NICAI Update
CA Raj Chawla
Quotes of the day:
1. Every King was once a crying baby and every great building was once a map. It’s not important where you are Today, But where you will reach Tomorrow is important.
2. OUR LIFE is 10% How we MAKE IT But Remaining 90% How we TAKE IT. Remember
Strong Positivity leads to MIRACLES. Be Positive & Keep yourself Motivated.
NICAI Update:
1. A Parliamentary Standing Committee on Finance has raised concerns over the growing backlog of income tax refunds, with approximately 27 lakh cases pending beyond the standard 90-day processing period in the 2025-26 financial year. The committee is pushing the Income Tax Department to expedite refunds, citing cash flow pressures on individuals and small businesses.
2. The Income Tax Department attributes delays to intensified verification of fraudulent claims, including bogus donations under Section 80G. The department has also launched a "nudge" campaign to encourage taxpayers to review and correct ineligible claims.
3. MSME Payment Deadline must address the significant tax implications of Section 43B(h) of the Income Tax Act. Failure to settle dues with specific MSME vendors by March 31, 2026, will result in a mandatory tax disallowance.
4. Payments to Micro or Small Enterprise manufacturers and service providers must be made within the time limits prescribed under Section 15 of the MSMED Act, 2006.
Wholesale and Retail Traders are excluded from Section 43B(h), even if they hold an Udyam Registration.
5. Payment terms: Without written agreement: 15 days from delivery/service
With written agreement: As per agreement, max 45 days
Ø Disallowance mechanism:
Can't claim expense if paid after year-end but before ITR filing date
Added back to taxable income if outstanding.
6. Gauhati High Court has ruled that GST recovery proceedings can't move forward without giving taxpayers a chance to respond to Show Cause Notices (SCNs). This decision emphasizes the importance of natural justice and fair hearing in tax proceedings.
7. In a recent case, R S Cooling Appliances vs Union of India, the court set aside a recovery notice because the taxpayer wasn't given an opportunity to respond to the SCN. The court directed the tax department to issue a fresh SCN and allow the taxpayer to submit a reply .
8. National Financial Reporting Authority (NFRA) has flagged serious lapses in audit firms linked to PwC, BDO, EY, and KPMG, highlighting concerns over audit independence, governance, and scrutiny of related-party transactions. The regulator's inspection reports reveal weaknesses in documentation, flawed audit procedures, and policy gaps, underscoring the need for stronger controls and oversight.
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With best regards
CA (Dr) Raj Chawla
B.Com (Hons), FCA, FCS, FCMA, LLB
MIMA, DISA, MICA, Phd, ASA (Aust), CMP (USA)
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27,Barakhamba Road, New Delhi-110001
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