Indirect Tax

Customs

Postal exports are fully eligible for Duty Drawback & Export Incentives

Notifications 03/2026-Customs (N.T.), 04/2026-Customs (N.T.), 05/2026-Customs (N.T.), 07/2026-Customs (N.T.), along with Circular No. 01/2026-Customs dated 15th January 2026.

The Ministry of Finance and the Central Board of Indirect Taxes and Customs (CBIC) introduced a comprehensive reform package to modernize and digitize the framework governing exports through the postal route. Through amendments to the rules and regulations, postal exports have been expressly recognized and aligned with shipping bills and bills of export. These changes eliminate procedural ambiguity, harmonize compliance requirements, and bring postal exports on par with other export channels.

A major highlight of the reforms is the full integration of the Postal Bill of Export (PBE) system with ICES, linking the Department of Posts’ DNK portal with ICEGATE. This enables exporters using the postal route to electronically claim export incentives such as Duty Drawback, RoDTEP, and RoSCTL. Mandatory ICEGATE registration, electronic bank linkage, revised PBE formats, and digital submission of supporting documents through E-Sanchit collectively ensure faster processing, improved transparency, and reduced manual intervention.

Overall, these measures represent a significant step towards enhancing ease of doing business, especially for MSMEs, startups, and e-commerce exporters that rely heavily on the postal channel.

One time relief for Cross Recessed Screws Imports

Instruction No. 01/2026 Customs (dated 17 January 2026)

CBIC has clarified the implementation of the Cross Recessed Screws (Quality Control) Order, 2025, originally effective from 1 November 2025, with staggered compliance dates for small enterprises (1 Feb 2026) and micro enterprises (1 May 2026).

Following the transfer of regulatory oversight for iron and steel products from DPIIT to the Ministry of Steel and to address concerns over consignments already at Indian ports, a one time exemption has been granted for imports with inward entry dates between 1 November 2025 and 12 January 2026, thereby providing much-needed transitional relief.

Foreign Trade Policy

DGFT introduces Minimum Import Price (MIP) for Penicillin, Amoxicillin, and 6-APA

Notification No. 56/2025-26 dated 29 January 2026

With an aim to curb low-priced imports from China while promoting domestic manufacturing, DGFT has introduced a one-year Minimum Import Price (MIP) based restriction on imports of key pharmaceutical inputs. Imports of Penicillin G-potassium with CIF value below ₹2,216 per kg, Amoxicillin Trihydrate below ₹2,733 per kg, and 6-APA below ₹3,405 per kg are now classified as “Restricted.”

However, the MIP conditions do not apply to imports by 100% EOUs, SEZ units, or under the Advance Authorization Scheme, provided the goods are not sold in the Domestic Tariff Area (DTA).

DGFT appoints IACCIA for issuance of Non-Preferential Certificate of Origin

Public Notice no. 43/2025-26 dated 9 January 2026

The India & Arab Countries Chamber of Commerce, Industry & Agriculture (IACCIA) has been authorized to issue Non-Preferential Certificate of Origin (CoO) under the Foreign Trade Policy (FTP), with immediate effect. This authorization expands the network of designated issuing agencies, enhancing institutional capacity and improving service outreach for exporters.

The move is expected to reduce procedural delays, improve accessibility, and streamline export documentation, particularly benefiting exporters engaged in trade with Arab countries.

Revised Electronic Bank Realization Certificate (eBRC) reporting framework

Public Notice no. 42/2025-26 dated 9 January 2026

DGFT has revised the e-BRC format effective from 13 January 2026, to strengthen data integration, traceability, and verification. The revision introduces:

  • Addition of mandatory fields such as GSTIN, GST Invoice Number, and GST Invoice Date, and
  • Modification of the existing field “Address/GSTIN” to “Address”.

The revision has also enabled online validation via QR code and the DGFT website, thereby improving document authenticity and compliance monitoring.

Niryat Protsahan: Enhancing MSME Exports under the Export Promotion Mission

Trade Notices no. 20/2025-26, 21/2025-26, and 22/2025-26 dated 2 January 2026 & 16 January 2026

As part of the initial rollout of the Export Promotion Mission (EPM), the Government has launched two key interventions under the Niryat Protsahan sub-scheme to strengthen MSME exports and improve access to export finance.

The first intervention introduces an interest subvention on pre and post-shipment rupee export credit, providing a base subvention of 2.75% on pre and post-shipment rupee export credit to reduce financing costs and ease working capital constraints for MSME exporters, with provision for additional incentives for exports to under-represented and emerging markets. The benefit is restricted to exports under a notified positive list of HS six-digit tariff lines covering nearly 75% of India’s tariff lines, with an annual cap of INR 5 Million per IEC for FY 2025–26 and bi-annual rate reviews.

