Year: 2026

In tax law, statutory provisions are classified as mandatory or directory based on legislative intent rather than literal terms like “shall” or “may”. Mandatory rules govern jurisdiction, limitation periods, and substantive eligibility; strict adherence is indispensable, and failure to comply renders proceedings void regardless of prejudice. Conversely, directory rules regulate procedural and evidentiary mechanisms intended to facilitate administration. Courts allow substantial compliance for directory provisions whenever the underlying statutory purpose is fulfilled and no prejudice is caused. Modern courts apply a seven-factor test examining statutory purpose, non-compliance consequences, curability, and overall legislative scheme to determine a provision’s true legal character.

Statutory interpretation occupies a central position in every fiscal legislation. Unlike private law, where rights and obligations frequently arise from consensual arrangements, tax statutes derive their authority exclusively from legislative command. Every obligation imposed upon the taxpayer, every power conferred upon the Revenue authorities and every exemption, deduction or concession recognised under the statute owes its existence to parliamentary enactment. Consequently, the interpretation of statutory language, particularly whether a provision is mandatory or directory assumes exceptional importance, for it determines not merely the meaning of legislative provisions but also the limits of administrative authority and the conditions governing the exercise of statutory rights.

The jurisprudence governing mandatory and directory statutory provisions has acquired renewed significance following a series of recent judicial pronouncements under the (now repealed) Income-tax Act, 1961 (“the Act”). A controversy arose before the Delhi High Court¹, where the validity of a notice issued under section 143(2) was challenged. The petitioner contended that the failure to adhere to the format prescribed by the CBDT² rendered the notice invalid and consequently vitiated the assessment proceedings initiated thereunder.

1 Bharat Bansal v. NFAC, W.P.(C) 2238/2026, CM APPL. 10798/2026 & CM APPL. 10799/2026

2 Instructions dated 23rd June 2017 and 13th October 2021

Rejecting the challenge, the Delhi High Court (HC) held that the CBDT Instructions were intended solely to regulate the internal functioning of the Income-tax Department and they neither conferred any enforceable rights upon the assessee nor imposed additional jurisdictional conditions beyond those prescribed by the statute. It was observed that the purpose of a notice under section 143(2) is to intimate the assessee that the return has been selected for scrutiny and assume jurisdiction and hence, mere omission to specify the category or reasons for scrutiny in the initial notice did not affect the validity of the said notice. The Court thus drew a clear distinction between statutory requirements governing jurisdiction and administrative instructions regulating departmental procedure, holding that non-compliance with the latter could not invalidate proceedings otherwise lawfully initiated under the Act.

This issue assumed greater significance in recent past as conflicting decisions of various benches of the Income Tax Appellate Tribunal (ITAT) necessitated constitution of a Special Bench³. The Special Bench also adopted a similar analogy as the Delhi HC (supra) in holding that a format prescribed under the CBDT Instructions constitutes an administrative mechanism and cannot be elevated into a statutory condition precedent governing the validity of a notice issued under section 143(2).

On a separate note, the Karnataka HC⁴, while examining the issue, the High Court considered the object underlying the Document Identification Number (“DIN”) regime, namely ensuring authenticity, traceability and maintenance of an audit trail in departmental communications. The Court noted that the controversy did not involve a case where no DIN had been generated or communicated. Rather, the impugned orders had been uploaded through the prescribed electronic process, the DINs were subsequently communicated through authenticated intimation letters and the accompanying orders contained an incorrect DIN owing to a manual error.

Adopting a purposive interpretation of CBDT Circular No. 19 of 2019 and the related system instructions, the Court held that the requirement of quoting a DIN is mandatory, however, where the correct DIN is communicated through an authenticated intimation identifying the relevant order, the communication would not be rendered invalid merely because the DIN was not originally reflected in the order or was incorrectly mentioned due to a typographical mistake. The court considered the object underlying the DIN regime, and ruled in favour of the tax department by treating such defects are curable irregularities.⁵

3 M.D. Sons v. Income Tax Officer, [TS-1089-ITAT-2026(Bang)]

4 PCIT v. Unisys India Pvt. Ltd., ITA No. 55/2024

5 It may also be noted that the Finance Act, 2026 has introduced legislative changes dealing with electronic communications and departmental authorisations,
 while CBDT Circular No. 19/2019 governing the DIN mechanism stands withdrawn. 
The impact of these developments on pending disputes concerning DIN-related invalidity arguments remains to be judicially tested.

It may be relevant to note here that in the past, a stricter approach to DIN compliance has been adopted by several HCs. The Bombay HC⁶ and Madras HC⁷, have held that a subsequent communication on DIN generation would not be sufficient compliance and the original communications were held to be non est in law.

6 Hexaware Technologies Ltd. v. ACIT, [2024] 464 ITR 430 (Bom),

7 CIT v. Laserwords US Inc., [2026] 486 ITR 159 (Madras)

The recent decisions of the HC’s as well as the Special Bench (supra) have thus noted that the format of the notice or insertion of DIN in a subsequent notice is a directory provision and does not prejudice the taxpayers. As long as substantial compliance is adhered to, the same was held to follow the procedure as mandated by law. The matter would have been fundamentally different, though, had there been no notice itself issued under section 143(2) or the DIN was never communicated to the taxpayers. This brings the focus to the germane issue that while certain provisions are so fundamental to the legislative framework that failure to comply necessarily invalidates the action taken under the statute, others merely regulate the way a statutory power is exercised or a statutory right is asserted, such that substantial compliance with the legislative objective may suffice. The logic of this distinction is that while a procedural formality facilitates the enjoyment of a benefit, a substantive condition determines whether the benefit can be claimed in the first place.

MANDATORY AND DIRECTORY PROVISIONS

A mandatory provision is one whose compliance constitutes a condition precedent to the validity of the statutory act. Such provisions ordinarily create jurisdiction, determine substantive rights or impose conditions that Parliament has expressly declared to be essential. Compliance with these requirements is indispensable because the statutory power or benefit itself comes into existence only upon fulfilment of the prescribed conditions. Failure to comply with a mandatory requirement, therefore, ordinarily renders the action void, irrespective of whether any actual prejudice has been demonstrated. The emphasis is not upon the consequences suffered by the parties but upon adherence to the legislative command.

A directory provision, in contrast, regulate the manner in which an existing right or power is exercised. While compliance with such a provision is ordinarily expected, the requirement is not regarded as indispensable to the validity of the proceeding or the existence of the statutory right. The provision regulates the procedure through which an existing right is exercised or established rather than creating that right in the first instance. Consequently, where the legislative purpose has been substantially achieved and the procedural lapse does not defeat the object of the statute or prejudice the interests sought to be protected, courts have often regarded substantial compliance as sufficient.

Broadly, statutory requirements under the IT Act may be classified into three categories. First are judicial requirements, which confer authority upon the tax administration to initiate or continue proceedings. Secondly, substantive eligibility conditions determine whether a taxpayer is entitled to a statutory benefit, exemption or deduction. Thirdly, procedural and evidentiary requirements regulate the manner in which jurisdiction is exercised or statutory rights are claimed. While the first two categories ordinarily receive a mandatory interpretation, the third category is generally construed as directory unless the statute expressly provides otherwise.

Identification of the nature of a provision i.e. whether it is mandatory or directory has been a subject matter of judicial interpretation across statutes. Early judicial decisions tended to adopt a largely literal approach. The use of the word “shall” in a statute was generally treated as indicative of a mandatory requirement, whereas the word “may” was regarded as conferring discretion. However, experience soon demonstrated that such an approach produced inconsistent results. Legislatures frequently used mandatory language in relation to procedural requirements where strict compliance was never intended, while permissive language was sometimes employed in situations where a duty was clearly contemplated.

The Supreme Court⁸ in a landmark case marked an important departure from purely linguistic interpretation. The Court observed that the determination of whether a provision is mandatory or directory depends primarily upon legislative intent and not merely upon the language employed. This approach was developed further where the Supreme Court⁹ emphasised that the consequences of non-compliance, the object of the statute and the purpose of the provision must all be examined.

The evolution of the mandatory-directory doctrine within the Income-tax Act may be traced to early decisions that recognised the distinction between substantive statutory conditions and procedural requirements intended merely to facilitate tax administration. An important application was made by the Patna High Court¹⁰, wherein the Court examined whether the requirement under section 184(7) that a declaration for continuation of registration of a firm be furnished “along with the return of income” was mandatory or merely directory. Rejecting a purely literal construction, the Court held that the expression could not be interpreted to require physical simultaneity between the return and the declaration. What was material was that both documents were available before the Assessing Officer at the time of making the assessment. The Court observed that an overly technical interpretation would defeat the legislative object and place undue emphasis on procedural form rather than substantive compliance. The decision is significant because it represents one of the earliest judicial recognitions under the Act that procedural requirements intended to facilitate assessment should ordinarily receive a directory interpretation where the legislative purpose has been substantially fulfilled and no prejudice is caused to the Revenue.

The Delhi High Court¹¹ further refined this jurisprudence where the Court was required to determine whether the prescribed time limit for rendering accounts under section 80G(5C)(v) constituted a mandatory condition or a directory procedural requirement. The Court emphasised that the determination could not rest solely upon the language employed by Parliament but required examination of the legislative purpose, the nature of the obligation and the consequences of non-compliance. Since the substantive conditions had already been fulfilled and the delay was procedural in nature, denial of the statutory benefit solely on account of delayed compliance would frustrate the legislative object and produce disproportionate consequences.

An equally significant contribution to the development of the doctrine is found in the Full Bench decision of the Allahabad High Court¹². The controversy concerned section 12AA(2), which required the Commissioner shall dispose of an application for registration within six months and hence the question framed was whether failure to adhere to the prescribed time limit resulted in a deemed grant of registration. The Full Bench rejected such an interpretation and held that although the provision employed the expression “shall”, the absence of any statutory consequence for non-compliance indicated that the prescribed time limit was directory rather than mandatory and emphasized that the true test lies in examining the object of the provision, the statutory scheme and the consequences that would follow from either interpretation.

A significant aspect of the mandatory-directory doctrine emerges from the decision of the Sikkim High Court¹³ wherein the court held that not every statutory prescription carries the same legal consequence upon non-compliance and relied upon the doctrine of substantial compliance i.e. where the essential requirements of the statute have been satisfied, minor procedural deviations should not defeat substantive right.

We will now deal with certain illustrations of mandatory and directory provisions in the context of the Act are in the ensuing paragraphs.

8 State of U.P. v. Manbodhan Lal Srivastava, AIR 1957 Supreme Court 912

9  Raza Buland Sugar Co. Ltd. v. Municipal Board , AIR 1965 Supreme Court 895

10 Commissioner of Income-tax v. Sitaram Bhagwandas [(1976) 102 ITR 560 (Pat.)]

11 Church’s Auxiliary for Social Action v. Director General of Income-tax (Exemptions) [(2010) 325 ITR 362 (Del.)],

12 Commissioner of Income-tax v. Muzaffar Nagar Development Authority [(2015) 372 ITR 209 (All.) (FB)]

13 Balchand Udairam v. State of Sikkim [(1989) 180 ITR 530 (Sikkim)].

A. JURISDICTIONAL PROVISIONS

These are the clearest illustrations of mandatory provisions as jurisdiction constitutes the legal authority to act. If the statute prescribes a particular condition for assumption of jurisdiction, failure to satisfy that condition ordinarily renders the entire proceeding void irrespective of the merits of the case. Consequently, defects going to the root of the notice cannot ordinarily be cured through acquiescence, participation or waiver by the assessee.

The Supreme Court¹⁴ has observed that service of the prescribed notice is not merely procedural but constitutes a condition precedent to the validity of reassessment proceedings and the entire proceeding would be rendered illegal where the jurisdictional notice was absent. The doctrine of substantial compliance finds little application in such circumstances because the issue is not whether the power was properly exercised but whether the power existed at all.

The Supreme Court¹⁵ in the context of issuance of a notice under section 143(2) has held that it is mandatory act under the statute as it lays the foundation of jurisdiction and hence, is not merely procedural. This principle was reiterated¹⁶ by the Supreme Court which clarified that complete absence of notice cannot be cured through section 292BB. While defects in service may in certain circumstances be cured, the actual issuance of notice remains indispensable.

The Delhi and Bombay HC’s¹⁷ while examining the validity of approval granted under section 151 before issuance of a notice for reassessment, rejected the Revenue’s contention that the statutory approval constituted a mere administrative formality. The Court held that the approving authority is expected to independently examine the reasons recorded by the Assessing Officer and arrive at its own satisfaction regarding the necessity of reopening the assessment. The judgment, thus, reinforces the principle that procedural safeguards incorporated by Parliament to regulate the assumption of jurisdiction are mandatory in nature and cannot be reduced to mechanical rituals. The requirement of prior sanction exists not for administrative convenience but to protect taxpayers against arbitrary exercise of reassessment powers.

