Every company that employs a director, a lawyer, an IT consultant, or a chartered accountant eventually has to pay professional or technical fees. The law mandates that a small sum be deducted and paid with the government prior to the payment reaching the person receiving it. This deduction, known as tax deducted at source, or TDS, is now covered by Section 393 of the Income Tax Act, 2025 for professional and technical fees.

This provision was governed by Section 194J of the previous Income Tax Act, 1961, until March 31, 2026. Along with a number of other TDS provisions, it was combined into Section 393 of the new Act on April 1st, 2026. The rates and thresholds haven’t changed, but the section number, payment codes, and a few forms have. It’s important to get the categorisation and rate correct because a mistake here could result in unwanted notices and disallowed expenses.

Who Is Required to Deduct TDS?

Not everyone making a payment for professional or technical services has to deduct TDS. The obligation applies to:

• Companies, partnership firms, and LLPs
• Co-operative societies and local authorities
• Government departments and bodies set up under law
• Trusts, universities, and educational institutions
• Individuals or HUFs whose turnover crossed Rs 1 crore (business) or Rs 50 lakh (profession) in the previous financial year

If your turnover crossed these limits in FY 2025-26, you must deduct TDS on professional and technical payments through FY 2026-27. Individuals paying for purely personal services, like a doctor’s visit for a family member, don’t need to deduct TDS even if their income is high.

Rates and the Threshold Limit

Section 393 applies different rates depending on the nature of the payment. Professional fees, paid to a chartered accountant, lawyer, doctor, architect, or engineer, attract TDS at 10%. Technical fees, covering managerial, technical, or consultancy services that aren’t tied to a recognised profession, attract a lower rate of 2%. Royalty payments and non-compete fees are taxed at 10% as well.

The threshold for deduction is Rs 50,000 per payee, per financial year. This limit is calculated separately for each category, professional fees, technical fees, and royalty aren’t added together. So if you pay someone Rs 40,000 as technical fees and Rs 45,000 as professional fees in the same year, no TDS applies to either, since each stays under its own limit. Once a category crosses Rs 50,000, TDS applies to every payment in that category from that point on, not just the amount above the threshold.

Director remuneration works differently. Sitting fees, commission, or any non-salary payment to a director attracts TDS at 10% right from the first rupee, with no threshold at all. If a payee hasn’t shared their PAN, the rate jumps to 20% regardless of the payment type.

Software and Filing Compliance

Payments made for the right to use computer software, such as annual licence fees for accounting or ERP tools, are treated as royalty and taxed at 10% once they cross the Rs 50,000 mark. Custom software development, where a developer is paid to write code, usually falls under technical or professional fees instead, depending on how the service is classified.

On the compliance side, TDS must be deposited by the 7th of the month following deduction, except for March, where the deadline extends to April 30th. Deductors also need to file quarterly returns and issue TDS certificates to payees within the prescribed time. Missing a deduction isn’t just a compliance gap, it can lead to 30% of the payment being disallowed as a business expense, along with monthly interest and a penalty equal to the TDS amount.

Conclusion

The essential compliance work has not significantly changed because Section 393 maintains the same rates and thresholds that companies were used to under the previous Section 194J. The forms associated with certificates, the payment codes used in refunds, and the section reference have all changed. Businesses should avoid the fines related to misclassification or missed deductions and ensure a seamless transition by updating their systems and maintaining a clear, category-wise record of payments.

A complete understanding of tax liabilities and credits is necessary for effective personal financial management. Form 26AS, which serves as a consolidated tax statement and provides a comprehensive summary of all tax transactions related to your PAN, is issued by the Income Tax Department of India. Verify that the taxes that were deducted from your income have been correctly deposited with the government before filing your income tax return.

The Importance of Verification

Form 26AS serves as proof of tax deducted at source. Employers, banks, and other financial institutions deduct TDS and file quarterly returns, which then reflect in your statement. When you verify these entries, you ensure that the TDS shown in your salary slips or interest certificates matches the government records. This reconciliation prevents discrepancies during the tax filing process and helps you claim the full tax credit you are entitled to. If there is a mismatch, it often indicates that a deductor failed to deposit the tax or made a filing error, allowing you to address the issue promptly.

