fast-track mergers. The 316th edition of Samhita, our monthly newsletter also unbundles other regulatory updates from SEBI, MCA, IT, GST, IFSC, ESG etc.
For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.
Happy Reading
S.C. Sharada
www.linkedin.com
MCA - Ambit of Fast Track Mergers widened
The MCA vide notification dated September 04, 2025 has amended Rule 25(1A) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, significantly broadening the scope of companies eligible for fast-track mergers under Section 233 of the Companies Act, 2013. Previously, the fast-track route was confined only to schemes between two or more start-ups, or between one or more start-ups, one or more small companies, a holding company and its wholly owned subsidiary. With the amendment, several new classes of companies have now been brought within its ambit, offering greater flexibility and ease of doing business. Following are the highlights of the amendments:
- Unlisted Companies:
An unlisted company (other than Section 8 company) with another unlisted company (other than Section 8 company), with reasonable debt exposure (aggregate outstanding loans, debentures or deposits not exceeding INR 200 crores) and no default in repayment thereto. The criteria shall be satisfied as on the date not more than 30 days prior to notice under Section 233(1)(a) as well as on the date of filing the scheme under Section 233(2) of the Act.
This amendment has significantly broadened the applicability of fast-track mergers to all unlisted companies, whether public or private and whether related or unrelated, other than Section 8 companies, to avail the fast-track merger route. - Holding and Subsidiary Companies:
A holding company (listed or unlisted) and a subsidiary (listed or unlisted). However, this clause will not be applicable in case the transferor company is a listed entity. Previously, fast-track mergers only covered mergers between holding company and its WOS, and therefore, this amendment is a step forward in terms of including mergers between holding company and any subsidiary. - Subsidiaries of Holding Companies:
A subsidiary with another subsidiary of the same holding company (fellow subsidiaries). However, this clause will not be applicable in case the subsidiary company being the transferor is a listed entity. - Inbound Reverse Merger:
A transferor foreign company being a holding company can merge with its Indian WOS in accordance with Rule 25A(5) of the 2016 Rules. While this provision was introduced in 2024 under Rule 25A(5) of the 2016 Rules, the given provision has now been incorporated into Rule 25 to make it self-contained and comprehensive – covering both domestic and cross-border fast-track mergers.
It is pertinent to note that the above expansion in framework also applies to scheme of division or transfer of undertaking of a company ie. demergers.
Pursuant to the amendment, the timeline to file a copy of the scheme as agreed to by the members and creditors, along with a report of the result of each of the meetings and the report of the registered valuer in Form No. CAA.11 (as attachment to Form RD-1), with the Central Government has been increased from 7 to 15 days from conclusion of the meeting of members or class of members or creditors or class of creditors.
Further, alongside these amendments, the MCA has revised several procedural forms to align with the new regime. Form CAA.9, CAA.10, and CAA.11 have been updated with enhanced disclosure requirements, while a new Form CAA.10A has been introduced to mandate an auditor’s certificate for unlisted companies engaging in a merger.
Regulatory Updates
MCA Update
MCA vide circular dated September 29, 2025 has extended the timeline for filing both e-form DIR-3 KYC and web form DIR-3 KYC from September 30, 2025 to October 15, 2025. Any filing of such KYC post October 15, 2025 would attract additional fee of Rs. 5,000.
Others
CS Ramaswami Kalidas shares different perspectives on resignation of a director, covering aspects under Section 168 and 165 of the Companies Act, 2013 as well as Regulation 30 of the SEBI LODR read with Industry Standards. He draws the attention of the readers to the nuances of the provisions and the resultant dichotomy, concluding with his interpretation. Click the link below to read more.