Interestingly, the Finance Act 2026 has inserted section 292BC in the Act to retroactively¹⁸ provide that such approvals would be deemed to be administrative and supervisory in nature and shall not invalidate a notice. Although, generally legislature is within its powers to enact an amendment retroactively and can also amend a directory provision to be made mandatory¹⁹ whether the wordings in the retrospective amendment in section 292BC are sufficient to convert a mandatory provision into a directory one, without removing any lis or the fundamental basis in the original provision remains to be tested before the Courts, especially in light of the law laid down by the Supreme Court²⁰ in the case of Prithvi Cotton Mills and Indian Aluminium Co. in this regard.

14 Y. Narayana Chetty v. ITO, 1958 (10) TMI 10 - Supreme Court

15 Assistant Commissioner of Income-tax v. Hotel Blue Moon, 2010 (2) TMI 1 - Supreme Court

16  CIT v. Laxman Das Khandelwal, 2019 (8) TMI 660 - Supreme Court

17 CIT v. SPL’s Siddhartha Ltd, [(2012) 345 ITR 223 (Del.)],
 United Electrical Co. (P.) Ltd. v. CIT [(2002) 258 ITR 317 (Del.)]; 
Svitzer Hazira Pvt Ltd vs Assistant Commissioner of Income Tax, TS-6621-HC-2021

19 Retrospective w.e.f. April 01, 2021

20 Commissioner of Income Tax vs. Natraj Engineers (P) Ltd, Patna HC, TS-5877-HC-2015

B. LIMITATION PROVISIONS

Limitation provisions occupy a unique position in tax law. They do not merely regulate procedure, rather, they define the temporal boundaries within which statutory power may be exercised. Once the prescribed period expires, the authority itself ceases to exist.

The mandatory character of limitation provisions is particularly evident in reassessment cases. The power to reopen completed assessments exists only within the framework prescribed by Parliament. Once the statutory period expires, the authority to reassess stands extinguished. Courts, therefore, refuse to treat limitation periods as mere procedural requirements.

The same principle applies to assessment time limits prescribed under section 153. These provisions serve not merely administrative purposes but also protect taxpayers against indefinite uncertainty. The expiration of limitation, therefore, affects the very competence of the authority to proceed further.

C. EXEMPTIONS AND DEDUCTIONS

The IT Act contains numerous provisions granting exemptions, deductions and preferential treatment. Such provisions often prescribe multiple conditions including filing of returns, reports etc. Judicial decisions consistently distinguish between conditions that determine eligibility and conditions that regulate the manner of claiming the benefit.

An exemption or deduction represents a departure from the normal charging provisions of the Act and hence, eligibility conditions for such exemptions or deductions are ordinarily regarded as mandatory²¹.

Section 80AC is also one of the clearest illustrations of legislative intent transforming a procedural act into a mandatory condition. The provision links availability of specified deductions to timely filing of the return of income, which clarifies the intent of the Parliament to restrict eligibility of such deductions and exemptions on furnishing of timely returns.²²

The requirement to obtain the audit report has also frequently been regarded as substantive because it ensures compliance with the statutory objective of independent verification. However, the requirement regarding the precise timing of filing the report has often been treated as procedural. Consequently, where the report existed and was furnished before completion of assessment proceedings, courts have frequently held that the deduction or exemption should not be denied merely because the report was not enclosed with the original return²³.

Particularly in cases of exemption provisions, the Constitution Bench of the Supreme Court²⁴ reaffirmed that exemption provisions in fiscal statutes must be interpreted strictly and that the burden lies on the taxpayer to clearly establish that its case falls within the scope of the exemption. At the same time, the Court recognised the doctrine of substantial compliance, observing that while substantive and mandatory conditions governing eligibility must be strictly fulfilled, mere procedural or directory requirements may be treated more liberally where the essential statutory conditions have been satisfied. The judgment thus draws a crucial distinction between substantive conditions that create the entitlement to a tax benefit and procedural requirements that merely regulate its exercise, making it a cornerstone authority in determining whether a statutory requirement is mandatory or directory. The principles of this decision were echoed by the subsequent Supreme Court’s²⁵ decision wherein the Court in the context of section 10B of the Act (treating it as an exemption section) held that furnishing of the declaration stipulated in section 10B and adherence to the prescribed timeline constituted mandatory conditions.

The Supreme Court²⁶ in a landmark case while dealing with deduction claims where the prescribed audit report had not been filed along with the return but had been furnished before completion of assessment proceedings held that as the purpose underlying the requirement was to ensure that the necessary certification was available to the assessing authority, once the report was furnished during the assessment proceedings and before completion of the assessment, the statutory purpose stood fulfilled.

The Gujarat High Court²⁷ and Calcutta High Court²⁸ similarly recognised that the prescribed report exists to facilitate verification by the Revenue and not to create the substantive entitlement itself and if the report is ultimately furnished during the assessment proceedings, there is no dispute regarding satisfaction of the substantive statutory conditions, delayed filing should not automatically result in denial of the deduction.

21 Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality’, [1970 AIR 192], 

Indian Aluminium Co. v. State of Kerala [1996 AIR 1431]

22 U.P. Forest Corporation And Anr. V. DCIT, 2007 (11) TMI 699 - Supreme Court

23 Association Of Indian Panelboard Manufacturer v. DCIT, 2022 (12) TMI 1414 - Gujarat High Court

24 Dilip Kumar & Co., 2018 (7) TMI 1826 - Supreme Court (LB)

25 PCIT v. Wipro [2022] 140 taxmann.com 223 (SC)

26 CIT v. G.M. Knitting Industries Pvt. Ltd, 2015 (11) TMI 397 - SC Order

27  Zenith Processing Mills v. CIT [(1996) 219 ITR 721 (Guj.)]

28  Winro commercial (India), ITAT No 237/2022

D. LOWER CORPORATE TAX RATE UNDER 115BAA/115BAB

A contemporary illustration of this debate arises in the context of the concessional tax regimes under sections 115BAA and 115BAB. These provisions permit domestic companies to avail a lower rate of tax subject to satisfaction of specified conditions and the exercise of the option in the prescribed manner through Form No. 10-IC or Form No. 10-ID, as the case may be. A recurring controversy has been whether delay in filing the prescribed form necessarily disentitles an otherwise eligible taxpayer from claiming the concessional rate. While the Revenue has generally viewed timely filing of the form as a mandatory requirement, appellate authorities have increasingly examined the substance of the taxpayer’s conduct, including whether the option was unequivocally exercised in the return of income, whether tax was computed at the concessional rate and whether all substantive statutory conditions were satisfied.

The Allahabad High Court in this context²⁹ held that where the assessee had clearly manifested its intention to opt for section 115BAA in its return of income and audit report, delay in filing Form No. 10-IC could be condoned upon demonstration of genuine hardship, observing that a procedural lapse should not deprive a taxpayer of a substantive benefit.

Similarly, the Gujarat High Court³⁰ condoned the delay in filing Form No. 10-ID under section 115BAB, emphasising that the filing requirement is intended to facilitate exercise of the option and that substantive entitlement should not be denied where sufficient cause for the delay exists. The Mumbai Tribunal³¹ went a step further and held that even the filing of an incorrect form, namely Form No. 10-IB instead of Form No. 10-IC, constituted a curable procedural defect where the assessee had otherwise satisfied all conditions and unequivocally exercised the option for concessional taxation. These decisions suggest a growing judicial inclination to treat the prescribed forms as procedural mechanisms evidencing the exercise of a statutory option rather than as conditions governing the existence of the entitlement itself.

29 Cell Com Teleservices Private Limited Versus Union of India, [2025] 176 taxmann.com 712 (Allahabad)

30 M/s. Royal Led Equipments Pvt. Ltd. Versus Chief Commissioner Of Income Tax, [2025] 174 taxmann.com 61 (Gujarat)

31 ACIT, Circle -3, Thane Versus Magik Kraft Pvt Ltd, 2025 (10) TMI 1431 - ITAT MUMBAI

E. FORM NO. 67 (FOREIGN TAX CREDIT)

Sections 90 and 91 of the IT Act confer the substantive right to claim FTC, while Rule 128 prescribes Form No. 67 as the procedural mechanism through which the taxpayer furnishes particulars of foreign taxes paid. Judicial decisions, however, have increasingly recognised that the Rule regulates the manner of claiming an existing statutory right and does not itself create the entitlement to FTC.

Several benches of the ITAT have therefore held that the requirement of filing Form No. 67 is directory rather than mandatory, particularly where the form is furnished before completion of assessment or appellate proceedings and the substantive conditions for grant of foreign tax credit are otherwise satisfied³².

32 Hertz Software India Pvt. Ltd. v. ACIT [(2022) 139 taxmann.com 448 (Bang. - Trib.), 
Brinda Ramakrishna v. ITO [(2022) 135 taxmann.com 358 (Bangalore - Trib.)], 
Bhagwandas Tikamdas Khinani v. NFAC, 2022 (12) TMI 357 - ITAT Mumbai, 
Anuj Bhagwati v. DCIT, 2022 (9) TMI 1397 - ITAT Mumbai

F. REVISED RETURNS AND CARRY FORWARD OF LOSSES

Section 80 embodies the legislative principle that the statutory right to carry forward and set off certain losses is contingent upon timely compliance with the return filing requirements prescribed under the Act. The provision expressly disentitles a taxpayer from carrying forward specified losses unless the return claiming such loss is furnished within the time prescribed under section 139(1). The focus of the provision, therefore, is on the existence of a valid and timely loss return, reflecting Parliament’s intention to treat timely disclosure of the loss as a substantive condition for preserving the benefit.

The relationship between original returns and revised returns provides another important illustration of the mandatory-directory distinction. Accordingly, where an assessee has filed the original return within the prescribed period and has validly disclosed the loss sought to be carried forward, a subsequent revised return correcting computational or factual errors should not ordinarily result in denial of the already accrued statutory right. The revised return merely refines the contents of that return and should therefore be viewed as a procedural mechanism regulating the exercise of an existing right.

The Supreme Court’s decision in Prakash Nath Khanna v. CIT³³ illustrates the circumstances in which Parliament consciously transforms a procedural requirement into a substantive statutory condition. Interpreting the expression “due time” under the Act, the Court held that a return furnished under section 139(4) cannot be equated with a return filed within the due date prescribed under section 139(1). The legislature had deliberately distinguished between timely compliance and belated compliance, attaching different legal consequences to each. The judgment, therefore, demonstrates that where Parliament expressly links a statutory right or consequence to compliance within a specified period, the courts cannot dilute that requirement by treating subsequent compliance as equivalent. The decision represents an important illustration of legislative intent converting what may otherwise appear procedural into a mandatory statutory condition.

33 Prakash Nath Khanna v. CIT [(2004) 266 ITR 1 (SC)]

TOWARDS A UNIFIED INTERPRETATIVE FRAMEWORK – THE SEVEN-FACTOR TEST

A review of judicial decisions reveals that courts repeatedly return to certain common themes when determining whether a provision is mandatory, directory or discretionary. These tests may be synthesised into a unified interpretative framework.

•  First Factor – Nature of the Right or Power Involved

The first inquiry concerns the nature of the right or power affected by the provision. Requirements affecting jurisdiction, limitation or substantive eligibility are more likely to be mandatory than those regulating procedure.

• Second Factor – Legislative Purpose

The second inquiry concerns the purpose sought to be achieved. If strict compliance is necessary to fulfil the statutory objective, the provision is likely to be mandatory. If the purpose can be achieved despite procedural deviation, the provision may be directory.

• Third Factor – Consequences of Non-Compliance

The third inquiry examines whether the statute specifies consequences for non-compliance. Express invalidation generally indicates mandatory intent, whereas silence may support a directory interpretation.

• Fourth Factor – Presence or Absence of Prejudice

The fourth inquiry concerns prejudice. Where non-compliance causes no prejudice and the statutory purpose remains fulfilled, courts are more inclined to treat the requirement as directory.

• Fifth Factor – Curability of the Defect

The fifth inquiry examines whether the defect can be cured without undermining the legislative objective. Curable defects are more likely to be procedural and therefore directory.

• Sixth Factor – Public Interest Considerations

The sixth inquiry concerns broader public interests. Requirements designed to protect public revenue, prevent abuse or maintain regulatory oversight are more likely to be treated as mandatory.

• Seventh Factor – Overall Legislative Scheme

The final inquiry requires examination of the statute as a whole. No provision can be interpreted in isolation. Its true nature emerges only when viewed within the broader legislative framework.

