Ministry of Corporate Affairs (“MCA”) introduces the Corporate Laws (Amendment) Bill, 2026 in Lok Sabha.
The Corporate Laws (Amendment) Bill, 2026 (“the Bill”) was introduced in the Lok Sabha on 23.03.2026 by Finance Minister Nirmala Sitharaman. The Bill proposes extensive amendments to the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 (“LLP Act”), driven by the recommendations of the Company Law Committee (2022) and the High Level Committee on Non-Financial Regulatory Reforms. The Bill has been referred to a 31-member Joint Parliamentary Committee (“JPC”) for detailed scrutiny.
Key Takeaways:
- The Bill decriminalises 21 minor and technical offences under both Acts, shifting them from a criminal court-based system to an electronic e-adjudication platform where only monetary penalties are levied, removing the risk of imprisonment for procedural lapses such as failure to furnish information to the Registrar, contravention of rules, or violations relating to books of account.
- A dedicated framework is introduced for entities operating within International Financial Services Centres (“IFSCs”), including formal recognition of “Specified IFSC LLPs,” which must maintain their registered offices within the IFSC and are permitted to maintain books of account and financial statements in permitted foreign currencies.
- A new Section 57A is inserted under the LLP Act to allow specified trusts registered with SEBI or IFSCA, including Category I and Category II Alternative Investment Funds structured as trusts, to convert directly into LLPs, with all assets, liabilities, rights, and obligations automatically vesting in the new LLP upon conversion, subject to consent of at least 75% of investors by value.
- The thresholds for “small companies” are revised upward, with the paid-up share capital limit increased from Rs. 10 crore to Rs. 20 crore and the turnover limit increased from Rs. 100 crore to Rs. 200 crore, expanding the class of companies eligible for relaxed compliance requirements.
- The Bill formally recognises share-linked employee compensation schemes beyond stock options, including Restricted Stock Units (“RSUs”) and Stock Appreciation Rights (“SARs”), under Section 62 of the Companies Act.
- The National Financial Reporting Authority (“NFRA”) is elevated with corporate status and expanded enforcement powers, including the authority to issue directions, conduct inquiries, impose penalties, and mandate mandatory registration and reporting by auditors.
- Digital governance provisions are strengthened, with companies permitted to hold Annual General Meetings through video conferencing or audio-visual means, subject to the requirement of at least one physical meeting every three years.
Securities and Exchange Board of India (“SEBI”) Board approves multiple regulatory reforms at its 213th Board Meeting.
SEBI held its 213th Board Meeting on 23.03.2026, approving a series of regulatory changes across the Alternative Investment Fund (“AIF”), Foreign Portfolio Investor (“FPI”), Infrastructure Investment Trust (“InvIT”), and Real Estate Investment Trust (“REIT”) frameworks, as well as significant internal governance reforms. The decisions reflect SEBI’s continued focus on ease of doing business, market efficiency, and institutional accountability.
Key Takeaways:
- SEBI amended the SEBI (Alternative Investment Funds) Regulations, 2012 to allow AIFs to retain liquidation proceeds beyond their permissible fund life under specified conditions, including where a formal litigation notice or tax demand has been received, where at least 75% of investors by value have consented to cover anticipated liabilities, or where residual operational expenses are substantiated by invoices or prior year comparables. Retention is capped at a maximum period of three years from the end of the fund’s permissible life.
- A new “inoperative fund” status is introduced for AIFs that have completed their lifecycle but cannot achieve a nil bank balance due to pending tax demands, litigation, or residual expenses. Inoperative funds will be subject to reduced compliance obligations, including discontinuation of periodic filings, Private Placement Memorandum (“PPM”) updates, and performance benchmarking requirements, while remaining under SEBI’s regulatory supervision until formal surrender of registration.
- FPIs will be permitted to settle transactions in the cash market on a net basis rather than the current gross basis, reducing funding costs and foreign exchange slippages for foreign investors. The proposal is to be implemented on or before 31.12.2026.