SEBI Updates
SEBI vide circular dated September 19, 2025 has amended the framework on Social Stock Exchange (SSE). These amendments which are effective immediately are based on recommendations of the Social Stock Exchange Advisory Committee (SSEAC) and public consultation. Corresponding changes have been made in SEBI ICDR and SEBI LODR vide notifications dated September 08, 2025 and September 09, 2025 respectively. A few important changes notified are as follows:
1) Not-for-Profit Organizations (NPOs) seeking registration with SSE must be registered in India as one of the following:
- Charitable trust under Indian Trusts Act, 1882 or relevant state public trust statute
- Trust registered under Indian Registration Act, 1908
- Charitable society under Societies Registration Act, 1860 or relevant state act
- Company under section 8 of Companies Act, 2013
2) Annual disclosures by NPOs (those registered on SSE or who have raised funds through SSE) required to be made within 60 days from the end of the Financial Year, include the following:
- General information (organization name, location, vision/mission/purpose, goals, activities, products, services, scale etc.)
- Governance aspects (ownership, structure, governing body & its meeting details, potential risk & mitigation plan, conflict of interest, remuneration policies, stakeholder grievance)
3) Additional annual disclosures by NPOs (those registered on SSE or who have raised funds through SSE) due by October 31 or before income tax return due date, whichever is later:
- Outreach information, top 5 donors/investors and top 5 programs
- Related party transactions and compliance management process
- Financial statements and audit reports
4) Guidance on above disclosures is available in the Annexure to Circular dated September 19, 2022.
5) Social Enterprises that have raised funds through SSE must provide an Annual Impact Report (AIR) by October 31 (or before income tax return due date
6) For registered NPOs without listed securities, self-reported AIR must cover significant activities (67% of program expenditure)
7) The AIR must be assessed by Social Impact Assessors, and their report must be disclosed alongside the AIR.
These amendments place higher responsibility on the NPOs for transparency and accountability through increased disclosures.
SEBI, at its Board Meeting held on September 12, 2025, has approved major Capital Market reforms. Changes under RPT framework, Minimum Public Holding requirements, FPI registrations, Investments in AIFS, REITs and InvITs etc have been approved under relevant regulations. These amendments aim to enhance ease of doing business, strengthen regulatory frameworks, improve investor protection and ensure alignment with global best practices. Highlights of the changes approved by SEBI can be read from the link given below.
(Open Highlights of SEBI Board Meeting)
(Open SEBI Press Release dt September 12, 2025)
As part of ease of doing business, SEBI vide circular dated September 19, 2025 has prescribed a process for smooth transmission of securities from nominees to legal heirs. Highlights of the same are as follows:
- SEBI has streamlined the process of appointing nominees who act as trustees of securities and transfer them to legal heirs according to succession plans.
- Under existing procedures, nominees may be incorrectly assessed for capital gains tax when transferring securities to legal heirs, despite such transmissions being exempt from taxation under Section 47(iii) of the Income Tax Act, 1961.
- Following recommendations from a Working Group that engaged with the Central Board of Direct Taxes (CBDT), SEBI has introduced a standard reason code “TLH” (Transmission to Legal Heirs) to be used by reporting entities when reporting such transactions to the CBDT.
- This change aims to enable proper application of Income Tax Act provisions while maintaining existing procedural requirements for transmission under SEBI regulations.
- Implementation of these changes is required by January 01, 2026 for all Registrars to an Issue and Share Transfer Agents, Listed Issuers, Depositories, and Depository Participants.
The circular was issued under SEBI’s regulatory powers to protect investors and regulate securities markets
SEBI vide circular dated July 31, 2025 had issued Digital Accessibility Guidelines under the ‘Rights of Persons with Disabilities Act, 2016 and rules made thereunder, highlights of which are available in 315th Issue of Samhita. Circular dated September 25, 2025 provides guidelines for compliance of the circular dt July 31, 2025.
The guidelines require Regulated Entities (REs) which include Stock-Brokers, Depository Participants, Investment Advisor and Research Analysts, Market Infrastructure Institutions etc. to submit information about their digital platforms, appoint IAAP certified accessibility professionals as auditors, conduct accessibility audits and complete remediation of findings within certain timelines prescribed in the circular. Further, an Annual Compliance Report needs to be submitted to SEBI within 30 days of each Financial Year. The circular also provides various formats for reporting.