CONCLUSION

The evolution of tax jurisprudence demonstrates a gradual but unmistakable shift away from formalism and towards purposive interpretation. Modern courts increasingly recognise that not every statutory requirement serves the same function. Some provisions confer jurisdiction, some define entitlement, some regulate procedure and others confer discretion. Treating all such provisions identically would undermine legislative intent and distort the statutory scheme.

The distinction between mandatory and directory provisions, therefore, reflects a deeper principle. The law seeks strict compliance where Parliament intended strict compliance. It accepts substantial compliance where Parliament intended procedural facilitation. It requires reasoned decision-making where Parliament intended administrative flexibility. Ultimately, the inquiry is not whether parliament has employed the expression “shall “ or “may”, but whether the requirement under consideration lies at the heart of the statutory scheme or merely facilitates its effective administration. The answer to that question determines not only whether a provision is mandatory or directory, but also the legal consequences that follow its non-compliance. The recent judicial developments reaffirm that courts will continue to preserve this distinction by insisting upon strict compliance with jurisdictional and substantive conditions while applying the doctrine of substantial compliance to procedural requirements that do not defeat the legislative purpose.

BCAJ Admin

Climate risk has evolved from an environmental issue into a core financial function, directly impacting balance sheets, asset valuations, and the cost of capital. It manifests as physical, transition, and liability risks that alter accounting estimates, including asset impairments and expected credit losses. Standardized frameworks like ISSB and India’s BRSR require rigorous disclosures, robust internal controls, and independent assurance over emissions data. Incorporating green bonds, climate due diligence, and carbon management into corporate strategy directly protects long-term enterprise value. Ultimately, finance leaders must look beyond historical numbers to price future climate risks into strategic capital allocation and investment decisions.

Climate risk no longer waits for the annual sustainability report. It shows up earlier- in impairments, provisions, credit ratings, insurance premiums, and the price a company pays for capital.

CLIMATE RISK HAS ENTERED THE FINANCE FUNCTION

Until recently, climate change was viewed largely as an environmental issue, while finance teams rarely considered it material unless the organisation belonged to a heavily polluting industry. That assumption no longer holds. Climate change, it turns out, reads a balance sheet just fine.

Around the world, climate-related events are reshaping financial statements, investment decisions, lending practices, and corporate strategy in ways that are no longer theoretical. A flood can impair manufacturing assets, a carbon tax can erode operating margins, and climate-conscious consumer behaviour can render once-profitable assets economically obsolete almost overnight.

For finance professionals, this represents a fundamental shift in the nature of the job. Climate considerations are steadily embedding themselves across every core finance function, from reporting and assurance to valuation, credit, and treasury. The real question isn’t whether climate change affects business, but whether finance professionals are equipped to measure its consequences well enough.

WHEN WEATHER BECOMES A BALANCE SHEET ITEM

The evidence isn’t waiting for anyone’s risk committee to catch up. The World Economic Forum’s Global Risks Report 2026 ranks extreme weather events among the world’s most severe long-term risks for the third year running. The California wildfires alone are estimated to have caused well over USD 250 billion in combined insured and uninsured losses, reshaping property valuations and insurance pricing.

Closer to home, the pattern is unmistakable with delayed monsoon and relentless heat. India’s peak power demand touched a record 270.82 gigawatts in May 2026. Independent estimates suggest that extreme heat alone could shave between 2.5 and 4.5 percent off India’s GDP by 2030 through lost labour hours in outdoor-intensive sectors. Investors, lenders, regulators, and boards are consequently demanding more robust assessments of climate-related risk. For finance professionals this means climate information is becoming unambiguously financially material.

THREE KINDS OF RISK, ONE FINANCIAL STATEMENT

Financially material through what channel, exactly? Climate risk breaks into three kinds, and each has begun to leave a distinct financial fingerprint on Indian businesses. The Task Force on Climate-related Financial Disclosures, whose recommendations now underpin the IFRS Sustainability Disclosure Standards, distinguishes two primary categories of climate risk — physical and transition. To these, prudential regulators such as the Bank of England add a third, liability risk, and this three-way split is what matters most to finance professionals.

Physical risks arise from the direct impacts of climate change, whether acute events such as floods and cyclones or chronic changes such as rising temperatures. India has experienced no shortage of either in recent years. These risks can also show up in less visible ways: a Climate Central analysis found that major Indian metros lost between 65 and 93 hours of sleep annually because of warmer nights.

Transition risks emerge as economies shift towards lower-carbon business models, as governments introduce carbon pricing, regulators strengthen disclosure requirements, and customers favour sustainable products. India’s Carbon Credit Trading Scheme (CCTS), set to begin trading soon, illustrates transition risk in practical terms. Around 740 entities across major industrial sectors, together accounting for roughly 700 million tonnes of carbon dioxide equivalent, now carry legally binding emission-intensity targets for the compliance years 2025-26 and 2026-27. Entities that outperform their targets will earn tradeable Carbon Credit Certificates, while those that fall short must purchase and surrender an equivalent number, making carbon emissions an explicit, tradeable cost of doing business.

Transition risk isn’t just a domestic story. From January 1, 2026, the European Union began fully enforcing its Carbon Border Adjustment Mechanism (CBAM), requiring EU importers of steel, aluminium, and cement to pay for the carbon embedded in each shipment, at €75.36 per tonne of CO2 equivalent for the first quarter of 2026 alone. India, lacking a domestic carbon price and reliant on older blast furnaces, is likely to bear close to double its fair share of total CBAM costs relative to its EU export volumes. For finance teams at exporting companies, this is now a live compliance cost: it needs audited embedded-emissions data, feeds directly into export pricing, and, left unaddressed, will surface within a few reporting cycles as a lost EU customer or a squeezed margin.

Liability risks, the third category, arise from the legal, regulatory, or reputational consequences of climate-related actions or omissions. Companies may face litigation over environmental damage, inadequate climate disclosures, or misleading sustainability claims, while financial institutions may face increased exposure from having financed assets that subsequently become stranded. These three risks converge in one place: the financial statements.

CLIMATE RISK AS AN ACCOUNTING ESTIMATE

There is no separate ‘climate accounting’ framework, and there doesn’t need to be. Climate risk simply alters the accounting estimates that already exist. Most accounting estimates rest on assumptions about future conditions, which climate change is now reshaping.

Consider property, plant and equipment. A manufacturing facility in a flood-prone region may continue to exist physically even as repeated climate-related disruptions reduce its expected economic benefit, while transition risk can render a carbon-intensive facility economically obsolete well before the end of its useful life. This naturally raises questions of impairment under Ind AS 36. The concept of a stranded asset captures this well: the asset need not be damaged at all, but loses value because regulation, technology, or markets make it commercially unattractive.

Financial institutions face a further consideration in the form of expected credit losses under Ind AS 109. If climate events cut repayment capacity or transition risk weakens profitability, default probabilities rise, and climate risk begins driving provisioning models directly. This is precisely why the RBI is pushing financial institutions to strengthen their climate risk management. It will require (though deferred) scheduled commercial banks and larger NBFCs to disclose governance, strategy, and risk management processes for climate-related risk. The RBI’s Financial Stability Report of June 2026 confirms banks and NBFCs remain well capitalised, though a subset could breach capital requirements under severe stress scenarios that increasingly include climate shocks. That is a signal that climate considerations now sit firmly inside mainstream prudential supervision.

In practice, a CA working out a bank’s provisioning would flag borrowers in flood-prone or carbon-heavy sectors and run them through the bank’s existing Ind AS 109 climate scenario, raising default probabilities or shifting a borrower into a riskier category, even without a missed payment, because climate risk has made their business meaningfully riskier than at origination.

The same thinking carries over to testing whether a company’s own assets have lost value, under a separate rule called Ind AS 36. For a carbon-intensive asset, projected future cash flows get revised downward to reflect falling demand or rising compliance costs, and the discount rate may also be nudged up to reflect the added risk. None of this requires learning a new accounting system. It simply means feeding a climate scenario into the same models CAs already run every reporting cycle.

SUSTAINABILITY REPORTING COMES OF AGE

Accounting estimates change the numbers inside the financial statements; what happens around those statements is shifting just as fast. Corporate reporting is undergoing one of its biggest transformations since the adoption of IFRS. Annual reports once focused on historical performance; investors now want a fuller picture of long-term value creation. This requires information about climate risk, governance, resource efficiency, resilience, and transition strategy. Globally, the International Sustainability Standards Board has established a common baseline for investor-focused sustainability disclosure through IFRS S1 and IFRS S2. Unlike earlier frameworks measuring societal impact, the ISSB approach focuses on how sustainability issues influence enterprise value and access to capital.

India has followed a similar trajectory. SEBI introduced the Business Responsibility and Sustainability Reporting (BRSR) framework for the top thousand listed entities by market capitalisation. BRSR Core has since strengthened the emphasis on assurance, extending to the full top thousand from FY 2026-27. For Chartered Accountants, this demands a deeper understanding of climate metrics, materiality assessment, internal controls over sustainability information, and the linkage between financial and non-financial reporting.

That data still needs an owner. Boards and audit committees increasingly ask who is accountable for sustainability figures, what controls govern their collection, and whether the same rigour applied to financial close applies here too. In practice this has meant extending internal controls over financial reporting to cover emissions data, energy consumption, and other metrics feeding into BRSR and ECL models.

This is not, however, a story confined to India’s largest listed companies. Most SMEs and unlisted businesses will meet climate risk long before any regulation directly requires them to report on it. For instance, this shows up when a large listed customer asks a supplier for Scope 3 data to complete its own disclosures, or a lender attaches a sustainability-linked covenant to a working capital facility. For CAs serving this segment, the work is less about disclosure frameworks and more about helping a client respond credibly to a customer or lender’s questionnaire.

MATERIALITY MAP: MAPPING WHAT MATTERS

Not every climate risk is worth reporting. Think of a simple two-axis plot: issues sorted by their likely financial impact on the business, and their significance to external stakeholders such as investors, lenders, and regulators. Issues that score high on both axes, such as carbon pricing exposure for a steel producer or physical flood risk for a coastal refinery, sit in the top right of the map and demand board-level attention and detailed disclosure. Issues that matter to stakeholders but carry limited financial consequence, such as biodiversity loss for a pure software business, can be monitored rather than actively managed.

This two-axis logic prevents organisations from spreading scarce management attention evenly across every conceivable climate issue and instead concentrates it on the handful that will actually move enterprise value or access to capital. For a diversified conglomerate spanning power, cement, ports, and financial services, the map looks entirely different business by business — a heatwave that barely registers for a ports business can be existential for a coal-fired power asset in the same group.

MEASURING EMISSIONS, THEN TRUSTING THE NUMBER

On the materiality map, one item shows up for almost every company: emissions. They come in three flavours worth telling apart. Every finance professional will increasingly need to read it fluently: the division of a company’s greenhouse gas footprint into Scope 1, Scope 2, and Scope 3 emissions under the GHG Protocol. This is the framework underpinning both BRSR Core and the CCTS.

Scope 1 covers direct emissions from sources a company owns or controls, such as the blast furnace at a Tata Steel plant or the kilns at an Ambuja cement facility. These are the emissions most directly within management’s control, which is why the CCTS sets its emission-intensity targets primarily against Scope 1 output.

Scope 2 covers indirect emissions from purchased electricity, steam, or heat. A textile unit in Tiruppur or an IT services data centre doesn’t burn coal itself, but the grid electricity it draws often comes from thermal power stations, so the emissions are attributed to the buyer rather than the generator. This is why so many Indian corporates such as Infosys are signing renewable power purchase agreements or investing in captive solar and wind capacity: doing so lowers Scope 2 emissions and, increasingly, the cost of capital attached to them.

Scope 3 is the widest and hardest category, covering all other indirect emissions across a value chain, upstream and downstream. For an automaker such as Tata Motors or Mahindra, Scope 3 includes emissions from steel and battery suppliers upstream and, more significantly, from millions of vehicles burning fuel on Indian roads downstream, a figure that can dwarf the company’s own factory emissions many times over. As Scope 3 sits largely outside a company’s direct control, it is the hardest to measure and the most contested in disclosure debates, yet for sectors like automobiles and oil and gas, it represents the largest share of climate-related financial risk.

For finance teams, this classification is a practical filter for materiality rather than an accounting curiosity. Scope 1 and 2 data feed directly into carbon compliance costs, lending covenants, and expected credit loss models, while Scope 3 data, though harder to verify, often reveals where the largest reputational and stranded-asset risks lie. BRSR Core already mandates Scope 1 and 2 disclosure for India’s largest listed companies, with Scope 3 moving from voluntary towards mandatory over coming reporting cycles. So building fluency in this classification is fast becoming as fundamental as reading a balance sheet.