How to Access and Review Your Statement

You can use your bank’s net banking service or the official income tax e-filing portal to view your tax credit statement. Take these easy steps to view it using the e-filing portal:

• Enter your password and PAN or Aadhaar to access the official Income Tax e-filing website.
• Click on View Form 26AS after choosing Income Tax Returns from the e-File option.
• Accept the agreements and click “Proceed” to confirm the redirection to the TRACES portal.
• To see or download the document, select the appropriate evaluation year and your preferred format (e.g., HTML or PDF).
• If you download the PDF, be aware that it is secured and often needs your date of birth in the format DDMMYYYY to open.

After you receive the document, thoroughly compare it to your own records. Verify the accuracy of the deductor information, particularly the TAN, and your personal information. Check your physical TDS certificates for any discrepancies in the amount or timing of the tax deposit.

Resolving Inconsistencies

The first thing to do is get in touch with the deductor, which might be your bank or company, if you see missing entries or wrong amounts. Ask them to check and correct any problems in their TDS return filings. It’s a good idea to write down your communications and subsequent actions. These problems are frequently the result of administrative hold-ups or small reporting mistakes that the deductor can correct by submitting an updated return. It is far simpler to find and fix these issues if you regularly check your Form 26AS during the financial year rather than waiting until the filing deadline.

Conclusion

For every taxpayer to guarantee tax compliance and make proper credit claims, Form 26AS is a crucial instrument. You can ease the preparation of your annual tax returns and keep control over your financial data by routinely checking this statement. By ensuring that your tax payments are accurately recorded, this proactive strategy not only saves time during the filing season but also gives peace of mind. Maintaining awareness of your tax status is essential to competent financial management and guarantees a more seamless interaction with tax authorities.

Businesses in India buy and sell products worth crores every day. Compliance for high-value trade has been simplified under the Income Tax Act, 2025, which went into effect on April 1, 2026. Section 393 imposes a 0.1% tax on purchases exceeding Rs 50 lakh when a buyer’s turnover exceeds Rs 10 crore. This emphasis on high-value transactions continues to be a fundamental compliance need for companies nationwide in order to determine their income promptly.

Important Guidelines and Requirements

Section 393 requires buyers to deduct taxes. This is applicable to any business that made more than Rs 10 crore in income in the previous tax year and buys more than Rs 50 lakh worth of products from a single resident vendor each year. The buyer is required to remove 0.1% of the amount over the Rs 50 lakh barrier upon credit or payment, whichever comes first. For this particular provision, there are no reduced or zero deduction certificates.

Important Aspects of Compliance

• Who Takes Action: The buyer whose turnover in the previous tax year exceeded Rs 10 crore.
• Threshold: Each seller’s total yearly purchase of Rs 50 lakh.
• Rate: 0.1% (if the vendor fails to provide a valid PAN, the rate rises to 5%).
• Timing: Either actual payment or credit to the seller’s account, whichever comes first.

“Goods” refers to movable items such as scrap, cars, and commodities. If GST is specified individually on the invoice, it is not included in the TDS basis.

Section 393’s implementation

Since the TCS provision under Section 206C(1H) was eliminated on April 1, 2025, the buyer is now fully responsible for ensuring that the sale of goods complies with tax laws. The compliance burden is greatly reduced because there is no longer a situation in which both TDS and TCS apply to the same transaction. No tax deduction is necessary under this clause if the acquisition is less than Rs 50 lakh or the buyer does not meet the Rs 10 crore turnover level.

Reporting and Compliance

• PAN: The transaction is subject to a 5% TDS charge if a PAN is not provided.
• Deposits: By the seventh of the next month (April 30 for the month of March), tax must be deposited via the electronic payment method (Challan 281).
• Returns: In accordance with the Income Tax Rules, 2026, buyers are required to file quarterly returns and provide the payees with the appropriate tax deduction certificates.

