Ergo Update

The Reserve Bank of India (RBI) has issued a master direction on outsourcing of information technology services by REs (as described below) on 10 April 2023 (Direction). The RBI had published a draft master direction for public feedback on 23 June 2022, pursuant to which the Direction has been released. The Direction aims to mitigate risks (as described below) faced by REs due to material outsourcing of information technology (IT) or IT enabled services as identified under the Direction (collectively, “IT services”) to providers of IT or IT enabled services (Service Providers).

In a major boost to the medical devices company sector, the Union Cabinet, chaired by Hon’ble Prime Minister Narendra Modi, has approved the National Medical Devices Policy 2023 (NMDP) on 27 April 2023 and the final policy has been notified on 03 May 2023 in e-Gazette of India. This is in furtherance to the ‘approach paper to National Medical Device Policy, 2022’ published for stakeholder consultation by the Department of Pharmaceuticals (DoP) on 10 May 2022.

The Reserve Bank of India (RBI), through its ‘Draft Circular for Comments on Fair Lending Practice – Penal Charges in Loan Account’ (Draft Circular), released on 12 April 2023, has sought suggestions from the stakeholders on the implementation of the proposed guidelines relating to lev

In a first ruling on the issue, the Income Tax Appellate Tribunal, Mumbai (Tribunal) in the case of Legatum Ventures Limited (Taxpayer) [ITA No. 1627/2022], ruled that capital gains on sale of unlisted shares by a non-resident must be computed strictly as per Section 112(1)(c)(iii) of the Income Tax Act, 1961 (ITA) without considering the computation provisions under Section 48 of ITA.

In a judgment with far reaching consequences, a five-judge Constitutional Bench of the Supreme Court of India in the matter of N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd. Civil Appeal No(s). 3802-3803 of 2023 provided clarity on the effects of an unstamped or insufficiently stamped arbitration agreement in proceedings to refer disputes to arbitration on a party’s application, answering the reference made to it by the three-judge bench of the Supreme Court in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited and Others, (2021) 4 SCC 379 (N.N. Global).

On 20 April 2023, the Indian Space Research Organization (ISRO) released the Indian Space Policy 2023 (Space Policy), which was reported to have received the nod of the Union Cabinet on 6 April 2023. The Space Policy has been issued subsequent to the reforms announced by the Government in space domain by opening doors for participation of non-governmental entities (NGEs) and enable a level-playing field.

On 2 April 2019, the European Union (EU) requested consultations  with India concerning the tariff treatment that India accords to certain goods in the Information and Communications Technology (ICT) sector.  

The Hon’ble SC reversed the Karnataka HC judgment on the issue of comparables selection and whether it constitutes a 'substantial question of law'.

The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill 2022 (Bill) received the assent of the Governor of Tamil Nadu, Mr R N Ravi, on 7 April 2023. Pursuant to the Madras High Court striking down the Tamil Nadu Gaming and Police Laws (Amendment) Act 2021 , the Tamil Nadu government constituted a five-member committee led by former Justice K Chandru (Justice Chandru Committee) to assess the adverse effects of online gaming with stakes and advise on the possibility of introducing a new law to regulate online gambling.

Taxation of intermediary services to offshore customers / clients has been one of the most contentious topics of the GST regime. An “intermediary service” has been defined as an activity of facilitating provision of goods or services between two or more persons. As per Section 13(8)(b) of the IGST Act, the “place of supply” for intermediary services, is deemed to be the location of the “supplier” of services.