Knowing the number is one thing. Trusting it is another. As sustainability disclosures become more important to investors and lenders, independent assurance becomes equally important to their credibility. This transition has already begun in India, with limited assurance over BRSR Core disclosures now applicable to the country’s largest listed companies. Yet the underlying challenge remains familiar to every Chartered Accountant: whether management’s assertions can be independently verified. The methodologies may evolve, but professional scepticism, evidence gathering, and documentation principles remain fundamentally the same, which means the assurance profession is expanding rather than being displaced by this shift. Once that data is assured, it stops sitting in a report and starts moving prices.

The real challenge here comes down to evidence. Financial statement audits rest on decades of well-established paper trails. Scope 3 emissions data doesn’t have that same track record; it’s pulled from suppliers and logistics partners, and sometimes estimated using industry averages. This means assurance providers, working under standards like SAE 3410 or the newer ISSA 5000, must be clear about what kind of check they’re doing: limited assurance, a lighter check based on inquiry and analytics, versus reasonable assurance, a much deeper check closer to a full financial audit. Most assurance on India’s BRSR Core disclosures today sits at the lighter, limited end, because the underlying data infrastructure isn’t mature enough yet.

Taking on this kind of work also brings its own risk: a CA who signs off on inflated sustainability claims or a misleading transition plan faces the same reputational and regulatory exposure as one who misses a financial misstatement. Increasingly, greenwashing allegations target the assurance provider too, making professional scepticism as much a liability question as a technical one.

PUTTING A PRICE ON CLIMATE RISK

While accounting standards determine how assets and liabilities are recognised, investors ask a sharper question: what will climate risk do to enterprise value over the life of an investment? Enterprise value rests on two variables, expected future cash flows and the discount rate applied to them, and climate risk moves both. Cash flows can shrink from higher costs or fading demand, while investors demand a higher return for climate-exposed businesses, pushing up the cost of capital and pulling enterprise value down.

Tata Power’s experience shows how precisely the market does this arithmetic. When its renewable energy arm raised ₹4,000 crore from a BlackRock-led consortium in 2022 at a valuation of around ₹34,000 crore, Tata Power’s own stock fell more than 7 percent in a single session, with analysts at the time attributing the fall largely to profit-booking after the announcement.

The same arithmetic runs in reverse for physical risk, and often faster. When Chennai flooded in December 2015, plants run by Ford, Renault-Nissan, Daimler, and Yamaha all shut down within days of each other, with Ford and Renault-Nissan alone losing roughly 3,000 vehicles between them, contributing to an industry-wide loss estimated at close to ₹1,000 crore. The flood itself lasted days; the disruption to order books, supplier payments, and insurance claims ran for weeks longer. That is the mechanism climate risk works through: a short-lived event cascades across operations, liquidity, and financing long after the water has receded.

BUYING A COMPANY, BUYING ITS CARBON

Mergers and acquisitions offer another illustration of how the finance professional’s role is expanding. Traditional due diligence has historically focused on financial statements, tax matters, legal disputes, and contractual obligations, but buyers now ask a further set of questions with equal seriousness: is the target exposed to significant flood or heat risk, will future carbon regulation raise its operating costs, how resilient is its supply chain, and how much capital will decarbonisation demand. Together, these questions form what’s now called climate due diligence which is understanding not just today’s profitability but whether it can be sustained.

Take the Adani Group’s 2022 acquisition of Holcim’s stake in Ambuja Cements and ACC. It was India’s largest M&A deal in infrastructure and materials, worth roughly USD 10.5 billion. Cement is one of the most carbon-intensive industries in the world. So buying a cement business means buying a long-dated carbon liability as decarbonising a kiln fleet takes decades, not years. Both Ambuja and ACC had already committed to net-zero by 2050 and the new owner didn’t walk that back. Instead, it went further, setting up independent board committees to oversee ESG performance. Ambuja then became the world’s first cement manufacturer to join the Alliance for Industry Decarbonization.

For a due diligence team, a target’s decarbonisation capex schedule and the credibility of its emission-reduction commitments are now as material to deal valuation as working capital or contingent tax liabilities. A mismatch between the public commitment and the capital earmarked to fund it will eventually surface as an impairment or a financing cost. Closing that gap takes capital and capital, these days, comes with strings attached.

THE NEW LANGUAGE OF CLIMATE CAPITAL

Those strings have created an entire new vocabulary of instruments, as markets have steadily learned to turn climate risk into tradeable debt. Green bonds require proceeds to be deployed exclusively for eligible environmental projects. India’s Sovereign Green Bond programme has mobilised over 44,000 crore rupees since its first tranche in January 2023. Sustainability-linked bonds take a different approach, tying the borrowing cost itself to measurable sustainability targets. Adani Electricity Mumbai’s USD 300 million issuance linked its coupon to a legally binding covenant of at least 60 percent renewable power in its procurement mix by the end of FY2027, with a step-up in the coupon rate if the target is missed.

A newer generation of instruments is emerging alongside these — transition bonds for hard-to-abate sectors like steel and cement, blue bonds for coastal and water projects, and catastrophe bonds that transfer physical risks such as cyclone losses to capital markets. For finance professionals, this expanding toolkit is becoming as relevant as conventional debt and equity structuring once was.

None of this financing happens on its own. The tax and customs system is also being adjusted to support it: Production Linked Incentive schemes worth tens of thousands of crores, a tax holiday under Section 80-IAC of the Income-tax Act, 1961, and waived or reduced customs duty and GST concessions on clean-technology imports and renewable equipment. For a CA advising a manufacturing client, this relief is now just as material to the investment case as the financing itself.

HERO MOTOCORP’S GREEN TRANSITION

Hero MotoCorp built its entire business on internal combustion engines. That could have been an existential threat once transition risk arrived. Instead, the company turned it into an advantage. Consider the evidence. It hit zero-waste-to-landfill status across all its Indian facilities in 2024, a year ahead of its own 2025 target. It is the only Indian two-wheeler maker on the Dow Jones Sustainability World Index, two years running, with its score climbing from 69 to 75.
But the real story is the product. Hero’s electric brand VIDA nearly trebled its unit sales in FY 2025-26, to around 144,000 vehicles. Its share of India’s electric two-wheeler market climbed into double digits, reaching roughly 10 to 11 percent up from a low single-digit share two years earlier. Hero funded the entire shift from its own operating cash flow, not under regulatory pressure. Transition risk and transition opportunity are usually the same shift, seen at two different moments. Get there early, and it looks like opportunity. Get there late, and it looks like risk.

WHEN THE BUSINESS MODEL IS THE CLIMATE STRATEGY

Climate risk eventually asks a hard question to every business: whether its underlying business model can survive a lower-carbon, resource-constrained economy at all. A growing number of Indian companies are answering this by redesigning the model itself. Cement plants are now co-processing industrial and municipal waste as fuel, cutting emissions while solving a disposal problem for other industries. Large agribusiness companies are signing regenerative farming contracts to help smallholder farmers build more resilient crops and soil against erratic monsoons. The logic is simple: a company’s factories can be as efficient as they like, but if the farms feeding them fail, earnings suffer just the same. Protecting the farm is now as important as protecting the factory.

What unites these efforts is a shift in thinking. Sustainability is no longer a cost bolted onto an unchanged business. It is becoming the business model itself. So the real question for finance professionals isn’t just what a decarbonisation initiative costs. It’s whether the business, ten years out, still looks anything like the one being valued today.

FINANCE GETS A BIGGER JOB

That same tension between growth and transformation plays out at the scale of the entire economy. India’s climate journey is itself a paradox. It must keep expanding infrastructure, manufacturing, and energy access to power one of the world’s fastest-growing economies, while cutting the emissions intensity of its GDP by 45 percent from 2005 levels by 2030 and reaching net-zero by 2070. The draft Climate Finance Taxonomy, released by the Ministry of Finance, is one attempt to reconcile the two: it aims to clarify what genuinely counts as a climate-aligned investment, targeting around USD 250 billion a year in redirected finance while cutting down on greenwashing.

Perhaps the most significant opportunity of all lies beyond compliance altogether. Boards are increasingly asking whether climate risk should be built into capital budgeting, how to prioritise adaptation against mitigation investment, and which climate-related investments generate the greatest long-term shareholder value. These are strategic finance questions, and answering them well requires fluency in accounting, valuation, governance, and risk management all at once- precisely the combination Chartered Accountants have always been trusted to bring to the table.

Technology will automate many routine compliance processes, but interpreting climate scenarios and advising boards on capital allocation still requires human judgement. Forward-looking finance teams are already asking not what they must disclose, but what climate-related information would genuinely help them decide better, a shift that turns reporting from compliance into strategy. In practice, this means that they will design climate governance frameworks, conduct assurance engagements, advise on green financing, and help organisations tell genuine value creation apart from superficial sustainability claims.

CONCLUSION

Climate risk got filed under ‘environment’ for a long time. That’s not wrong, but it’s not the whole picture either. Turns out it should have been filed under ‘finance’ all along. At its core, it is about better financial decision-making in a world where the climate itself now moves economic outcomes.

The finance professional’s job hasn’t changed: measure value, protect stakeholders, enable good decisions. What has changed is the terrain. Tata Power’s stock didn’t move on a green narrative; it moved because investors were pricing real cash flows. Hero MotoCorp didn’t wait for a regulator to force its hand into electric vehicles; it moved early enough to fund the shift itself. Climate risk now sits inside asset valuations, lending decisions, insurance costs, supply chains, and corporate resilience. Whether newly qualified or thirty years into practice, every finance professional now needs to look past historical numbers and price in risks that haven’t happened yet.

The real opportunity here isn’t ticking a compliance box. It’s helping businesses allocate capital more intelligently and build something that still creates value in a warming world. Climate risk isn’t another line on the ESG checklist. It’s the next chapter in the story of finance itself. And as it has done before, the profession won’t just adapt to this change — it will help write it.

BCAJ Admin

Corporate accounting and finance professionals often suffer from neck stiffness, shoulder aches, and fatigue due to prolonged sitting. To counter these preventable complaints, Dr Krupa Kadakia recommends four simple workplace habits:

• Ergonomic Setup: Adjust your monitor, chair, and lumbar support to maintain proper posture.
• Regular Movement: Alternate sitting with standing, take short walks, and break every 30–45 minutes.
• Desk Exercises: Perform quick 2–3 minute workstation stretches, like thoracic extensions, to relieve stiffness
• Sunlight Exposure: Get 15–20 minutes of daily sun exposure for vitamin D, immunity, and mood regulation.

These low-effort adjustments protect long-term vitality without disrupting your daily corporate workflow.

BACKGROUND

For most of the corporate accounting and financial professionals, the workday is spent almost entirely at a desk, reviewing spreadsheets, sitting through back-to-back calls and racing against deadlines. It is a routine which leaves no room to think about posture or movement, yet the human body was never designed for 8-10 hours of near total stillness. Human body is designed to move and exercise, the sedentary lifestyle nowadays contributes to most common workplace complaints of neck stiffness, aching shoulders, sore lower back and fatigue post afternoon.

Good news is, these aches and pains are preventable. They do not require a whole lot but some modifications around work to keep active. They require simple modifications around desk set up, stretches, a walk to the printer or kitchen. These are low effort strategies and easily doable at your workstation.

Following insights could be useful in preventing or helping aches, pain and or stiffness and improving health and wellness even being behind a desk.

Insight 1: Ergonomic – foundation, not an afterthought Poor posture rarely announces itself with a single injury. It is usually the accumulation of things, hunched posture, screen height, etc. which then add up to chronic discomfort. This is why ergonomic set up requires attention. A proper ergonomic set up requires the following check list:

Monitor: top of the screen at or just below eye level and arm’s length away

Chair: feet flat on the floor, knees slightly lower than hips

Elbows: bent ~90 degree, close to body and wrist must be in neutral when typing

Lumbar support: a small cushion works to support your lower back

Screen distance: 20-30 inches away to reduce eye strain.

None of these adjustments is going to cost you much and they do not require special equipment’s. If something can be prevented why not make it a priority.

Insight 2: Movement beats Posture – Even a good posture held for too long can be a problem.

It can be tempting to think that ergonomics will fix everything. But the body is not built to hold any position – however correct for hours on end. Prolonged static position even if right can cause workplace related health risks. Movement is the KEY.

If you can get a standing desk, the goal is to not stand the whole day but alternate. Aiming for 30-60 minutes of sitting with 15-20 minutes of standing. Good use: when on calls, while reviewing documents, after eating snacks or lunch while doing some heel raises or mini squats.

