Direct tax 

Case Laws

Non-compete fees paid to protect the business are capital expenditures and a claim of depreciation is to be allowed: Chennai Tribunal 

– Assessee was engaged in manufacturing and selling fuse and fuse fittings to both export and domestic markets and engaged in trading activities.  

– Assessee claimed deductions amounting to Rs. 3.22 crores under various heads, including non-compete fees. The Assessing Officer disallowed these deductions, considering them as capital expenditure. 

– On appeal, the CIT(A) confirmed the action of the Assessing Officer. Aggrieved by the order, the assessee filed an appeal to the Chennai Tribunal. 

– The Tribunal held that the non-compete fee paid by the assessee formed part of the initial outlay on the acquisition of the business and the non-compete agreement suggested that the non-compete agreement was very much part of the entire business purchase by the assessee and therefore it is a capital expenditure. 

– Further, the alternative argument of the assessee that since it was held as capital expenditure, the assessee is entitled to depreciation under section 32(1)(ii) was agreeable. 

– Thus, the Assessing Officer was directed to allow depreciation on payments made on non-compete fees under section 32(1)(ii). 


Reopening of assessment for a matter already accepted in regular assessment is a change of opinion: Supreme Court 

– Assessee-company, engaged in the investment business, had raised share capital by issuing rights shares and reflected book value and fair market value of shares in its financial statement. 

– Subsequently, the assessment was completed under section 143(3) – Thereafter, a reopening notice under section 148 was issued to the assessee alleging that income chargeable to tax under section 56(2)(viib) had escaped assessment. 

– Assessee contended that when the method of determining fair market value of rights shares issued had been accepted by the Assessing Officer during the original assessment and his satisfaction was recorded in assessment order, assessment could not be reopened. 

– Matter reaches to High court where it was held that assessment in case of assessee-company was reopened on issue of fair market value (FMV) of rights shares issued by assessee, since Assessing Officer had accepted assessee’s method of determining FMV during original assessment and recorded his satisfaction in assessment order, reopening notice issued under section 148 after expiry of four years on mere change of opinion was liable to be set aside. 

– Against such order department file Special leave petition (SLP) which was dismissed. 


GST Litigation Update

Indirect Litigation update

Supreme court to decide if pre-deposit for filing GST appeal can be made through input tax credit balance. 

Earlier the Patna High Court in the case of M/s Flipkart Internet Pvt Ltd and others had held that the input tax credit balance can be used only for specified purposes such as payment of output tax and in the absence of specific provision in GST law, the credit balance cannot be utilized for making pre-deposit for filing an appeal. This decision of Patna High Court has been challenged before Supreme Court and presently, the Supreme Court has stayed the decision of High Court pending disposal of the matter. 

Madras High Court upholds input tax credit claim on belatedly filing of GST return, reversal under section 16(4) of CGST Act not applicable. 

The Madras High Court in the case of M/s Kavin HP Gas Gramin Vitrak set aside the order of lower authorities that had demanded the reversal of input tax credit under section 16(4) of the Central GST Act. The Court instructed GST authorities to permit the petitioner to manually file GST returns and acknowledged the financial difficulties faced by the petitioner, preventing them from filing returns on the GSTN portal for the financial years 2017-18 and 2018-19. 

The petitioner argued before the Court that the GSTN Portal’s unique system design prevented them from filing returns without paying the GST liability. The High Court observed that if the GSTN portal allowed the filing of returns without payment of tax or incomplete GSTR-3B, dealers would be entitled to claim input tax credit. However, as this option was not available in the GSTN network, dealers were constrained from claiming ITC due to non-filing of GSTR-3B within the prescribed time. The Court also noted that the GST Council may be the appropriate authority, but the GST authorities ought to take steps to rectify the same and till such time they should allow the dealers to file the returns manually. 

Delhi High Court upholds assessee’s right to interest on delayed GST refunds 

The Delhi High Court in the case of M/s Bansal International has ruled that an assessee is entitled to interest on delayed refunds. The court held that interest commences from the date immediately after sixty days from the receipt of a complete refund application, as outlined in Sections 56, 54(7), and 54(8) of the CGST Act. The decision emphasizes that even if the claim is initially denied by the Adjudicating Authority and later allowed in appellate proceedings, the interest calculation period starts after the initial sixty days. The court further held that rectification of an incorrect order by the proper officer in appellate proceedings does not negate the assessee’s entitlement to interest. Importantly, the ruling asserts that the time involved in appellate processes should not be a basis for denying the assessee their rightful interest. 