IFSCA Update
IFSCA, vide circular dated September 12, 2025, has amended the “Regulatory Framework for Global Access in the IFSC” issued on August 12, 2025. The original framework required Global Access Providers (GAPs) and Introducing Brokers (IBs) to maintain bank accounts with International Banking Units in IFSC for client funds and business activities. Based on representation of the market participants, the amendment now permits GAPs and IBs to alternatively use accounts with Payment Service Providers (PSPs) authorized under IFSCA regulations for fund movements related to global access business activities. This change aims to enhance efficiency and competitiveness in cross-border payments in a regulated manner.
ESG Updates
In a move to address existing gaps in environmental compliance monitoring, the Ministry of Environment, Forest and Climate Change (MoEFCC) has notified the Environment Audit Rules, 2025 on August 29, 2025, effective immediately. It provides for undertaking environment audit in a structured manner, prescribes the necessary eligibility criteria and procedure for certification and registration of environment auditors, laying down their roles and responsibilities, obligation and liabilities, and the mechanism and framework which need to be put in place before undertaking such audits.
Highlights of the Rules are as follows:
- Environment Auditors (EAs) to be Certified and Registered by MoEFCC notified Environment Audit Designate Agency (EADA) and auditing to be undertaken only by such Registered Environment Auditors (REAs)
- Projects that are subject to green approval may be assigned for audit on a random basis.
- Additionally, the REAs may be permitted to carry out necessary verification under the Green Credit Rules, 2023, engage as a ‘Verifier’ or ‘Auditor’ under various subordinate legislations made under the Environment (Protection) Act, 1986 and other such legislations such as Ecomark Rules, 2024, E-Waste (Management) Rules, 2022, Plastic Waste Management Rules, 2016 etc.
- Roles and responsibilities of REAs have been prescribed which includes compliance evaluation and related activities of sampling, analysis, compensation calculation, verification under Green Credit Rules, audit under waste management rules etc
- Environment Audit Designated Agency (EADA) shall be notified by the Central Government which shall be responsible for certification, registration, oversight, and training of auditors
- EADA shall carry out the certification of auditors through ‘Recognition of Prior Learning’ mode or ‘National Certification Examination’ based mode.
- Establishment of Steering Committee to oversee the implementation of Environment Audit Scheme
Currently the framework for monitoring and compliance within existing environmental framework is supported by the Central Pollution Control Board (CPCB), the Regional Offices of the Ministry, and the State PCBs/Pollution Control Committees, which are facing significant constraints in terms of manpower, resources, capacity, and infrastructure.
The new reform aims to bridge the manpower and infrastructure deficits faced by regulatory authorities, thereby strengthening the effective implementation of environmental compliance mechanisms. Furthermore, it is designed to ensure greater transparency, accountability, and credibility in the compliance monitoring process, fostering trust among stakeholders and promoting sustainable environmental governance.
(Open Press Release dt September 03, 2025)
(Open Environment Audit Rules, 2025)
Reserve Bank of India (RBI) has been advised to strengthen its climate risk framework by balancing global best practices with domestic realities, according to a new report by the India Initiative on Climate Risk and Sustainable Finance (IICRSF). Produced in collaboration with the Climate Bonds Initiative, ODI Global, and auctus ESG, the report lays out a blueprint for embedding climate resilience across India’s financial system. The analysis builds on the Basel Committee on Banking Supervision’s (BCBS) 2022 principles, which outline 18 guidelines for banks to integrate climate risk into governance, strategy, and risk management. While largely micro prudential in focus—directed at the resilience of individual banks—the report stresses that India cannot ignore macroprudential oversight.