Breaks matter as much as posture changes. Every 30-45 minutes either standing up or going on a loo break is the key. Every 2 hours, going for a walk – 3-5 minutes, example going to the kitchen to drink water, make coffee/tea/catching up with colleague. I would recommend a reminder system, either using stick pads on desktop to remind you to take a break for 3-5 minutes or reminder on your phone. These moments have dual function – helps in resetting the body and refresh your focus for next task.

Insight 3: Desk Exercises, helping “no time to exercise” into a non-issue.

Time is one of the barriers for professionals to keep active. Desk exercises solve this by requiring neither a gym nor change of clothes – just a few minutes at your workstation will do the magic.

There are some exercises that if incorporated in the day will help in avoiding muscle and joint pain.

• Thoracic Extensions – helps in countering forward hunch while typing.

Sit in a chair and clasp both arms behind your head. Gently arch backward and look up toward the ceiling. Repeat 10 times. Could be done 2-3 times each day

•  Thoracic Rotations – helps in relieving stiffness through mid-back.

Sitting in the chair, arms across the chest and turning on either side. Repeat 10 times. Could be done 2-3 times/day

• Backward bend.

In standing, arms on hips, bending backwards, Repeat 6-8 times. Could be done 2-3 times/day.

•  Cervical retractions and shoulder rolling.

In sitting, thinking of forming a double chin, hold for 30 seconds*3 repetitions. Could be done 2-3 times/day

• Double leg calf raises.

In standing, 10/12 repetitions*2 sets. Once a day

• Sit to stand.

Sit to stand with hands across the chest/. 8-10 repetitions*2-3times/day

None of these exercises need more then 2-3 minutes of your time in the day and can be done without leaving your desk. They will function as an ongoing physical therapy but with cheap insurance.

Insight 4: Don’t forget the sunlight

Amidst all the focus of posture and movement, one easy habit is always overlooked: SUN EXPOSURE. Getting roughly 15-20 minutes of sun exposure any time of the day supports vitamin D production, which plays an important role in bone health, immune function and mod regulation. Pairing this with any movement during the day is an easy way to fold sun exposure into a habit you are building.

Recommendations

Bringing the pieces together, a few habits will help to protect long term health without disrupting workflow:

1. Audit the ergonomic set up once
2. Build in reminder system
3. Treat standing and walking as schedule, important as your work calls or meeting deadlines.
4. 15-20 minutes of sunlight during the day

BCAJ Admin

The debate centers on whether GST appellate authorities (FAA and GSTAT) can condone appeal delays beyond prescribed statutory limits. Grounded in precedents like Singh Enterprises and The Property Company, quasi-judicial tax bodies are statutory creatures, not “courts”. Consequently, Section 5 of the Limitation Act, 1963 cannot extend appeal deadlines beyond statutory ceilings under Sections 107 and 112. Conversely, High Courts and the Supreme Court function as judicial courts where Section 5 applies. While Writ Courts under Article 226 retain constitutional power for exceptional cases (such as natural justice violations), they exercise strict self-restraint.

A debate is going on in the professional forums on whether the appellate authorities i.e., First Appellate Authority (FAA) or the Goods and Services Tax Appellate Tribunal (“GSTAT”), being the creature of statute, have power to condone the delay beyond the condonable period prescribed in the statute. Section 107(1) of the CGST Act, 2017 (“Act”) requires a first appeal to be filed within three months of communication of the order. Section 107(4) of the Act permits the FAA to admit a belated appeal for ‘a further period of one month’ upon sufficient cause is shown. Section 112(1) of the Act requires an appeal to the GSTAT to be filed within three months of FAA order or Revisional Authority order. Section 112(6) of the Act permits GSTAT to admit a belated appeal (or cross-objection, subject to its own 45-day rule) within a further period of three months.

The FAA across India has rejected the appeals filed beyond the condonable period and the said orders are appealable before the GSTAT. Now, the taxpayers have filed the appeals before GSTAT for examining whether the GSTAT can condone the delay in filing the 1st appeal beyond the condonable period prescribed in the statute. Recently, the Principal Bench of GSTAT constituted a Special Bench to determine whether the First Appellate Authority has the authority to condone the delay beyond the statutory time limit.

This is not a new question. The Hon’ble Supreme Court has answered this question repeatedly since 2007 under the Central Excise, Customs and VAT laws, and, very recently, under the Companies Act as well. Yet every time a new fiscal statute comes along, the same question gets litigated afresh. This article explains the judicial precedents from the Central Excise, through VAT, into the Companies Act and applies it to below practical questions that every GST practitioner is facing today –

a. Whether the FAA and GSTAT can condone delays beyond what the statute permits;

b. Whether Section 5 of the Limitation Act [“Act, 1963”] can rescue an appeal filed beyond the condonable period;

c. The position of the High Court and Supreme Court as GST appellate forums;

d. How far can a Writ Court condone the delay once the statutory door has closed?

With the above questions, let us understand the statutory framework under Section 5 and 29(2) of the Act, 1963 first. Section 5 of the Act, 1963 reads as follows –

“5. Extension of prescribed period in certain cases. – Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

From the above, we can identify that there are two important aspects. First, this power is given to a ‘court’ and not to every forum that decides disputes. Second, Section 5 of the Act, 1963 applies only to proceedings under general law (principally the Code of Civil Procedure). Its extension to a ‘special or local law’ such as a tax statute happens only through Section 29(2) of the Act, 1963, which reads as follows –

“29(2). Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.”

Reading the two provisions together brings up the below two questions –

a. First, does Section 5 of the Act, 1963 apply to other than a court? (which is the point GST practitioners tend to overlook i.e., Section 5 applies only before a ‘court’)

b. Second, does the special law (Central Excise Act, VAT enactment, Companies Act or CGST Act), read as a whole, show an intention to keep Section 5 of the Act, 1963 out of its ambit?

A quasi-judicial authority or tribunal created by a tax statute is ordinarily not a ‘court’, so the gateway under Limitation Act will not be available unless the special law specifically gives the power to condone delay. It is this fundamental point which was recently and emphatically restated by the Apex Court in the company law context in case of The Property Company (P) Ltd. v. Rohinten Daddy Mazda¹ (hereinafter referred as ‘Property Company’), which this article places at the Centre of the GST analysis, ahead of the more familiar ‘complete code’ debate.

1 Civil Appeal No.92 of 2026 (Arising out of S.L.P (Civil) No. 3906 of 2017)

Before proceeding further, let us understand the position under Central Excise, Service Tax, Customs and VAT context. In Singh Enterprises v. CCE, Jamshedpur², the Apex Court examined the provisions of Section 35 of the Central Excise Act, 1944, which provides 60 days’ time limit to file an appeal with additional condonation period by a further 30 days. The Court held that the Commissioner (Appeals) and the Tribunal, being creatures of statute, cannot condone the delay beyond the time limit prescribed in the statute. A specific 30 day upper cap shows a clear intent to exclude Section 5 of the Act, 1963. There was no law declared by Supreme Court that even though the Statute prescribed a particular period of limitation, this Court can direct condonation. That would render a specific provision providing for limitation rather otiose.

2 (2008) 221 ELT 163 (SC)

A year later, in Commissioner of Customs & Central Excise v. Hongo India (P) Ltd.³, a three-judge Bench went a step further. The provision in question is the unamended Section 35H of the Central Excise Act, 1944 governing reference applications to the High Court which prescribed 180 days with no condonable extension at all. The Court held that the Sections of the same Chapter i.e., Sections 35, 35B, 35EE, 35G expressly grants a condonable extension but not in Section 35H and this silence itself is an indicator of exclusion and it binds even the High Court under Section 5 of the Act, 1963.

3 (2009) 236 ELT 417 (SC)

In VAT context, the Apex Court in case of Patel Brothers v. State of Assam⁴, examined Section 81 of the Assam VAT Act, 2003 which provides 60 days period for revision before the High Court, while Section 84 of the same Act made only Sections 4 and 12 of the Act, 1963 applicable to such proceedings. It was held that this selective adoption was itself a clear act of exclusion. If the Legislature wanted Section 5 to apply, it would have specified it exactly as it did elsewhere in the same Act (Sections 79 and 80, which gave the FAA and Tribunal forums an express further condonable period). The High Court, therefore, had no power to condone a 335-day delay.

4 (2017) 345 ELT 578 (SC)

Two years later, on almost identical facts under a sister enactment, the Apex Court reached the opposite result. In Superintending Engineer, Dehar Powerhouse Circle v. Excise & Taxation Officer⁵, it was held that Section 48 of the Himachal Pradesh VAT Act, 2005 provides 90 days period for a revision and it was silent altogether regarding the Act, 1963. The Court distinguished Patel Brothers on precisely this ground and held that Section 5 stood attracted. Read together, the two cases show there is no standard rule that ‘tax statutes exclude Section 5’ or the reverse and each statute has to be read on its own text.

5 2019 (30) GSTL 193 (SC)]

Later, the Apex Court in case of Assistant Commissioner (CT), LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd.⁶, while examining the Andhra Pradesh VAT Act has held that once the statutory appeal remedy has been foreclosed by limitation, a Writ Court should exercise self-restraint rather than routinely reviving it, doing so would make the limitation scheme meaningless.

6 2020 (36) G.S.T.L. 305 (S.C.)

Now, coming to Companies Act context, it is pertinent to examine the recent decision of the two-Judge Bench of the Apex Court in case of ‘Property Company’, wherein it examined a similar question. Although the decision is in the context of Companies Act, it has laid down the principles which are equally applicable for every quasi-judicial GST forum, including GSTAT. In this case, the respondent sought registration of shares inherited under a will, more than two decades after probate, and approached the Company Law Board (“CLB”) under Section 58(3) of the Companies Act, 2013 with a delay of 249 days. The CLB condoned the delay, citing the respondent’s residence abroad and confusion during the transition from the 1956 Act and this decision was affirmed by the Calcutta High Court. Later, the Apex Court set aside both the orders and held that the CLB had no power to condone the delay, for two reasons as follows –

a. First, the Act, 1963 including Section 5 applies only to proceedings before ‘court’. A quasi-judicial body being a creature of statute does not automatically acquire that character. It must actually be shown to be a court.

b. Second, Section 433 of the Companies Act (which expressly gives the NCLT and NCLAT the power to apply the Act, 1963) cannot be read backwards to give the same power to the CLB, an earlier and different body, merely because both perform similar functions. The Court put it plainly –

“…the provisions of the Act, 1963…would only apply to suits, applications or appeals which are made under any law to ‘courts’ and not to those made before quasi-judicial bodies or tribunals, unless such quasi-judicial bodies or tribunals are specifically empowered in that regard… The absence of express exclusion, by itself, cannot be said to have conferred the CLB with the power to condone delay.”

This reframes the debate for GST. Most common question that is being asked based on Singh Enterprises is whether Section 107 (or 112) of the Act impliedly excluded Section 5 of the Act, 1963? The Property Company insists on a prior question i.e., is the Appellate Authority, or GSTAT, a ‘court’ at all, so that Section 29(2) of the Act, 1963 even opens the gate to Section 5 in the first place? On this footing, the ‘implied exclusion’ debate becomes almost academic and the power to condone delay has to be found within Sections 107 and 112 of the Act themselves, because neither provision has stated that Section 5 of the Act, 1963 is applicable.

Coming to GST context, many High Courts held that Sections 107 of the Act is complete code that impliedly exclude Section 5 of the Act, 1963 beyond these ceilings relying on Singh Enterprises and Hongo India. Few of the decisions under GST include Penuel Excus (P) Ltd v. Additional Commissioner (Appeals)⁷, Garg Enterprises v. State of U.P.⁸, Abhishek Trading Corp. v. State of U.P.⁹, Nandan Steels & Power Ltd. v. State of Chhattisgarh¹⁰ and Venkateswara Rao Kesanakurti v. State of A.P.¹¹, wherein it was held that CGST Act a self-contained code excluding Section 5 of the Act, 1963.

7 2023 (75) GSTL 582 (Kerala)

8 2024 (15) Centax 510 (All)

9 2024 (16) Centax 179 (All)

10 2023 (6) Centax 301 (Chhattisgarh)

11 2024 (23) Centax 43 (AP)

Against this, a Division Bench of the Calcutta High Court in S.K. Chakraborty & Sons v. UOI¹² has held that since provisions of Section 5 of the Act of 1963 have not been expressly or impliedly excluded by Section 107 of the Act of 2017, by virtue of Section 29 (2) of the Act of 1963, Section 5 of the Act of 1963 stands attracted and the FAA can condone delay beyond the four-month ceiling on sufficient cause. This has been followed in later Calcutta decisions in case of Arvind Gupta v. Assistant Commissioner of Revenue¹³; Partha Pratim Dasgupta v. Joint Commissioner of State Tax and Ors¹⁴.