The Court further held that the interest at 6% is payable from sixty days after the initial refund application, while the higher interest at 9%, as per the proviso to Section 56, becomes applicable from sixty days after filing an application following orders from appellate authorities or courts that have attained finality. 

Damages towards early termination of sub-lease agreement liable to GST – Karnataka AAR 

The Karnataka AAR in the case of Ms/ Enzyme Business Center has held that the damages received by the applicant from the tenant towards the termination of sub-lease before the agreed upon lock-in period are tantamount to “supply”. Consequently, the amount received towards damages as per the settlement agreement would be construed as “consideration” for the principal supply viz. sub-letting of a commercial property. Thus, the applicant is liable to pay GST at 18% on damages received. 


CBIC instruction number 5/2023-GST 

Supreme Court judgement in NOS case – taxability of expats salary on secondment of employees 

In its recent directive (instruction number 5) to field formations, the Central Board of Indirect Taxes and Customs (CBIC) has provided the following key points: 

– The concept of secondment is not limited to Service Tax regime, and the determination of tax liability on secondment extends to the GST as well.

– The Supreme Court emphasized the need to individually assess each case involving secondment, considering the unique features of the arrangement. The court advised against relying on a one-size-fits-all approach or a single test.

– Therefore, the decision of the Supreme Court in NOS case should not be applied mechanically across all the cases and each case is required to be evaluated on its own set of facts and unique arrangement.

– Section 74(1) of the CGST Act cannot be invoked solely due to non-payment of GST; it requires a specific element of fraud, willful misstatement, or the suppression of facts to evade tax.

– The invocation of Section 74(1) is justified only when the investigation reveals substantial evidence of fraud, wilful misstatement, or the suppression of facts by the taxpayer.

– These considerations should be kept in mind while conducting investigations and issuing show cause notices in cases related to secondment.

SEZ Update

New Rule 11B notified to allow non-SEZ IT/ITeS businesses to operate in the special economic zone 

The government has notified a new Rule 11B in SEZ Rules, 2006 to allow non-SEZ businesses from IT/ITeS industry to operate in IT/ITeS SEZ. Salient features of New Rule are as under: 

– SEZ developer needs to make a formal request to Board of Approvals to permit the demarcation of part of SEZ area as a non-processing area.

– Non-processing area shall consist of a complete floor and part of a floor would not be demarcated as a non-processing area.

– Non-processing area can be used for setting up and operation of businesses engaged in Information Technology or Information Technology Enabled Services.

– SEZ developer to repay tax benefits already availed attributable to the non-processing area.

– SEZ Developers to maintain minimum built-up processing area depending upon the category of cities.

– No tax benefits on operation and maintenance of common areas of SEZ.

Service Tax update

Secondment of employees: whether service tax is payable on salary paid in India – difference of opinion between Judicial member and technical member of Tribunal – matter referred to President. 

In a recent case of M/s Nissan Motors India Pvt Ltd, the question before the Tribunal was whether service tax is applicable on salary and allowances paid in Indian Rupees in India to the deputed employees. The assessee had paid service tax under the reverse charge mechanism classifying the transaction as an import of manpower supply service. However, the service tax was paid only on reimbursements made to Nissan, Japan, while the salary and allowances paid directly to deputed employees in India were excluded from the service tax payment. 

The department contended that the assessee had short-paid service tax and demanded the same along with interest and penalty. The assessee argued before the Tribunal that since the salary payments were made directly to the employees and never charged by Nissan, Japan, service tax is not applicable on the same. 

The Judicial member of the Tribunal held that salary and allowances paid in India, which were not invoiced by Nissan Japan, should not be considered as part of the consideration. Therefore, these payments should not be included in the taxable value, and the demand for service tax is not justified. 

On the contrary, the technical member of the Tribunal held that the services provided by the secondee should not be dissected and treated as separate from the agreement. Accordingly, the service tax should be applicable on the salary and allowances paid in India as well. 