Exemptions and Useful Actions

These rules do not apply to some parties, such as government departments and entities that are exempt from income tax under the Act. Compliance is still simple:

• To determine applicability, check turnover from previous years in advance.
• Keep track of per-party purchase totals starting on April 1st, the first day of the tax year.
• To avoid increased deduction rates, obtain PANs up front.
• Accurately aggregate purchase values.

The buyer is considered an assessee-in-default and is subject to interest at a rate of 1% per month for late reductions and 1.5% for late deposits if they fail to deduct or deposit tax.

Conclusion

Section 393 compliance is required for the purchase of goods valued at more than Rs 50 lakh for businesses with a turnover of more than Rs 10 crore. The compliance environment has been simplified with the removal of the previous TCS rules, and the buyer now bears main accountability. To prevent validation issues during filing, make sure your accounting systems are updated to reflect the new section references under the Income Tax Act, 2025. Throughout the tax year, your company will have flawless tax compliance if you keep track of individual restrictions and keep correct records.

Every salaried employee looked forward to Form 16 at the beginning of the financial year for more than 60 years. It served as the foundation for each ITR file and verified the amount of tax that the employer had deducted and deposited. Form 130 will take its place under the Income Tax Act, 2025. Millions of salaried employees are affected by this change, so knowing when it applies and what it looks like may help avoid confusion when it does.

When Form 130 Is Really Important

It’s worth being precise here, since there’s often confusion about timing. Form 16 continues to apply for FY 2025-26, and employers must issue it by 15th June 2026, exactly as before. Form 130 comes into effect from Tax Year 2026-27, which runs from April 2026 to March 2027. The first Form 130 that employees receive will be issued by 15th June 2027, once this tax year closes. So salaried employees filing returns right now still work with Form 16, but TDS deducted from April 2026 onward is already being recorded under the new system that Form 130 will eventually reflect.

What Form 130 Looks Like

Form 130 is issued under Section 395(4)(b) of the Income Tax Act, 2025, and it serves the same core purpose as Form 16, certifying tax deducted from salary and deposited with the government. It also extends to pensioners and specified senior citizens who have authorised a bank to deduct tax on their interest income, a group Form 16 never fully covered.

Structurally, Form 130 has three parts instead of two:

• Part A carries employer and employee details, along with the employment period, a field that wasn’t explicitly required before.
• Part B summarises the income paid and TDS deducted, reconciled against the employer’s quarterly filings.
• Part C contains detailed annexures, covering salary computation, or pension and interest income for senior citizens

Like its predecessor, Form 130 can only be generated through the TRACES portal, and only after the employer has filed the corresponding quarterly TDS return, now called Form 138, which replaces the earlier Form 24Q. Any version issued outside TRACES isn’t considered valid.

What Employees Should Watch For

Even though Form 130 won’t arrive until mid-2027, a few practical points are worth keeping in mind as this transition unfolds:

• Confirm your employer is filing Form 138 correctly each quarter, since Form 130 depends entirely on this filing being accurate
• Watch for the new employment period field in Part A, especially if you changed jobs during the year
• Once issued, cross-check the TDS figures in Form 130 against Form 168, the new version of Form 26AS, sometimes called the Tax Passbook
• Any mismatch between the two documents should be resolved with the employer before filing the ITR, not after

Since the certificate is generated only after quarterly filings are processed, delays on the employer’s side can push back when you actually receive it, so it helps to raise queries early if your payroll team seems behind schedule.

Conclusion

Salaried employees still have one more filing season with the well-known Form 16 before the move fully takes effect, and Form 130 isn’t arriving overnight. The fundamental change, quarterly filings under Form 138, a wider reach that includes pensioners, and a more complex three-part structure that will influence how income and deductions are reported after Form 130 finally arrives in mid-2027 have already begun.

Anyone who has bought property, paid rent above a certain amount, hired a contractor without a TAN, or sold a virtual digital asset knows how scattered TDS compliance used to be. Four forms, 26QB, 26QC, 26QD, and 26QE, each handled a different transaction. From 1st April 2026, the Income Tax Act, 2025 replaced all four with a single form, Form 141.