12 2024 (15) Centax 172 (Cal)

13 (2024) 14 Centax 295 (Cal.)

14 (2024) 19 Centax 357 (Cal)

However, the High Courts in case of Yadav Steels v. Commissioner¹⁵ and Addichem Speciality LLP v. Special Commissioner-I, Delhi GST¹⁶ refused to condone delay beyond 4 months, holding that Section 5 of the Act, 1963 cannot extend the maximum condonable period provided under Section 107 of the Act, relying on Singh Enterprises, Hongo India and Glaxo Smith Kline and distinguishing ‘S.K. Chakraborty’. Also, the decisions of Calcutta High Court do not survive The Property Company test as the Appellate Authority cannot be considered as a ‘court’ for the purposes of Section 29(2) of the Act, 1963.

15 2024 (19) CENTAX 435 (All)

16 (2025) 27 Centax 145 (Del.)

In view of the above analysis and discussion, the answers to the questions framed are as follows –

(a) Whether GSTAT and the F AA can condone delays beyond the condonable period?

No, the FAA and GSTAT are both creatures of statute and cannot condone the delay beyond the time limit prescribed under the statute.

(b) Whether Section 5 of the Act, 1963 can rescue a belated appeal?

No, considering the above-referred judicial decisions. Until the Supreme Court resolves the conflict directly in the GST context, practitioners outside West Bengal should proceed on the footing that Section 5 offers no rescue beyond the statutory ceilings.

(c) The position of the High Court and Supreme Court as GST appellate forums?

Yes, because of the ‘court’ distinction in The Property Company. Section 117 (appeal to the High Court on a substantial question of law from a GSTAT order) prescribes 180 days and Section 117(3), expressly applies the Code of Civil Procedure’s appellate provisions consequent to which Section 5 of the Act, 1963 will come into picture as the High Court is unquestionably a court. Section 118 (appeal to the Supreme Court) attracts the CPC similarly.

(d) How far can a Writ Court condone the delay once the statutory door has closed?

Two separate questions here. First, where GSTAT rejects an appeal as filed beyond the condonable period provided under Section 112(6) of the Act, a further appeal under Section 117 of the Act lies only on a ‘substantial question of law’. Whether GSTAT correctly applied its own statutory ceiling is ordinarily not such a question and it is settled law applied to undisputed facts, so the High Court would ordinarily decline to re-open it, except where GSTAT itself misapplied the ceiling (say, miscalculated the date of communication).

Second, and more commonly litigated, is where a taxpayer approaches the jurisdictional High Court directly under Article 226, seeking either to compel condonation or to have the underlying order quashed. This power comes not from Section 5 of the Act, 1963 at all, but from the extraordinary, equitable jurisdiction under Article 226 (and, over subordinate tribunals, Article 227), which exists independently of any taxing statute’s limitation scheme. But the Apex Court has repeatedly cautioned against treating independence as a license, the governing principle, most clearly stated in ‘Glaxo Smith Kline’, is self-restraint, a Writ Court should not routinely use Article 226 to overcome the statutory framework. However, the restraint is not absolute. Writ jurisdiction survives on narrower, jurisdictional or constitutional grounds that are not really Section 5 discretion in disguise –

a. Violation of Natural justice: Where the appeal was rejected solely on delay without providing effective opportunity of being heard to explain the reasons for delay.

b. Want of jurisdiction or a fundamental-rights violation: Where the original order is wholly without jurisdiction or offends Article 14/19/21, a time-barred appellate remedy does not oust writ jurisdiction over such an order, a position recognized even in Singh Enterprises.

c. Non-communication or defective communication: Where limitations never validly began to run because the order was not properly served. Here the writ jurisdiction holds that no delay occurred in law, rather than condoning one.

d. Gross, demonstrable hardship, exercised sparingly: The writ jurisdiction is not per se barred merely because a statutory remedy is time-barred, though it remains extraordinary and sparingly used.

The source of the Writ Court’s power is constitutional, not statutory, and its extent is deliberately narrow as explained above but not as a routine substitute for a missed statutory condonation window.

CONCLUDING REMARKS

A two decade of near-identical litigation across Central Excise, Customs, VAT, Companies Act and now GST forums suggest the problem is structural, not merely a matter of interpretation. Decision of The Property Company, though decided far from GST, gives more clarity to the practitioners as against the ‘complete code’ test alone. However, the Parliament (or the GST Council) should consider whether the current law position serves any real purpose. Express provision clarifying exactly how far the Act, 1963 applies to the Appellate Authority, Revisional Authority and GSTAT would also help the taxpayers to be more vigilant. Also, a large share of the condonation litigation is due to disputes on dates of communication, therefore, the cross-verification by SMS and e-mail (as GSTAT’s own portal already partly does) for all communications, would resolve a good fraction of these disputes before they even reach a condonation application.

BCAJ Admin

The recent Foreign Contribution (Regulation) Rules amendments introduce several key compliance updates:

• Key Functionaries: Formally defined under Rule 2(ca), affecting administrative expense calculations (capped at 20%) and restricting foreign nationals. Intimations require Form FC-6E.
• Purpose and Territory: Registration is restricted to specified Scheduled purposes and States using Form FC-6F; modifications require MHA approval.
• Domestic Use: Foreign funds must be utilized strictly within India for stated objectives.
• Minimum Activity: Associations must spend at least ₹10 lakh over two financial years.
• Form FC-4 Disclosures: Mandates reporting social media accounts, ultimate DAF donors, project-wise expenses, publications, and auditor UDINs.

INTRODUCTION

The Foreign Contribution (Regulation) Rules 2011 (“the Rules”) prescribed under the Foreign Contribution Regulation Act 2010 (“the Act”) have been amended vide notification dated 22.6.2026¹. This article contains an analysis of the key amendments in the Rules and in Forms.

1 The text of the Rules is given in the link: https://fcraonline.gov.in/9f211570-9722-4cc3-b17f-8bd3dcf78f99

PART I : AMENDMENT IN THE RULES

1. Key functionary

1.1. Background

Hitherto, the term “key functionary” was not defined. It has now been defined under rule 2(ca) as follows:

“key functionary”, in relation to a person other than an individual, includes—

(i) the Director of a company;

(ii) a partner in a firm;

(iii) a trustee of a trust;

(iv) the Karta of a Hindu undivided family;

(v) an office bearer, member of the governing body, managing committee or other controlling authority of a society, trust, trade union or association of individuals; and

(vi) any other officer or person, by whatever name called, who has control over, or responsibility for the management or affairs of such person;

1.2. Observations

The definition can be divided into four limbs:

(i) A person who is key functionary within the ordinary meaning of the term (since the definition is inclusive);

(ii) Director of a Company, partner in a firm, trustee of a trust, Karta of an HUF;

(iii) An office bearer, member of the governing body, managing committee or other controlling authority of a society, trust, trade union or association of individuals;

(iv) Any other officer or person, by whatever name called, who has control over, or responsibility for the management or affairs of such trust.

Limb (ii) consists of individuals where there is no ambiguity. In other limbs, there could be ambiguity in whether a particular individual is a key functionary or not. The subsequent paragraphs 1.4 to 1.9 analyse these limbs (i), (iii) and (iv)

1.3. Ordinary meaning of “key functionary” (first limb)

The terms “key” and “functionary” have been defined in dictionaries as follows:

Key

•  “Chief; major; important; fundamental; pivotal; a key person in the company; key industries.” [Random House Compact Unabridged Dictionary]
• “Very important and having a lot of influence on other people or things.” [http://dictionary.cambridge.org/dictionary/english/]

Functionary

• “a person who functions in a specified capacity, esp., in government service; an official; civil servants, bureaucrats, and other functionaries.” [Random House Compact Unabridged Dictionary]
• “A person who has to perform official functions or duties; an official.” [http://www.oxforddictionaries.com/]

Thus, in its ordinary sense, a “key functionary” means a person occupying an important position and exercising significant functions in an organisation, [but excluding the persons mentioned in limbs (ii) to (iv)]. It would also include an individual designated as “chief functionary”.

1.4. An office bearer, etc. (third limb)

The term “office bearer” is not defined in the Act/Rules.

Office

• The word `office’ is normally understood to mean “a position to which certain duties are attached, esp. a place of trust, authority or service under constituted authority”. [See Oxford Shorter English Dictionary, cited in P. V. Narasimha Rao v. State, AIR 1998 SC 2120. Also see Statesman (Private) Ltd. v. H.R. Deb, AIR 1968 SC 1495, Mahadeo v. Shantibhai, 1969 (2) SCR 422; Satrucharla Chandrasekhar v. Vyricherla Pradeep Kumar, (1992) 4 SCC 404]
• An ‘office’ means a public or private employment with certain duties to be performed [Dewan Joynal Abedin v. Abdul Wazed, (1988) 2 SCR 370]

Bearer

• One that bears; a person or thing that carries, upholds, sustains, or brings something [Merriam-Webster]
• A person who bears or carries something [Britannica Dictionary]

On a combined reading, the expression “office bearer” means holder of a position with certain duties attached to the position. On its own, this term is quite wide, but having regard to the following context, its meaning should be restricted to persons occupying very important position.

The “office bearer”

(a) must be a “key functionary” and therefore, he must be a person occupying an important position and exercising significant functions, authority or responsibility in an organisation, and does not cover every holder of any position.

(b) should be read in the context of the second limb, that is, he is akin to director, partner, trustee or Karta. All these persons occupy very important positions and similarly, office bearer should also occupy a very important position.

(c) should be read in the context of the fourth limb, that is, it should cover a person control over, or responsibility for the entire or substantially the entire management or affairs of the person, and not every person holding a position.

(d) In limb (iii) it could be argued that the word “or” should be read between “bearer” and “member” and so read the individual should be an office bearer of the governing body, etc.

1.5. Any other officer or person who has control over, or responsibility for the management or affairs of such person (fourth limb)

There could be two views on the meaning of the expression “control over or responsibility for the management of affairs of such person”.

1.5.1. View 1

The person should have control over, or responsibility for the entire management or affairs or substantially the entire management or affairs of the person. The arguments in support of this view are as follows:

(a) On a plain reading, “management or affairs of a person” should mean management or affairs of the association; the words “control or responsibility for partial management or affairs” cannot be read into the definition.

(b) The word “key” indicates that the provision is intended to cover persons occupying positions of substantial importance in the management of the organisation. Every individual responsible for partial or limited function cannot be considered “key” person. For example, an employee who is responsible only for accounts is not a “key functionary” under limb (iv).

(c) Limbs (i) to (iii) cover persons who, occupy important positions in the governance or management of the entity. Limb (iv), although residuary and wider, should also be read so : it would therefore be inappropriate to treat every person having responsibility for any individual aspect of the organisation’s activities as a key functionary.

(d) ‘Key functionary’ has significant implications under the Act/Rules. To illustrate

• his salaries, etc. are considered as admin expenses (Rule 5).
• The application for registration is to be accompanied by his affidavit (Rule 9).
• If he is a foreign national, the association is not considered eligible for registration [Explanation 1 to Rule 9(5)].

Now, the officer or person referred to in limb (iv) is not construed narrowly, although he may not be a very important official,

• his salaries, etc. will be considered as admin expenses
• the application for registration will have to be accompanied by his affidavit.
• the association shall not be considered eligible for grant of registration.

Ordinarily, this could include a Chief Executive Officer or any other person, irrespective of the designation, who exercises control over or has responsibility for the management or affairs of the organisation.

1.5.2. View 2

The reference to “management of affairs” should ordinarily connote responsibility or control of a sufficiently significant nature, rather than responsibility for merely a limited aspect of the organisation’s activities. However, it should not be restricted to entire management or affairs or substantially the entire management or affairs, as proposed in View 1. Accordingly, in determining whether a person falls within limb (iv), the following factors may be relevant:

• the nature and extent of the person’s powers;
• whether the person can make or materially influence significant decisions;
• the extent of the person’s authority over the organisation;
• whether the person has control over its operations or affairs;
• whether the person is responsible for the organisation as a whole or only for a limited function; and
• the actual functions and responsibilities performed, rather than merely the designation of the person

1.5.3. Conclusion

The matter is not clear but View 1 appears to be better view.

Thus, the definition of “key functionary” is very subjective and ambiguous and may require factual analysis as to whether a person is a key functionary or not.

If any new person is identified as “key functionary”, the association was required to file intimation in Form FC-6E within 45 days of 22.6.2026, that is, on or before 6.8.2026. Therefore, it is advisable to expedite this analysis and, if required, the said Form should be immediately filed after passing appropriate resolution of the Board of Directors, etc.