Due to this difference of opinion between the Judicial and Technical members, the matter has been referred to the President of the Tribunal for resolution. 

Singapore Updates

Monetary Authority of Singapore

1. MAS Launches Digital Platform for Seamless ESG Data Collection and Access 

On 16th November 2023, the Monetary Authority of Singapore (MAS) launched Gprnt  (pronounced “Greenprint”), an integrated digital platform that harnesses technology to simplify how the financial sector and real economy collect, access and act upon environmental, social and governance (ESG) data to support their sustainability initiatives.  

Gprnt is the culmination of MAS’ Project Greenprint and offers an enhanced digital reporting solution for both large businesses and small and medium enterprises (SMEs) to seamlessly report their ESG information. This is currently undergoing live testing with selected banks and SMEs and will be progressively rolled out from Q1 2024 onwards. When fully implemented, Gprnt’s reporting solution is expected to help companies automate their ESG reporting process, and allow end users (such as financial institutions, regulators and large corporates) to access relevant data and timely insights to support their sustainability-related decision-making. The platform will also synergise across Project Greenprint’s existing functions to support enhanced data access and product innovation by the ESG community. 

Following its launch, Gprnt will expand its cross-border capabilities to better serve the more sophisticated data needs of larger multinational entities and other regional economies. To achieve this, a new entity, Greenprint Technologies Pte Ltd, will be set up, with HSBC, KPMG in Singapore, MAS, Microsoft and MUFG Bank joining as strategic partners. 

Gprnt will function as an inclusive and interoperable data layer that serves both businesses and corporates as well as financial institutions. It will simplify ESG reporting by enabling businesses to automatically convert their economic data into sustainability-related information. 

Data collection: Gprnt will pursue integrations with a range of digital systems employed by businesses in their day-to-day activities. These include systems for utility consumption, bookkeeping and payroll solutions, building and waste management, payment gateways, and networks for artificial intelligence of things (AIoT) sensors and devices. 

– These integrations will allow businesses to consent to the release of data via application programming interfaces (APIs), to enable Gprnt to help businesses compute their basic sustainability metrics in an automated and efficient way. 

– To make this data collection more seamless for businesses in Singapore, Grpnt will also enable the retrieval of relevant data from trusted government sources via Myinfo business, by using their Singpass. 

Data computation: Gprnt will translate and compute source data into ESG-related outputs for businesses to report. 

– Where businesses’ source data is unavailable, the platform will provide AI tools such as intelligent document processing (IDP) to extract key data from user-uploaded documents. 

– A GPT4-powered chatbot [4] will aid businesses in crafting their sustainability disclosures and recommending actionable insights. 

– The platform will cater for the mapping of sustainability metrics across key global reporting standards [5] and the automatic generation of basic sustainability reports from the middle of next year onwards. This reduces duplicative reporting for businesses that are required to adhere to different standards should their activities span multiple geographies and markets. 

Data access: Businesses have the discretion to decide whom to share their ESG information with. These include: 

– Financial institutions, for purposes of obtaining green and sustainability-linked loans; 

– Industry partners, to access green business and supply chain opportunities; 

– Government or regulatory bodies, to fulfil climate reporting requirements or apply for sustainability-related grants; and 

– International platforms such as the Net Zero Data Public Utility , for businesses seeking to affirm their climate transition commitments at the global level  

Gprnt will initially focus on addressing the baseline reporting needs of SMEs, which form the backbone of the global economy but face numerous challenges to commencing their sustainability reporting journeys [7] . For Singapore-based SMEs, MAS is consulting government agencies such as the Accounting and Corporate Regulatory Authority (ACRA), Enterprise Singapore, and the Infocomm Media Development Authority (IMDA) to ensure that Gprnt’s reporting solution can fully support local SMEs’ reporting needs. Trade Associations and Chambers (TACs) are critical enablers for initiating SMEs on these journeys, and MAS is pleased to announce that the Singapore Manufacturing Federation (SMF) will be the first TAC to partner Gprnt in offering a basic sustainability reporting tool to its member base of approximately 5,000 entities. 