Further, DGFT Trade Notice No. 22/2025–26 dated 16 January 2026 aligns eligibility with RBI credit norms, restricts applicability to facilities sanctioned on or after 2 January 2026, excludes deemed exports and accounts turning NPA before completion of the export cycle, applies revised rates prospectively, allows exporters graduating out of MSME status to retain eligibility for three years, streamlines online monthly reimbursements, reinforces exporter compliance responsibility, affirms banks’ pricing discretion, and confirms a full-year annual cap for FY 2025–26 without pro-rata adjustment.

The second intervention focuses on easing collateral constraints faced by MSME exporters by introducing collateral guarantee support for export credit in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Under this framework, guarantee coverage of up to 85% will be available for Micro and Small exporters and up to 65% for Medium exporters, subject to a maximum outstanding guaranteed exposure of INR 100 Million per exporter per financial year. The measure is intended to complement existing credit‑guarantee mechanisms, reduce lenders’ risk perception, and catalyze higher bank lending to export‑oriented MSMEs. The two interventions will be implemented on a pilot basis with continuous monitoring and data-driven refinements.

Transfer Pricing

The implementation of New Income-tax Act, 2025, along with publication of new draft rules to the said Act and introduction of Finance Bill, 20265 has brought in a sea change to the idle calm waters of transfer pricing (TP) regulations. A detailed article for all the below developments is given in this link. A summary of the same is given below –

Retrospective changes to procedural aspects to overrule the court decisions

  • Clarification on time limit for the completion of assessment under section 144C of the Act

    The ITAT across the country had recently began passing the orders in favour of the taxpayers, on technicalities, ruling the assessment orders to be time barred based on High Court judgement of Shelf Drilling6 case post the split Supreme Court verdict in case of Roca Bath considering the stay on the matter was vacated post verdict.

    However, the Government has decided to pass retrospective law ironing out any inconsistencies in interpretation of law giving AO additional time to pass the final order where taxpayers have option to opt for filing objections before DRP.
  • Clarification on Timeline for Passing Transfer Pricing Orders (60 or 61 days)

    The Finance Bill, 2026 also proposes to reverse the fairly settled interpretation7 of passing the TP order on 29-January (in case of non-leap year, with 61 days to spare). The amendment specifies fixed TP assessment deadlines rather than relying on interpretation of the law:

    Under Income-tax Act, 1961

    Deadline for AO order u/s 153 in respective AY Deadline for TP order
    31-Mar (Leap year) 31-Jan
    31-Mar (non-leap year) 30-Jan
    31-Dec (non-leap year) 1-Nov

    Under Income-tax Act, 2025

    Deadline for AO order u/s 153 in respective AY Deadline for TP order
    31-Mar 31-Jan
    31-Dec 31-Oct

    Detailed article – Click here

Prospective changes

  • Resurgence of Safe Harbor Regime
    • The Government has extended applicability of Safe Harbour regime to include:
      • data centers (15% cost-plus); &
      • non-residents for component warehousing in a bonded warehouse (2% margin).
    • It has been further proposed to expand the scope of IT services:
      • to include IT, ITeS, KPO & contract R&D
      • with lower uniform mark-up of 15.5% and
      • a higher threshold of INR 20 billion

      This is expected to bring great relief to large number of tax payers.

    • The safe harbour approval mechanism to be made fully automatic, rule based driven framework rather than at the officer’s discretion.
  • Fast-tracking of unilateral APA for IT services
    The Government has put its foot forward to fast-track the unilateral APAs with a targeted 2 years resolution timeline with an extension of 6 months available to taxpayers. This will provide a greater certainty to the taxpayers.
  • From Discretionary Penalties to Automatic, Graded Fees for Form 3CEB Defaults
    The shift marks a clear move away from subjective penalty proceedings toward predictable, rules-based compliance enforcement raising the stakes for timely compliance, as fees will apply mechanically once a delay occurs.

    Earlier: Penalty of INR 0.1 million at discretion of officer even for a delay by a day.

    Proposed:
    Delay Late fee (INR)
    Upto 1 month 50 Thousand
    Beyond a month 0.1 million
    Transition from Form 3CEB to Form 48

    The changes in proposed new form 48 for TP compliance of puts onus on taxpayers to maintain contemporaneous documentation. The new forms require detailed information of the benchmarking performed along with financial information of tested party requiring maintenance of extensive and correct information at the time of filing of Form 48.

    Link to detailed article on the transition – Click here

5. www.indiabudget.gov.in/doc/Finance_Bill.pdf

6. Shelf Drilling Ron Tappmeyer Ltd. v. ACIT (IT) (Bombay) [Writ Petition Nos. 2340, 2661, 3059 and 3060 OF 2021]

7. Pfizer Healthcare India (P.) Ltd. v. Jt. CIT (Madras HC) [Writ Petition Nos. 32699, 33751, 34174, 34389, 34568 & 32703 of 2019]

Tax Street January 2026