1.6. Suggestion

Where there is any ambiguity as to whether an individual is a “key functionary”, an explanatory note may be included in the relevant resolution of the Board, etc. explaining why the person is or is not being treated as a key functionary. This would provide a contemporaneous record of the basis on which the organisation has determined its key functionaries show its bona fides in case of any allegation of default.

1.7. Impact on administrative expenses (rule 5)

1.7.1. Text (relevant portion)

The following shall constitute administrative expenses:

(i) salaries, wages, travel expenses or any remuneration realised by the key functionaries of the person;

(ii) all expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel;

(iii) all expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premise(s) from where the organisation or Association is functioning, stationery and printing charges, transport and travel charges by the key functionaries and expenditure on office equipment;

1.7.2. Observations

• It appears that the salary, etc. of the “new key functionary” may be considered as administrative expenses from 22.6.2026.
• The total of administrative expenses defrayed out of foreign contribution cannot exceed 20% of such foreign contribution. Thus, any increase in number of key functionaries may increase the total of administrative expenses and hence some admin expenses may have to be defrayed out of funds other than foreign contribution to ensure that the limit of 20% is not breached.

2. REGISTRATION LIMITED TO SPECIFIED PURPOSES/STATES AND INTIMATION BY EXISTING CHARITABLE INSTITUTIONS

2.1. Background

Hitherto, the certificate of registration specified the purpose, that is, one or more out of cultural, economic, educational, religious or social (“cultural, etc.”) as specified in section 11 of the Act. These terms were not defined and accordingly they were to be interpreted in normal parlance and perhaps, on the basis of the facts stated in the application for registration.

Further, the activities could extend to entire India.

2.2. Text [Rule 9(1A)]

The certificate of registration shall specify the purpose or purposes and the States or Union territories for which registration is granted.

(b) Every application for registration shall mention—

(i) the purpose or purposes for which registration is sought, chosen only from such list of purposes as specified in the Schedule appended to these rules; and

(ii) the States or Union territories in which the association proposes to undertake the activities.

(c) Every association registered before the commencement of the Foreign Contribution (Regulation) Amendment Rules, 2026 shall, within one year of such commencement, submit to the Central Government an intimation in Form FC-6F specifying the purpose or purposes and the States or Union territories for which it seeks to retain its registration.

2.3. Observations

2.3.1. The application now requires

•  the purpose of the association to be restricted to one or more out of the list of purposes as specified in the Schedule appended to the Rules (“Scheduled purposes” or “sub-purposes”) and
• the States or Union Territories in which the association proposes to undertake the activities (“the States”).

2.3.2. An association registered before 22.6.2026 has to submit to the Central Government on or before 21.6.2027, an intimation in Form FC-6F, specifying the list of Scheduled purposes and the States applicable to it.

The intimation may have to be preceded by a resolution of the Directors, etc.

On a plain reading, only an intimation is required; no approval from Ministry of Home Affairs (MHA) is necessary.

2.3.3. The sub-purposes have to be selected from the Scheduled purposes & they cannot go beyond the purposes mentioned in the registration certificate, that is, cultural, etc. For example, if the association has been granted registration for “educational” purpose, it must select the sub-purposes from “educational” category and cannot opt for sub-purposes from any other category.

2.3.4. The Act merely requires that the association should have a definite programme in the cultural, etc. field. However, there is no restriction in the Act as to the meanings of the words “cultural, etc.” Further, the Act is also silent on whether the Rules can curtail the sub-purposes to those specified in the Schedule. In the circumstances, it is a moot point as to whether the restriction to Scheduled purposes by the Rules is ultra vires the Act or not.

2.3.5. In Noel Harper v. UOI, WP (Civil) No. 566 of 2021, the Supreme Court had reproduced the illustrative list of permitted activities as mentioned in the Annual Report (2004-2005) prepared by the MHA. A comparison of the said list with the Scheduled purposes shows that there are many items in the list which are not mentioned in the Schedule. A significant omission is that while the old list had “any other activities related to the above” as a residual clause, the Schedule does not have this clause. It could be argued that in spite of this omission, the individual entry in the Schedule has to be read liberally and should include ancillary and incidental activities. The exact scope of such activities will, of course, be fact driven.

2.3.6. It appears that, where the beneficiaries of an activity are located in a particular State, the activity may be regarded as undertaken in that State, even if the association does not have an office or other establishment in that State. For example, if the association conducts online training for beneficiaries based in Bihar, the activity may be considered as undertaken in Bihar. The fact that the employees who are imparting such training are based in Karnataka, or that the association does not have an office in Bihar, does not alter this position.

2.3.7. However, a distinction may be drawn in the case of internal training of the association’s own staff. If such training is an internal administrative or capacity-building activity rather than an activity undertaken for the fulfilment of the association’s stated purposes, it may not constitute an activity in the State where the staff training is conducted.

2.3.8. Thus, the focus should be on where the association’s charitable activities are actually undertaken, rather than merely on the residential location of its employees.

3. CHANGING PURPOSE OR STATE

3.1. Text [Rule 17B]

Change of scope of registration.- (1) An association registered under the Act which intends to change its area of operation by including or deleting any purpose or any State or Union territory specified in its certificate of registration shall apply, in Form FC-6F, for such inclusion or deletion, along with—

(a) a resolution of the governing body approving such application;

(b) the prescribed fee.

(2) The fees payable for inclusion of additional purpose or State or Union territory under sub-rule (1) shall be in accordance with sub-rule (4) of rule 9 and the proviso thereof.

(3) The Central Government may, after such inquiry as it deems fit, approve or reject the application under sub-rule (1).

3.2. Observations

3.2.1. After the intimation referred to in para 2 above is filed, the purposes & States can be added/deleted by filing Form FC-6F. However, before filing the application a resolution has to be passed by the governing body approving the application.

3.2.2. Such addition will require MHA approval.

The filing of Form FC-6F will entail fees of ₹300 per additional State and ₹300 per additional sub-purpose [Rule 9(4)].

The MHA may make such inquiries as it deems fit including a field visit, and then approve or reject the application.

3.2.3. Deletion of purposes and States require the same process too.

3.2.4. No statutory timeline is provided for approval / rejection by MHA

4. ASSOCIATIONS WITH FOREIGN NATIONALS OTHER THAN PIO AS KEY FUNCTIONARIES BARRED FROM REGISTRATION

4.1. Background

Hitherto, an FAQ was published on MHA website as follows:

“Whether foreigners can be appointed as Executive Committee members of an association seeking registration or prior permission?

Organizations having foreign nationals, other than of Indian origin, as members of their executive committees or governing bodies are generally NOT permitted to receive foreign contribution. However, foreigners may be allowed to be associated with such associations in an ex-officio capacity, if they are representing multilateral bodies, foreign contribution from whom is exempted from the purview of the Foreign Contribution (Regulation) Act, 2010, or in a purely honorary capacity depending upon the person’s stature in his/her field of activity. Relaxation may be considered on case to case basis by an authority higher than the competent authority, if any of the following grounds is met:

1) the foreigner is married to an Indian citizen;

2) the foreigner has been living and working in India for at least five years;

3) the foreigner has made available his/her specialized knowledge, especially in the medical and health related fields on a voluntary basis in India, in the past;

4) the foreigner is a part of the Board of Trustees/Executive Committee in term so the provisions in an inter-governmental agreement;

5) the foreigner is part of the Board of Trustees/Executive Committee, in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source.”

However, there was no express provision in the Act/Rules to the effect that associations with foreign nationals other than PIO as key functionaries are barred from grant of registration/prior permission.

4.2. Text [Explanation 1 to Rule 9(5)]

It is hereby clarified that an association having foreign nationals, other than those of Indian origin, as its key functionaries shall ordinarily not be considered eligible for grant of registration or prior permission under the Act.

Provided that the Central Government may, by order, specify such cases or circumstances in which foreign nationals may be permitted to be key functionaries of an association for the purposes of consideration of registration or prior permission, and the conditions to be fulfilled for such consideration.

4.3. Observations

Thus, an association with foreign nationals as key functionaries (other than PIOs) will not be ordinarily granted registration.

For the purposes of the proviso, the Central Government will specify the exceptional cases or circumstances; this could be on the basis of those listed in the above cited FAQ.

5. FUNDS ONLY FOR INDIA ACTIVITIES AND STATED OBJECTS

5.1. Background

Hitherto, the Act/Rules did not provide that foreign contribution could be utilized only for activities in India. However, Form FC-4, had, and continues to have, a question on whether “the Association has utilized any foreign contribution outside India?” [Sr. No. 8(xv)]

5.2. Text [Explanation 2 to Rule 9]

For the removal of doubts, it is hereby clarified that the foreign contribution so received shall be utilised only for activities carried out in India in accordance with the association’s stated objectives and for the purposes for which such contribution has been received.

5.3. Observations

5.3.1. Thus, foreign contribution must be used only for activities carried out in India, and only for stated objectives and registered purpose(s) for which it was received: it cannot be diverted to another cause even within India.

5.3.2. It may be argued that an expenditure incurred outside India would not, by itself, result in a violation of the Explanation, provided that the expenditure is integrally connected with, and facilitates, an activity that is actually carried out in India. For example, a computer is purchased outside India is used exclusively in India for carrying out the association’s teaching activities in India, it may be argued that the foreign contribution has ultimately been utilized for an activity carried out in India.

This is likely to be a fact-specific determination. The nature and purpose of each expenditure incurred outside India and the nexus between such expenditure and the activity carried out in India would need to be considered on a case-by-case basis.

5.3.3. Further, even if an expenditure is regarded as utilised for activity carried out in India, such expenditure may have implications under the Income-tax Act 2025.

5.3.4. As mentioned above, FC-4 continues to have a question on whether “the Association has utilised any foreign contribution outside India?” – para 8(xv). This appears to suggest that even if the Association incurs expenditure outside India for activity in India, it will need to report here and may be subject to further scrutiny.

5.3.5. The expression “stated objectives” appears to refer to the objects of the association as set out in its constitutional document, such as its Memorandum of Association and which are mentioned in the registration / renewal application.

5.3.6. The expression “purposes for which such contribution has been received” appears to refer to the specific purpose for which the foreign contribution has been received, that is, mentioned by the donor, but limited to Scheduled purposes selected by the association. Thus,

• even where an activity falls within the association’s stated objectives, the utilization of the foreign contribution should be consistent with the specific purpose for which the contribution was received.
• a foreign contribution cannot be received for a purpose other than the Scheduled purposes selected by the association, even if the donor so wishes. In such circumstances, the association should make an application for change in purpose referred to in para 3 above before receiving the contribution.

6. MINIMUM-ACTIVITY TEST

6.1. Background

One of the conditions for grant of registration is that the person making the application has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized [section 12(4)(b)].

Further, the Central Government may cancel the certificate if the holder of the certificate has not engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive years [section 14(1)(e)].

What amounts to reasonable activity was not explained in the Act/Rules.

6.2. Text [Rule 14A]

Utilisation of foreign contribution for reasonable activity. – For the purposes of cancellation under section 14 and renewal under section 16, an association shall be deemed to have undertaken reasonable activity in its chosen field for the benefit of society if it has utilised foreign contribution of not less than ten lakh rupees in the last two financial years for such purpose.

6.3. Observations

6.3.1. While the matter is not clear, it appears that the amount of Rs.10 lakhs excludes administrative expenses incurred by the association (since the same may not be regarded as activity for the benefit of the society).

6.3.2. Activity

The association has to undertake “reasonable activity”. The word “activity” is judicially explained in other contexts as follows:

• The word ‘activity’ is wider than the word ‘business’. It connotes a specified form of supervised action or field of action. Read in the context of the profit-earning activity of a co-operative society it means the corporate activity of the society, that is to say, the combination of operations undertaken by the co-operative society whether or not they amount to a business trade or profession in the ordinary sense. [Kottayam Co-operative Land Mortgage Bank Ltd v. CIT, (1988) 172 ITR 443 (Ker)²]
• …Normally, an activity would include an act done, a work done, a deed done, an operation carried out, execution of an act, provision of a facility etc. Where applicant receives the violation charges from contractors there is no activity done by both the parties. [Dholera Industrial City Development Project Ltd., In re, (2019) 108 taxmann.com 510 (AAR-GUJ)]
• Webster’s New International Dictionary defines the word “activity” as “natural or normal function or operation;…” Another significant dictionary definition is: “ The state of action, doing; an exercise of energy or force; an active movement or operation; a physical or gymnastic exercise, an agile performance.