What Form 141 Does

Form 141 is a challan-cum-statement, combining tax payment and reporting into one step. It’s filed under Section 393(1) of the Income Tax Act, 2025, and is entirely PAN-based, so deductors don’t need a TAN to file it. This suits its audience well, since it’s mainly meant for individuals and HUFs not otherwise required to hold a TAN.

Filers now select the schedule matching their transaction, instead of choosing between four different forms:

• Schedule A, TDS on rent paid to a resident landlord, where monthly rent exceeds Rs 50,000
• Schedule B, TDS on purchasing immovable property from a resident seller, where the value exceeds Rs 50 lakh
• Schedule C, TDS on payments to contractors or professionals by individuals or HUFs not covered under regular TDS filing
• Schedule D, TDS on specified virtual digital asset transactions, such as crypto transfers

Each schedule replaces one of the earlier forms, but the underlying TDS rates and thresholds haven’t changed. This is purely a filing and structural reform.

How to File Form 141

Filing happens entirely online. The general path is to log in using your PAN, go to e-File, then e-Pay Tax, select Income Tax Act, 2025, choose New Payment, and pick Form 141. From there, select the relevant schedule and enter the deductor’s and deductee’s PAN, the transaction value, the date of payment or credit, and the TDS amount.

One useful feature is that a single filing can now cover multiple parties of the same status. If a property has more than one seller, or a rented property has more than one landlord, all of them can be reported in one filing with percentage-wise allocation, rather than filing separately for each pairing as the old system required.

The due date remains the same as before, thirty days from the end of the month in which TDS was deducted. A deduction made in April 2026 needs filing and payment by 31st May 2026. A single Form 141 can only cover deductees sharing the same month of deduction, if the month differs, separate filings are needed.

What Changed Beyond the Form Number

Along with the consolidation, a few related changes matter. The TDS certificate tenants used to issue after filing Form 26QC, earlier called Form 16C, is now called Form 132. Correction of a filed Form 141 is possible, though not through the regular e-filing portal correction flow used for other returns. The new form also includes prefilled details and validation checks meant to catch common errors, such as PAN mismatches, before submission.

Conclusion

Form 141 brings four previously disconnected filings under one roof, which should reduce the friction individuals and HUFs face when dealing with property, rent, contractors, or crypto-related TDS. The rates and thresholds for each transaction type stay the same, so the real change lies in a simpler filing path and fewer repeated submissions for transactions involving multiple parties. Getting familiar with the right schedule for your transaction is the main thing to get right under this new system.

Firms pay agents for sales or deals. Section 393(1) requires TDS on these commission or broking earnings for residents. Payers deduct 2% when yearly totals exceeds Rs 20,000. Individuals join if prior turnover exceeds Rs 1 crore in business or Rs 50 lakh in professional limits. Agents claim credits in returns. Compliance tracks aggregates and deposits timely to avoid penalties.

This provision targets intermediary payments. Any resident payer qualifies, from companies to audit-bound persons. It excludes insurance commissions under the relevant separate provision. Deduct at the credit or payment first. The threshold rose to Rs 20,000 from April 2025.

Commission Meaning

A broad definition covers agent acts. Payments reward services in sales or buys, excluding professionals. Real estate deals, stock trades, or goods sales trigger it. Indirect receipts count too.

Who Pays TDS

Everyone deducts above the limit. Governments, firms, and trusts lead. Individuals or HUFs step in post-audit threshold. No exemptions for big players.

Threshold Limit

Aggregate rules apply. Skip if under Rs 20,000 yearly per payee. Cross it and deduct the full amount. Separate from other sections.

TDS Rate Details

Flat 2% hits most cases. No PAN jumps to 20%. Basic rate, no extras. The table sums it up:

Payee Status	Rate	Threshold
With PAN	2%	Rs 20,000
No PAN	20%	Rs 20,000

Deduction Timing and Deposit Deadlines

Act at account entry or cash out early on. Suspense ledgers qualify. Match other TDS. Other than March: 7th next month. March: April 30. Government same-day sans challan. Use Challan 281 online.