- The minimum investment threshold for individual investors in Social Impact Funds (“SIF”) under the AIF framework has been reduced from Rs. 2 lakh to Rs. 1,000, aligning it with the minimum application size for Zero Coupon Zero Principal instruments and broadening access to mission-driven investing through the Social Stock Exchange.
- Reforms to InvIT and REIT regulations provide additional flexibility, including permitting privately listed InvITs to invest up to 10% of their assets in greenfield infrastructure projects and under-construction assets, and allowing InvITs and REITs to deploy surplus funds in liquid mutual fund schemes rated AA and above.
- Internal governance reforms were approved for SEBI itself, with Chairman and Whole-Time Members now subject to the same investment and trading restrictions as employees, brought within the definition of “insider,” and required to disclose any future employment negotiations. A digital whistleblower system and ethics training programmes are also to be established.
Income Tax Department launches AI-driven nationwide verification exercise under the SAKSHAM NUDGE campaign.
The Income Tax Department launched a nationwide verification exercise in March 2026 using AI-based data analytics to identify large-scale suppression of income in the Food and Beverage sector. Transactional data from restaurants was analysed using AI-enabled tools and cross-referenced with declared turnover, revealing significant under-reporting. The exercise was accompanied by the launch of the SAKSHAM NUDGE campaign, aimed at encouraging voluntary compliance from identified taxpayers.
Key Takeaways:
- The AI-driven analysis of transactional data from restaurants in the Food and Beverage sector revealed suppression of sales amounting to approximately Rs. 408 crore on a preliminary basis, with several restaurants found to have engaged in deletion of bulk bills and other modifications to suppress actual sales.
- The Income Tax Department conducted a nationwide survey on the basis of the AI analysis, marking one of the first large-scale deployments of AI-enabled analytical tools for sector-specific income verification in India.
- The SAKSHAM NUDGE campaign was launched in parallel, targeting approximately 63,000 identified restaurants and urging them to file updated returns under Section 139(8A) of the Income Tax Act, 2025, and voluntarily disclose suppressed income to avoid further enforcement action.
- The exercise signals a broader shift in the Income Tax Department’s enforcement strategy from reactive audit-based compliance to proactive, data-driven identification of high-risk sectors and taxpayers.
- Taxpayers in the Food and Beverage sector are advised to review their declared turnover figures and reconcile them against point-of-sale data, digital payment records, and third-party platform data, which may be accessible to the Department through its AI analytics infrastructure.
- The initiative forms part of the Department’s Risk Management Strategy (Cycle 6), under which cases identified across benami transactions, undisclosed foreign assets, and TDS compliance have been uploaded to the “Verification” module of the Insight portal for further action by investigation wings.
Income Tax Department adopts AI-driven enforcement under “SAKSHAM NUDGE” campaign
In a significant shift toward data-driven tax administration, the Income Tax Department has launched a nationwide AI-based verification exercise targeting income suppression in the Food & Beverage sector. The initiative is part of its broader compliance strategy under the SAKSHAM NUDGE campaign.
Key Takeaways:
- AI-led detection of tax evasion:
Advanced analytics tools were used to analyse restaurant transaction data and compare it with declared turnover, identifying discrepancies and patterns of under-reporting. - Large-scale income suppression identified:
Preliminary findings indicate suppression of approximately ₹408 crore, including practices such as deletion of bulk bills and manipulation of sales records. - Targeted compliance outreach:
Around 63,000 restaurants have been flagged and encouraged to voluntarily update their returns under Section 139(8A) of the Income Tax Act. - Shift to proactive enforcement:
This marks a transition from traditional audit-based scrutiny to predictive, AI-driven compliance monitoring, enabling earlier detection of sector-specific risks. - Integration with broader risk strategy:
The exercise forms part of the Department’s Risk Management Strategy (Cycle 6), covering areas such as benami transactions, foreign asset disclosures, and TDS compliance via the Insight portal.