Gprnt will progressively scale its capabilities and network of data sources next year, to serve the more advanced needs of larger multi-national corporations (MNCs), financial institutions, supply chain players and national authorities. Gprnt will partner these organisations to co-develop focused modules for sectoral data collection and outcomes tracking, to better support the transitioning of key sectors such as energy, industrial and real estate. Gprnt will also collaborate with ESG data providers and core banking solution providers like Temenos to develop capabilities that streamline how bank users leverage their data to access sustainable financing. 

Read More: Visualization of the Gprnt platform 

Read More: SME user journey on the gprnt

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2. MAS Partners Industry to Develop Generative AI Risk Framework for the Financial Sector 

On 15th November 2023, the Monetary Authority of Singapore (MAS) announced the successful conclusion of phase one of Project MindForge which seeks to develop a risk framework for the use of Generative Artificial Intelligence (GenAI) for the financial sector. A whitepaper detailing the risk framework will be published in January 2024. 

GenAI is a rapidly evolving technology that could both transform and disrupt the financial sector. While GenAI can help financial institutions to improve efficiency, provide more personalised customer experiences, and generate content and ideas for products and services, there are also risks involved, including more sophisticated cybercrime tactics, copyright infringement, data risk and biases.  

Project Mind Forge looks into the risks and opportunities of GenAI for the financial sector. It aims to develop a clear and concise framework on the responsible use of GenAI in the financial industry, and to catalyse GenAI-powered innovation to solve common industry wide challenges and enhance risk management. The project is supported by a consortium comprising DBS Bank, OCBC Bank, United Overseas Bank Limited, Standard Chartered Bank, Citi Singapore, HSBC, Google Cloud, Microsoft, MAS, Accenture, and the Association of Banks in Singapore.  

In phase one, the consortium has developed a comprehensive GenAI risk framework, with seven risk dimensions identified in the areas of: (a) Accountability and Governance, (b) Monitoring and Stability, (c) Transparency and Explainability, (d) Fairness and Bias, (e) Legal and Regulatory, (f) Ethics and Impact, and (g) Cyber and Data Security. The framework will enable financial institutions to use GenAI in a responsible manner. A platform-agnostic GenAI reference architecture was also developed, providing a list of the building blocks and components that organisations can use to create robust enterprise-level GenAI technology capabilities.  

The consortium will also look into developing strong industry use cases that will benefit from the application of GenAI and other AI technologies, including the use of GenAI in managing complex compliance tasks and identifying hidden, interconnected financial risks. 

In the next phase, the Mind Forge consortium will expand its scope to involve financial institutions from the insurance and asset management industries. The GenAI risk framework can thus be further improved and extended to the entire financial industry. The consortium will conduct experiments to explore the use of GenAI in areas such as anti-money laundering, sustainability, and cyber security. 

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3. MAS Partners Financial Industry to Expand Asset Tokenization Initiatives 

On 15th November 2023, the Monetary Authority of Singapore (MAS) announced that it is working with the financial industry to expand asset tokenisation initiatives and develop foundational capabilities to scale tokenised markets. These developments under Project Guardian will catalyse the institutional adoption of digital assets, with the aim of freeing up liquidity, unlocking investment opportunities, and increasing the efficiency of financial markets.   

In response to strong interest from the funds industry, MAS is launching a new funds workstream within the Project Guardian industry group focused on the native issuance of Variable Capital Company (VCC) funds on digital asset networks. This workstream aims to address tax, policy and legal considerations while increasing distribution channels for asset managers. MAS will collaborate with the Accounting and Corporate Regulatory Authority (ACRA) to better assess the opportunities and risks of adopting digitally native VCC fund shares.  

MAS is collaborating with international policymakers and FIs including BNY Mellon, DBS, JP Morgan and MUFG to explore the design of an open, digital infrastructure that will host tokenised financial assets and applications. This new initiative, called Global Layer One (GL1), will facilitate seamless cross-border transactions and enable tokenised assets to be traded across global liquidity pools, while meeting relevant regulatory requirements and guidelines. The participation of public-private stakeholders will help ensure that foundational digital infrastructures are established in accordance with international standards. 

