Your Weekly dose of Legal, Technology and Risk Insights
TOP STORY OF THE WEEK
End of an Era: Income-tax Act, 1961 Repealed; New Act of 2025 Takes Effect
As of April 1, 2026, the 65-year-old Income-tax Act, 1961, has been officially repealed and replaced by the Income-tax Act, 2025. This transition represents the largest overhaul of India’s direct tax regime in six decades. The new Act introduces "Tax Year" as a unified term to replace the confusing "Previous Year" and "Assessment Year" cycle. Key changes include a significant tax rebate under Section 87A for individuals earning up to Rs12 lakh and the replacement of familiar compliance forms—Form 16 and 16A are now Form 130 and Form 131. For companies, the new Act streamlines assessment procedures but introduces stricter transitional provisions for pending litigation under the old law.
LEGAL & TECH
Launch of 'Nyaya Setu' AI Chatbot
In a landmark step for "Ease of Justice," the Vice President of India officially unveiled Nyaya Setu, a voice-first, multimodal AI legal assistant developed by the Digital India BHASHINI Division. Unlike basic chatbots, Nyaya Setu is trained on the Bharatiya Nyaya Sanhita (BNS) and supports multiple Indian languages, allowing citizens to seek legal clarity through simple voice commands. The platform serves as a digital bridge, simplifying complex procedural information and connecting users directly to panel lawyers for preliminary consultations.
Compliance Overhaul: Government Proposes 3-Hour Takedown Rule for AI Content
The Ministry of Electronics and Information Technology (MeitY) has proposed a significant amendment to the IT Rules. Under the new framework, digital platforms must take down flagged harmful AI-generated content or deepfakes within a strict 3-hour window. Crucially, the government plans to make its "advisories" legally binding, meaning non-compliance could lead to a loss of 'safe harbour' protection for tech giants.
CORPORATE COMPLIANCE
SEBI’s New Mutual Fund Expense Framework Goes Live
Effective April 1, 2026, the Indian mutual fund industry has transitioned to a new transparency-led expense structure under the SEBI (Mutual Funds) Regulations, 2026. The traditional Total Expense Ratio (TER) has been split, introducing a Base Expense Ratio (BER) that covers only core management and distribution fees. Statutory costs like GST, stamp duty, and brokerage are now disclosed separately, providing investors with a granular view of where their money is going.
RBI mandates Legal Entity Identifier (LEI) for all market participants
The Reserve Bank of India has made it mandatory for all entities, domestic and foreign to obtain a Legal Entity Identifier (LEI) to participate in financial markets. Entities without an LEI will be barred from undertaking regulated financial transactions. The move aligns India with global compliance standards aimed at improving transparency and risk tracking. It is expected to enhance monitoring of financial flows and reduce systemic risk in markets. This step strengthens regulatory oversight and reinforces compliance discipline across financial institutions.
Risk Intelligence
IBC 2026 Reforms: New Valuation Standards and Disclosure Framework
The Insolvency and Bankruptcy Board of India (IBBI) has introduced sweeping reforms to the Insolvency and Bankruptcy Code (IBC) as of April 1, 2026, targeting the chronic delays in resolution processes. A new circular mandates strict "Valuation Standards" for all assets under the IBC, aimed at reducing the discrepancies between liquidators and resolution professionals that often stall proceedings. Risk officers should note the new requirement for monitoring the insolvency resolution of "Personal Guarantors to Corporate Debtors," which adds a layer of scrutiny for high-net-worth directors and promoters.
The 'OTP-Only' Vulnerability: RBI’s Mandatory MFA Shift
The Reserve Bank of India has officially moved beyond SMS-based One-Time Passwords (OTPs) as a sufficient security measure, citing a surge in SIM-swapping and sophisticated phishing scams. Starting this week, all digital payment providers must implement Multi-Factor Authentication (MFA) where at least one factor is 'dynamic' (e.g., biometrics or in-app hardware tokens). The strategic risk here lies in the Risk-Based Authentication clause: banks are now using behavioral biometrics and location tracking to flag "weird" payments. For corporate finance teams, this means a higher likelihood of legitimate business transactions being "soft-blocked" or requiring secondary director-level approval if the transaction patterns deviate from established norms, necessitating a review of corporate treasury workflows.