Exemptions List

Several skip deductions:

• Insurance or loan commissions.
• Securities trades broking.
• Employee payouts under salary provisions.
• BSNL/MTNL PCO franchisees.
• Ad agency payments by media.
• RBI turnover to banks.

Personal services or pure interest is exempt too.

Certificates and Returns

Issue Form 16A quarterly: August 15, November 15, February 15, and June 15. File Form 26Q by July 31, October 31, January 31, and May 31.

Examples in Action

The shop pays the sales agent Rs 25,000 yearly. Deduct 2% or Rs 500 in total. Net occurs Rs 24,500.

The firm gives the distributor Rs 15,000 and then Rs 10,000. The aggregate of Rs 25,000 needs Rs 500 TDS.

Compliance Steps

Payers verify PAN upfront. Track per agent yearly. Deduct precisely and record well. Deposit with CIN. File returns accurately. Mail certificates promptly.

Lower Rate Process

Agents apply for a lower or nil deduction certificate under the relevant provision. Officers grant it if income is low. Validate certs: PAN, year, and section match. Quote the right number.

Conclusion

Section 393(1) provides for 2% TDS on commissions exceeding Rs 20,000 per year. Agents in sales or broking face it from firms and qualifying individuals. Deduct at credit or pay; deposit by 7th or 30th April. Exemptions cover insurance, securities, and employees. Form 26Q quarterly, 16 Timeliness keeps compliance clean. Track aggregates, verify PAN, use lower certs wisely. Strong practice blocks penalties and ensures smooth tax flow.

It can be challenging for operational staff to ensure a smooth transfer of goods for your business while maintaining complete regulatory compliance. The uncertainty around transportation laws and the requirement to wait for documentation are two major causes of inefficiency for finance executives. The Electronic Way Bill (E-Way Bill) system, which was incorporated into India’s Goods and Services Tax (GST) system, is the main digital tool designed to expedite this process. By guaranteeing that every significant goods transfer is documented and tracked, it reduces the chance of tax evasion and makes the entire transportation process transparent.

What is an E-Way Bill?

Before starting the movement of goods, a registered individual must create an electronic document called an E-Way Bill on the official portal. When a single invoice, bill, or delivery challan covers a cargo for more than ₹50,000, this bill is required. A distinct E-Way Bill Number (EBN) is assigned and made available to the transporter, the supplier, and the recipient after it has been generated.

The bill is constructed from two primary components:

Part A: This captures details of the goods and the transaction, including the recipient’s GSTIN, place of delivery PIN code, invoice details, value of goods, and the reason for transportation. This section also requires accurate HSN codes: 4 digits for turnover up to ₹5 crores and 6 digits for turnover exceeding ₹5 crores.

Part B: This focuses solely on transportation logistics, requiring the vehicle number and transporter details.

Applicability and Mandatory Requirements

E-Way Bills must be generated whenever goods are moved in a conveyance of value more than ₹50,000, whether the movement is:

• In relation to a formal supply such as a sale or transfer.
• For reasons other than a supply, such as a goods return.
• Due to an inward supply from an unregistered person.

Importantly, for certain specific goods, the E-Way Bill must be generated regardless of the consignment value:

• Inter-state movement of goods by the principal to a job worker.
• Inter-state transport of handicraft goods by an exempted dealer.
• Intra-state movement of gold and precious stones if the state has notified a threshold (typically ₹2 lakhs) under Rule 138F.

Who is Responsible for Generation?

The responsibility for generating the E-Way Bill typically falls on the registered consignor or consignee.

Registered Person: They must generate the bill for movements over ₹50,000 and can also choose to generate it for lower-value movements. If the person is required to issue e-invoices, the E-Way Bill should ideally be generated via the Invoice Reference Number (IRN) on the E-Invoice portal.

Unregistered Persons: If an unregistered person makes a supply to a registered person, the receiver is responsible for ensuring all compliance is met, acting as if they were the supplier.

Transporter: The transporter must generate the bill if the supplier or recipient has not done so. For multiple consignments in a single vehicle, a transporter can generate a consolidated E-Way Bill using Form GST EWB-02.