“From a systemic perspective, climate shocks could amplify vulnerabilities in India’s financial system,” the report warns, urging regulators to design transition guidance and capital frameworks tailored to local conditions. The report’s core recommendation is a dual approach: weaving together the Basel principles with national macroprudential tools to reduce systemic risk, mobilize climate finance, and fortify India’s pathway to a sustainable, climate-resilient economy.
Second Party Opinions (SPOs) have emerged as a key instrument to ensure that environment, social and governance (ESG)-labelled bonds and loans meet global standards and remain credible in the eyes of investors. According to a report by ICRA ESG Ratings Limited, SPOs are designed to provide an independent assessment of an issuer’s ESG debt framework, strengthening transparency, curbing risks of greenwashing, and building confidence in sustainable finance. The development comes on the heels of Securities and Exchange Board of India (SEBI) circular issued in June 2025, which requires issuers of ESG debt securities, including social bonds, sustainability bonds, and sustainability-linked bonds, to appoint independent third-party reviewers or certifiers. These reviewers are tasked with verifying compliance with recognized standards, evaluating project selection processes, and validating the use of proceeds and impact reporting.
Announcing the launch of its SPO service, ICRA ESG Ratings said the framework will assess the integrity of sustainability claims made by issuers. “By rigorously evaluating an issuer’s ESG framework–including its use of proceeds, governance mechanisms, and alignment with international standards–ICRA ESG helps issuers demonstrate the integrity of their sustainability commitments. SPOs also empower investors with the confidence that their capital is being directed toward genuinely sustainable initiatives, mitigating risks of greenwashing and enhancing trust in the ESG debt market,” said Sheetal Sharad, chief rating officer at ICRA ESG Ratings.
The Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India, has signed a Memorandum of Cooperation (MoC) with the Government of Japan on the Joint Crediting Mechanism (JCM) under Article 6.2 of the Paris Agreement. This development highlights India’s strong commitment to Climate Action and represents another milestone in the implementation of the Paris Agreement. The agreement aims to strengthen the India-Japan partnership in Climate Change Mitigation, with low-carbon technologies approved by the National Designated Agency for Implementation of Article 6 of Paris Agreement (NDAIAPA) forming a key element of India’s long-term low carbon development strategy to achieve Net Zero by 2070.
The strategy, though cost intensive and requiring viability gap funding, will benefit from JCM’s support in driving investments, technology assistance, technology transfer, and capacity building. It is expected to foster a domestic ecosystem for localising low carbon technologies and high-tech interventions in equipment, products, systems, and infrastructure, ensuring their large-scale deployment. The MoC will facilitate projects contributing to greenhouse gas (GHG) reduction or removal and sustainable development in India, while enabling international trading of carbon credits generated from such projects with Japan and other countries, without impacting India’s NDC commitments.
Tax Update
The CBDT vide circular dated September 25, 2025 has extended the due date for filing tax audit reports for the financial year 2024–25 (Assessment Year 2025–26) from September 30, 2025 to October 31, 2025 for taxpayers whose accounts are required to be audited under the Income Tax Act. This extension was granted due to difficulties faced by taxpayers and professionals, including disruptions from natural calamities, and following directions from High Courts. The extension applies only to audit reports—not to the income tax return or other compliance forms.
GST Updates
With the aim of providing relief, simplification, and growth for all, the 56th meeting of the GST Council, chaired by Union Finance Minister Smt. Nirmala Sitharaman approved the Next-Gen GST reforms that are effective from September 22, 2025. Highlights of the comprehensive reform package are as follows:
- Rate rationalization with a simplified two-slab structure (5% and 18%)
- GST reforms cut taxes on household essentials (soaps, toothpaste, Indian breads) to 5% or Nil boosting affordability
- GST on Life-saving drugs, medicines reduced from 12% to Nil or 5% making healthcare affordable
- Two-wheelers, small cars, TVs, ACs, cement cut from 28% to 18% bringing relief to middle-class
- Farm machinery, irrigation equipment cut from 12% to 5%, reducing farming costs
- Tobacco, pan masala, aerated drinks, and luxury goods taxed at 40%.