2  For the purpose of section 80P(2)(c) of the Income-tax Act, 1961.

The word “activity or activities” of course as applied to various things has various meanings but the ordinary accepted meaning of the term when applied to any particular thing is that it covers everything that the individual or the corporation does.

[Carbide & Carbon Chemicals Corp v. Carson, 192 Tenn. 150 (1951)]

6.3.3. On a literal reading, this test is applicable for any renewal after 22.6.2026. Thus, it could apply retroactively for financial year 2024-25 and financial year 2025-26 . However, the matter is not clear.

Part II: Amendment in Forms

7. RENEWAL (FC-3C): 3-YEAR ACTIVITY HISTORY

For the renewal of registration, a year-wise detailed activity report of last three financial years is required to be attached [Note (c) at the end of the Form FC-3C].

The report should

(a) be detailed

(b) be year wise

(c) cover last three financial years

(d) cover all activities (except, perhaps, insignificant activities)

8. ADDITIONAL REQUIREMENTS FOR FC-4 (ANNUAL RETURN)

8.1. Website + social-media disclosure

8.1.1. The annual return in Form FC-4 now requires disclosure of the following:

(a) official website of the association

(b) social-media accounts of the association.

[Sr. No. 1(c)]

8.1.2. Observations

(a) What is required is disclosure of “social media accounts” and not “social media posts.”

(b) The FC-4 provision refers to “Social Media Accounts of the Association” and not of its key functionaries (except where they are officially designated, named, or run primarily as the media voice of the association). This is different from the publication disclosure, where the Form FC-4 expressly refers to material published by the association or its key functionaries (see para 8.6).

(c) Any social media account of the association must be disclosed, even if the posting frequency is low or the account is dormant.

(d) The association will have to separately maintain records of any posts by the association, even if they are deleted from the account.

(e) Meaning of social media

The Rules do not define “social media” or specify an exhaustive list of platforms. Therefore, the expression should be understood in its ordinary and reasonably broad sense.

Online dictionaries define “social media” as follows:

forms of electronic communication (such as websites for social networking and microblogging) through which users create online communities to share information, ideas, personal messages, and other content (such as videos) [https://www.merriam-webster.com/dictionary/social media]

websites and computer programs that allow people to communicate and share information, opinions, pictures, videos, etc. on the internet, especially social networking websites:

forms of media that allow people to communicate and share information using the internet or mobile phones:

[https://dictionary.cambridge.org/dictionary/english/social-media]

(f) The following could be considered as social media:

• Facebook
• Instagram
• X (Twitter)
• LinkedIn
• YouTube Channel
• WhatsApp Channel/Telegram Channel/Signal (if used as public communication channel)
• Facebook/Instagram groups (if maintained/controlled by the association)

However, WhatsApp group for internal staff is not necessarily social media.

8.2. Ultimate-donor for Donor Advised Fund (DAF) / intermediary routes

8.2.1. Form FC-4 now requires the following details:

Details of ultimate donors in case of Donor Advised Funds/Other intermediary remittance vehicles

[Sr. No. 2(ii)(aa)]

8.2.2. Meaning of DAF

The meaning of “DAF”, has been given by various AI platforms. Based on this, a DAF may be broadly summarised as follows:

(a) A DAF is a charitable giving arrangement under which a donor makes a contribution to a sponsoring charitable organisation (the “donee”).

(b) The donee holds and administers the contributed assets in a separate fund or account associated with the donor.

(c) The donor generally retains the right to recommend how and when amounts held in the fund should be distributed to eligible charitable organisations. However, the donor does not retain legal ownership of, or ultimate legal control over, the assets contributed to the fund.

(d) Irrevocable Contribution

Once a donor makes contribution to a donee, the contribution becomes the property of the donee. The donor ordinarily has no right to reclaim or withdraw the contribution.

(e) Donor’s Advisory Rights

The donor may generally recommend:

(i) the charitable organisations to which grants should be made;

(ii) the amount of each grant; and

(iii) in certain cases, the timing or purpose of the grant.

The donor may make recommendations but does not have legal control over the grants. The donee retains ultimate discretion to approve or reject the donor’s recommendations.

(f) Investment of Corpus

Until grants are made, the assets held in the DAF may be invested. Any investment income and appreciation generally remain within the fund and may subsequently be applied towards charitable grants to the donee.

(g) Illustration

Suppose “A” contributes ₹1 crore to a charitable institution (donee).

• The ₹1 crore becomes the property of the donee.
• “A” may recommend that ₹20 lakh be granted to Charity X, ₹30 lakh to Charity Y and ₹10 lakh to Charity Z.
• The donee considers and approves those recommendations.
• The remaining ₹40 lakh may continue to be invested by the donee and may be used for future charitable grants.
• “A” cannot withdraw ₹1 crore.

In the above illustration, ‘A’ is a DAF

(h)      A DAF is distinct from a charitable trust.

(i) The expression “Donor-Advised Fund” is principally associated with the U.S. charitable and tax system.

(j) Relevance for FCRA and Form FC-4

For the purposes of disclosure in Form FC-4, there are two views

View 1

A contribution may be regarded as having been received from a DAF where the donor is treated as a DAF for the donor country purposes. Hence, even if the donation to the Indian association does not satisfy the features of a donation from DAF as mentioned in para 8.2.2, it will be automatically regarded as a
donation by a DAF if the status of the donor is a DAF.

Under this view, the DAF will have to furnish to the donee the details of ultimate donors even if the donation from the DAF does not have the features corresponding to those received by it from those ultimate donors.

View 2

A contribution may be regarded as having been received from a DAF only where, based on the relevant facts and documentation, the contribution is treated as a DAF contribution for the donor country purposes. Under this view, whether a particular contribution constitutes a donation from a DAF is fact-specific and should be determined on the basis of the legal and contractual arrangements governing the contribution, the nature of the donor’s rights, and the terms and conditions attached to the donation, etc. Accordingly, each contribution should be examined on its own facts and documentation.

Conclusion

View 2 appears to be a better view.

(k) Disclosure in Form FC-4

Where there is any doubt regarding the appropriate classification, it would be prudent to make an appropriate disclosure in Form FC-4, explaining the reasons for exclusion of a particular donation.

8.3. Detailed activity report

A detailed activity report every year is required to be attached [Sr. No. 3(a)(i)]

The activity report has to be “detailed”. Further, the format of Sr. No. 3(a) appears to suggest that the report has to be project-wise, location-wise, amount-wise.

8.4.     Project wise details

8.4.1. Background

Hitherto, the details of individual project/activity were not required.

8.4.2. Text

The following details are now required:

[Sr. No. 3(a)]

8.4.3. Observations

(a) The details are required for each and every project as well as activity. For meaning of activity, please see para 6.3.2 in Part I of this article.

(b) The association will now have to maintain project/activity wise details of amounts utilised on fixed assets/admin expense. It must make sure that the project-wise admin figures add up exactly to the master figure in FC-4.

(c) The details are required only to the extent foreign contribution has been utilised for the said purposes.

8.5.1. On the basis of cumulative requirements the foreign contribution transactions (receipt and payment) require the following details:

• donor/grant — ultimate donor for DAF/intermediary inflows;
• State where money is spent;
• project/activity mapped to a registered purpose;
• expense head — programme, fresh assets, or admin and
• expense head — programme, fresh assets, or admin and

8.5.2. The association may consider preparing and filing a reconciliation between FC-4 and Form 112 under the Income-tax Rules 2026, in consultation with the tax auditor.

8.6. Details of publications

8.6.1. The requirement in Form FC-4 is as follows:

“8A Details of publications brought out by the association;

(i) Whether the association or its key functionaries has brought out any publication during the year: Yes/No

(ii) If yes, details of the publications:

Note: As per section 3(1)(g), the association shall not engage in production or broadcast of any news or current affairs related matters through any mode of mass communication.

Thus, in essence, details of all publications brought out by the associations or its key functionaries are required to be disclosed.

8.6.2. The form does not ask for details of every communication made by the association or its key functionaries. It specifically asks for details of “publications” and, in describing the nature of mass communication, gives examples such as a book, magazine and newspaper article. It further requires the title of the publication and a brief description of the article. Hence, it could be argued that unless a publication is in the form of a book, magazine or newspaper, article, etc. it need not be covered in Form FC-4. To illustrate, a mere interview of a key functionary may not be regarded as a publication required to be disclosed in this table.

8.6.3. The publication should be brought out by the association or its key functionary. It appears that a book, magazine or newspaper published by a third party may still be regarded as brought out by the association, if it is authored by the association/key functionary.

The terms “publication”, “mass communication”, “published” and “article” have been defined in dictionaries as follows:

8.6.4. Publication

• “publication” is, inter alia, “a published work”. [The Merriam-Webster Dictionary]
• “publication” is a book, magazine, newspaper or document in which information or stories are published. [The Cambridge Dictionary]

Thus, in its ordinary sense, a publication generally connotes some identifiable work or material which is published. It does not necessarily extend to every communication made available to the public. The term is therefore wider than a printed book or newspaper, particularly in the digital age. A publication may, depending upon its nature, be made available electronically or on the internet. For example, if a key functionary writes a detailed article on a particular subject and gets it published in an online journal. The fact that it is hosted electronically would not prevent it from being regarded as a publication. At the same time, the mere fact that a communication is publicly accessible through social media or can potentially reach a large number of persons should not, by itself, make it a “publication” for purposes of item 8A.

8.6.5. Mass communication

• Mass communication is communication directed to or reaching the mass of the people. [The Merriam-Webster Dictionary]
• Mass communication is something such as television or the internet through which a message, story, etc., can be communicated to a large number of people at the same time. [Cambridge Dictionary]

Thus, “mass communication” is generally understood to mean communication directed to, or capable of reaching, a large number of people. However, the contents of the communication may not constitute a publication. This distinction is important. Social-media platforms are undoubtedly capable of mass communication. However, it does not follow that every post, photograph, video, announcement or other communication placed on a social-media platform is necessarily a “publication” required to be reported under item 8A.

8.6.6. Publish

• Produced or released for distribution in a book, magazine, newspaper, etc. [https://www.merriam-webster.com/dictionary/publish]
• to make information available to people, especially in a book, magazine, or newspaper, or to produce and sell a book, magazine, or newspaper; [https://dictionary.cambridge.org/dictionary/english/]

8.6.7. Article

• a nonfictional prose composition usually forming an independent part of a publication (such as a magazine) wrote an article for the newspaper [https://www.merriam-webster.com/dictionary/]
• a piece of writing on a particular subject in a newspaper or magazine, or on the internet: [https://dictionary.cambridge.org/dictionary/english/]
• a piece of writing included with others in a newspaper, magazine, or other print or online publication. “an article about middle-aged executives” [https://www.google.com/]

Thus, an “article” ordinarily refers to a piece of writing dealing with a particular subject and forming an independent part of a publication. It is generally more substantial and structured than an ordinary communication or announcement.

8.6.8. Social-media posts

The terminology ordinarily used by the principal social-media platforms also supports the distinction between a general social-media communication and an article. For example:

Therefore, an ordinary post on X, Instagram or LinkedIn is not ordinarily described as an “article” merely because it is publicly accessible. For example, the following would not ordinarily be regarded as publications/articles:

• a photograph of an event;
• an announcement regarding an event;
• a congratulatory message;
• a short brief update regarding the activities of the association;’
• an Instagram Story;
• an Instagram Reel;
• a short X/LinkedIn post;
• a link or notice shared on social media.

Accordingly, the medium of publication is not determinative. The nature and substance of the material are more relevant.

8.6.9. Further, section 3(1)(g) reads as follows:

association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) or any other mode of mass communication;

It is also referred to in Note to Item 8A. This, gives an impression that the publication should be relating to audio news, or audio visual news or current affairs programmes.

8.6.10. Conclusion

For practical purposes, an association may therefore adopt the following approach:

Ordinary social-media communications such as routine posts, photographs, event announcements, short updates, reels and stories may ordinarily not be treated as publications/articles for purposes of item 8A. Substantive articles, reports or other identifiable published works disseminated through a website or social-media platform should, however, be examined separately and may require disclosure.

In case of ambiguity, appropriate disclosure may be made in Form FC-4.

8.7. UDIN of the auditor’s certificate

Unique Document Identification Number (UDIN) is 18-Digits system generated unique number for every document certified/attested by a full time practicing chartered accountants (CA). Now, it is mandated as per format of FC-4 that UDIN of both the auditor’s certificate and FC-specific financial statements is specified.

9. Summary

Significant changes have thus been made in the Rules. While the authors have taken the liberty to express their views, it will be prudent for the association to periodically check the MHA portal and ascertain whether the authors’ views are in conformity with the views if any expressed by MHA. In an appropriate case the association may have to alter its position.

BCAJ Admin