E-Way Bill Validity and Time Limits

The validity of an E-Way Bill is calculated from the date and time of its generation, based on the distance the goods must travel:

Type of Cargo	Distance (or part thereof)	Validity Period
Other than Over Dimensional Cargo (ODC)	Every 200 Kms	1 Day
Over Dimensional Cargo (ODC)	Every 20 Kms	1 Day

The validity can be extended by the generator eight hours prior to or within eight hours following expiration. The entire extension is only available in extraordinary circumstances and is limited to 360 days from the initial generation date. Furthermore, only documents dated within the last 180 days are eligible for creating E-Way Bills.

Situations in Which an E-Way Bill Is Not Necessary

1. In several situations, the e-way bill is exempt, including:
2. movement of a non-motor vehicle.
3. goods that are carried under seal or customs supervision.
4. Transport goods to or from Bhutan or Nepal.
5. Movements caused by defence formations.
6. Transportation within 20 km between a company location and a weighbridge, as long as a delivery challan is present.
7. Certain commodities are free from state regulations; for example, in states like Tamil Nadu and Delhi, certain intrastate movements are subject to higher limitations of ₹1 lakh.

Conclusion

A significant step toward digital and transparent logistics management under GST is the E-Way Bill system. Making sure logistics data corresponds with the digital footprint in the Unified Annual Information Statement (Form 168) is important in the current Income Tax Act 2025 framework. Any firm must correctly calculate validity periods and comply with required Multi-Factor Authentication (MFA). Following these guidelines not only guarantees smooth logistical operations but also protects your business from severe fines under Section 129 of the CGST Act.

In terms of Indian law and taxation, a Hindu Undivided Family (HUF) is a distinct entity. An HUF is regarded as a person for tax purposes and is acknowledged as a distinct taxable entity under the Income Tax Act, 2025. It is governed by Hindu law and consists of people who share a common ancestor. Members of the family, referred to as coparceners, have a birthright in the joint family property, which is administered by the Karta. An HUF is subject to taxation at the same slab rates as an individual. The simplified tax structure under Section 202 is the default option for Tax Year 2025. Particular legal issues pertaining to the ownership and taxability of the divided property come up during a partition.

Meaning of Partition

‘Partition’ refers to the division of HUF property among its coparceners. It ends the joint status of the family concerning the property being divided. For a valid partition, there must be an actual and physical division of the property. Each coparcener must receive a specific and definite share. A mere division of income without dividing the underlying asset does not constitute a partition under the law.

The right to demand partition lies with all coparceners. In certain circumstances, a mother or wife also becomes entitled to an equal share along with the sons when a partition occurs among male members after the death of the father.

Types of Partition

A partition under Hindu law may be either total or partial.

• Partial Partition: A partial partition occurs either among some members of the family or concerning specific properties. The remaining coparceners continue as an HUF with the remaining assets. For example, if only one coparcener separates while others remain joint, it is a partial partition.

• Total Partition: In a total partition, the entire property of the HUF is divided among all coparceners. The joint family ceases to exist. Once such a partition is completed, the HUF is dissolved for taxation purposes. Each coparcener becomes an independent taxpayer for their respective share of property and income. The tax authorities must verify the genuineness of the partition and record a formal finding under Section 268 of the Income Tax Act, 2025.

Assessment of HUF Partition under Section 268

Section 268 of the Income Tax Act, 2025, governs the assessment of an HUF after a partition claim is made.

• Total Partition: When a total partition is claimed, the tax department conducts an inquiry to verify the claim. If satisfied, they record a finding that the family has been partitioned. They specify the date of partition and assess the total income of the HUF up to that date. For instance, if an HUF earns rental income up to September 2025 and the property is divided on October 1, 2025, the income up to September will be taxed in the hands of the HUF. Income generated thereafter will be taxed in the hands of each individual coparcener.
• Partial Partition: Partial partitions taking place after December 31, 1978, are generally not recognized for tax purposes if the HUF was previously assessed as a separate unit. This rule is maintained under the 2025 Act. Where a partial partition is ignored, the family continues to be assessed as if no partition occurred. The income or property is deemed to continue to belong to the HUF for tax purposes. However, if the family was never previously assessed as an HUF, this restriction does not apply.