These reforms have prioritized consumers by lowering rates on essentials and high-value items, empowers MSMEs and manufacturers with smoother cash flows, strengthen state revenues, and boost demand driving consumption and manufacturing growth across India.
GSTN vide advisory dated September 25, 2025 highlighted the enforcement of a three-year limitation for filing GST returns that was implemented w.e.f October 01, 2023, as per the Finance Act, 2023.
Affected Returns: GSTR-1, GSTR-1A, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-9C.
Deadline: Returns cannot be filed after three years from their original due date. From October 01, 2025, the GST portal will block overdue filings (e.g., September 2022 returns due in October 2022).
Action Required: Taxpayers must review records, reconcile discrepancies, and file pending returns promptly to avoid permanent filing restrictions.
CIBC vide circular dated September 12, 2025 clarifies the GST treatment for post-sale discounts under Section 15(3)(b) of the CGST Act, 2017 as follows:
- Discount Eligibility: Post-sale discounts reduce GST only if pre-agreed in writing at the time of supply, specifying the discount amount. Ad-hoc discounts are ineligible; GST applies on full value.
- Commercial Credit Notes (CCNs): CCNs for ineligible discounts require suppliers to reverse proportionate ITC; recipients cannot claim ITC on reversed amounts.
- Financial Commission Notes (FCNs): Discounts via FCNs (e.g., bank incentives) attract GST unless part of the original agreement.
- Promotional Discounts: Volume-based or target discounts need explicit agreements; otherwise, treated as separate supplies with GST.
Compliance: Taxpayers must prove agreement existence under self-assessment. Effective immediately, with trade notices for awareness.
CBIC vide notification dated September 17, 2025 has exempted registered persons with an aggregate annual turnover up to ₹2 crore for FY 2024-25 and onwards from filing the annual GST return (GSTR-9/GSTR-9C). Issued under Section 44(1) of the CGST Act, 2017, per GST Council recommendations, it simplifies compliance for small businesses by removing the mandatory annual return filing requirement.
CBIC vide notification dated September 17, 2025 has notified certain amendments to GST w.e.f October 01, 2025. Key amendments are as follows:
- Clause (116A): Introduces “unique identification marking” (e.g., digital stamp/mark).
- Sections 12 & 13: Removes sub-section (4) from both, simplifying time of supply rules.
- Section 17(5)(d): Replaces “plant or machinery” with “plant and machinery” (effective July 1, 2017); clarifies interpretation via Explanation 2.
- Section 34(2): Restricts output tax liability reduction unless ITC is reversed by recipient or tax incidence not passed on.
- Section 38: Replaces “auto-generated statement” with “statement”; adds flexibility for prescribed details.
- Section 39(1): Adds conditions/restrictions for return filing.
- Sections 107 & 112: Requires 10% penalty payment for appeals against penalty-only orders.
- Section 122B: Imposes penalty (₹1 lakh or 10% of tax, whichever is higher) for violating unique identification marking rules under Section 148A.
- Section 148A: Introduces mandatory unique identification marking for specified goods, with rules for affixation, record-keeping, and payment.
- Section 134: No refunds for taxes collected if Section 133 had been in force.
Implementation: Effective from the September 2025 tax period, TDS deductors must report invoice-level TDS details in Form GSTR-7 on the GSTN portal.
Compliance: Deductors are required to prepare and furnish invoice-wise data for TDS deductions starting with the September 2025 return, due by October 10, 2025.
Support: For issues, taxpayers should raise grievances via the GST Portal’s Self-Service Portal with relevant details for prompt resolution.
Statutory Compliance Calendar
July 2025
Quote of the day
It is your attitude, more than your aptitude, that will determine your altitude. - Zig Ziglar
Disclaimer: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.