Conclusion

The partition of a Hindu Undivided Family is a significant legal and tax event. While total partitions are recognized and lead to separate assessments for each member, partial partitions are often disregarded for tax purposes to ensure administrative simplicity. With the Income Tax Act, 2025 now in force, taxpayers must ensure that physical divisions of property are clearly documented. Maintaining transparent records is essential to validate a genuine partition and successfully transition from an HUF assessment to individual tax filing.

India are developing their GST system into more of a technology-based framework within compliance. The government has implemented numerous ways to lessen tax evasion, use of false invoices, and taking advantage of input tax credit through digital means. The use of a track and trace mechanism would fall under this category of new technology as introduced in Section 148A of the CGST Act. The intent of this system is to keep track of goods that are subject to tax evasion without being solely reliant on the physical documentation and inspection of the goods but, instead, through digitally linking the movement of goods with the tax records that are produced for those goods.

As of 2026, the framework is active in certain sectors and has become an important part of GST enforcement.

Purpose of the Track and Trace System

The government introduced this mechanism mainly to control tax evasion in industries where underreporting and fake transactions are common. Certain products move through long supply chains, making it difficult to track whether the correct amount of tax has been paid.

Under this system, notified goods are required to carry a unique identification marking, commonly known as a UIM. This mark may appear in the form of a QR code, RFID tag, or another secure digital marking placed on the product or packaging.

The marking helps authorities verify the following:

• Whether the goods are genuine
• Whether tax has been correctly reported
• Whether the movement of goods matches GST records
• Whether fake Input Tax Credit claims are being made

This system creates better transparency because every stage of movement can be digitally traced.

Legal Framework

The legal foundation of the mechanism comes from Section 148A of the CGST Act. This provision was introduced through the Finance Act, 2025 and became effective from 1 October 2025 through Notification No. 16/2025 Central Tax.

The section gives power to the government to notify the following:

• Specific goods
• Certain classes of persons
• The manner in which goods must be marked and tracked

Another important provision is Section 2(116A), which defines the Unique Identification Marking. The law states that the marking should be secure and difficult to remove or alter.

The penalty provision has also become stricter. Under Section 122B, failure to comply with the track and trace requirements may result in the following:

• A penalty of ₹100,000
• Or 10 per cent of the tax payable on such goods
• Whichever amount is higher

This shows that the government considers non-compliance a serious offence rather than a small procedural error.

Current Position as of April 2026

The system has now moved beyond the planning stage. The government has already notified certain high-risk sectors, including tobacco product, pan masala, and selected pharmaceutical items. Manufacturers dealing in these sectors are required to follow additional compliance measures. They must submit declarations regarding production capacity, packaging machinery, and operational details through prescribed forms such as Form CE DEC 01.

Another major development is the integration of the UIM system with existing GST tools. The track-and-trace mechanism now works together with the following:

• E-invoicing
• E-waybill systems
• GST portal verification systems

For notified goods, businesses cannot generate a valid e way bill unless the Unique Identification Marking is verified through the GST portal. This has enhanced real-time monitoring of goods movement across the supply chain.

Impact on Businesses

The mechanism has changed the compliance responsibilities of manufacturers and dealers operating in notified sectors. Businesses now need stronger internal systems and accurate digital records.

Companies are expected to maintain manufacturing batch records, packaging details, transport records linked with digital markings, and proper reconciliation between stock and GST filings. Many businesses have also invested in digital printing and scanning technologies to ensure that their products comply with legal requirements.

The system has improved supply chain authenticity because authorities can now identify suspicious consignments more quickly. It has also reduced the chances of fake invoices and fraudulent transactions.

Conclusion

GST’s Track and Trace Mechanism marks a significant change in India’s indirect tax system, as it will now provide not only a digital identification for goods but also ‘real-time’ tracking for determining if goods are being produced and if they comply with rules, thereby moving away from being reliant mostly upon physical inspections and manual verifications to improve compliance via the use of these technical means.

As of 2026, the Track and Trace Mechanism has begun operations across multiple high-risk industries and is expected to continue to be implemented over time. Businesses that handle notified goods should take compliance very seriously because of the serious penalties associated with non-compliance.

The Supreme Court’s decision in GKN Driveshafts (India) Ltd. v. Income Tax Officer and Others [2002 INSC 494] clarified how reassessment under the Income-tax Act must be handled to protect taxpayer rights. The Court insisted that reopening an assessment cannot be an ambiguous exercise and set out a required procedural order for dealing with notices under Section 148. That judgement balanced the revenue’s investigation powers with safeguards that let taxpayers know and respond to the basis for reopening. The principles from the case shaped reassessment practice for many years and impacted later statutory amendments.

The notices and initial response

Tax authorities had issued notices under Section 148 after forming a belief that income had escaped assessment. The taxpayer filed a writ petition seeking to quash those notices as lacking any valid basis. The High Court declined to interfere at that stage, observing that statutory remedies existed and should be exhausted first. The matter reached the Supreme Court, which confirmed that a premature writ is generally inappropriate where a workable statutory route exists, but it also set out the administrative steps that must be respected before a fresh assessment proceeds.

Why premature writs are channelled to procedure

The Court explained that a Section 148 notice is not automatically arbitrary if issued after the Assessing Officer forms a genuine reason to believe. The correct course is to follow the procedure under the Act so that the officer’s reasons are put on record and the taxpayer gets an opportunity to object. A writ petition can remain available in exceptional cases where mala fide action or lack of jurisdiction is shown, but it is not a substitute for the statutory process in ordinary cases.

The procedure mandated by the Court (pre-2021 law)

GKN Driveshafts laid down a clear sequence that became standard practice:

1. Respond to the Section 148 notice by filing the return called for.
2. Request, in writing, the reasons recorded by the assessing officer for issuing the notice.
3. File considered and specific objections to those recorded reasons.
4. The Assessing Officer must pass a speaking, reasoned order disposing of those objections before proceeding to make any reassessment.

Only after a reasoned order addressing the objections is passed can the department proceed with reopening and assessment. This procedure ensured that taxpayers receive an intelligible record on which to base appeals.

The importance of this ruling

GKN Driveline brought transparency and accountability to reassessment proceedings. Requiring recorded reasons and a speaking order protected taxpayers from blind or fishing expeditions and gave appellate authorities a proper factual and legal record. By channelling disputes into administrative objections and appeals, the judgement promoted quicker, better-reasoned outcomes and limited premature judicial intervention.

Legislative reform and current impact

The Finance Act, 2021, introduced a new, statutory framework for reassessment by inserting Section 148A into the Income-tax Act. Section 148A requires the Assessing Officer to carry out a formal inquiry, serve a show-cause notice and provide the taxpayer an opportunity to be heard before issuing a Section 148 notice. This statutory procedure took effect from 1 April 2021 and, for reopenings initiated after that date, governs the process, thereby codifying many of the safeguards that GKN had created judicially. At the same time, Section 148A contains specific exceptions; for example, where assessments arise from searches or seizures, the prior 148A inquiry may be dispensed with. Thus, while GKN remains a cardinal authority for pre-2021 reopenings and for interpreting principles of fairness, reassessments after 1 April 2021 proceed under the statutory 148A regime.

Conclusion

GKN Driveshafts changed the practice of reassessment from an ambiguous power into a procedure that necessitates transparency and well-reasoned decisions. While guaranteeing taxpayers a fair hearing and an understandable record for appeal, the Supreme Court upheld the revenue’s authority to look into undisclosed income. Although these protective principles have now been integrated into the Act itself by the 2021 statutory amendments, court interpretation and the handling of pre-2021 reopenings remain affected by the procedural legacy of GKN. When taken as a whole, they highlight an essential principle: the use of power to investigate must be accompanied by written reasons and an appropriate opportunity to be heard.