MAS is also collaborating with the financial industry to develop an Interlinked Network Model (INM) which will serve as a common framework for exchanging digital assets across independent networks. This enables FIs to transact with each other without the need for all of them to be on the same network. A whitepaper, “Interlinking Networks, which details how INM may be applied in practice and the design considerations for its implementation was published today. The whitepaper was jointly developed in collaboration with FIs, FinTechs and industry groups. 

Read More: MAS Partners Financial Industry to Expand Asset Tokenization Initiatives

Read More: – List of Participants in Project Guardian Industry Group

Inland Revenue Authority of Singapore

1. Property Tax Rebate for All Owner-Occupied Residential Properties in 2024 

Property taxes (PT) for most residential properties will increase in 2024 due to higher market rents and Annual Values (AVs) for most residential properties, and an increase in PT rates for higher-value private residential properties. Owner-occupied residential properties will receive PT rebates to offset the increases in PT.     

The AVs of HDB flats and most private residential properties will increase with effect from 1st January 2024 to reflect the rise in market rents.[1] AV is used to compute the Property Tax (PT) payable by property owners. 

In addition, as announced at Budget 2022, the second- and final-step of the PT rate increase will take effect from 1st January 2024. The PT rate increase will only affect non-owner-occupied residential properties, and owner-occupied residential properties with an AV of more than $30,000 (i.e. all owner-occupied HDB flats are not affected). Owner-occupied residential properties will continue to enjoy lower PT rates than residential properties that are rented out. 

To cushion the impact of the PT increases, amidst concerns about cost-of-living, the Government will provide a one-off PT rebate of up to 100% for all owner-occupied residential properties as shown below. The rebate is tiered to ensure that our PT regime remains progressive, and those with greater means pay their fair share of taxes.  

For private property owner-occupiers, the rebate will similarly be automatically offset against any PT payable. The bottom half of private property owner-occupiers will experience a PT increase of less than $15 per month. The increase in PT will be higher for those with higher value properties.  

The Government will also be raising the AV thresholds for social support schemes from January 2024. 

Property Owners can pay PT via GIRO with interest-free monthly instalments 

All property owners will receive their PT bills before end-December 2023. IRAS would like to remind all property owners to pay their 2024 PT by 31st January 2024. There will be a 5% penalty imposed for property owners who fail to pay or have not arranged to pay their taxes via GIRO instalments by the due date. 

Property owners are encouraged to join GIRO to enjoy up to 12 interest-free monthly instalments or opt for a one-time deduction. For example, an average four-room HDB flat owner-occupier whose PT payable amounts to $154.00 this year would pay a monthly instalment of about $12.80. Individual taxpayers who have bank accounts with DBS/POSB, UOB or OCBC can apply for GIRO via Internet Banking and receive instant approval. 

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2. GST Rate Change from 8% to 9% with effect from 1st Jan 2024 

The Minister for Finance announced in Budget 2022 that the GST rate will be increased in 2 steps:  

(i) from 7% to 8% with effect from 1st Jan 2023 (first rate change); and  

(ii) from 8% to 9% with effect from 1st Jan 2024 (second rate change). 

The Inland Revenue Authority of Singapore (IRAS) has published a comprehensive guidance regarding the upcoming Goods and Services Tax (GST) rate change from 8% to 9%, which will take effect on 1st January 2024. 

The guidance issued by IRAS explains the general transitional rules applicable to transactions spanning the rate change, which covers crucial aspects such as the time of supply rules, the GST rates chargeable and provides information on the issuing of invoices, credit notes and other requirements. To effectively manage the impact of the rate change, it is imperative that GST-registered businesses remain proactive and well-informed to ensure a seamless transition, as well as maintain compliance with their GST obligations. 

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Accounting And Corporate Regulatory Authority

1. ACRA issues Financial Reporting Practice Guidance No.1 of 2023 on areas of review focus for FY 2023 financial statements 

On 6th November 2023, the Accounting and Corporate Regulatory Authority (ACRA) issued financial reporting practice guidance No. 1 of 2023 on areas of review focus for FY 2023 Financial Statements highlighting financial reporting areas that require closer attention by directors when reviewing their FY 2023 financial statements. 

The practice guidance explains that as audit quality is also an integral part of the financial reporting ecosystem, audit committees should actively engage the external auditors and monitor the audit process to identify and resolve collectively any area of concern. High quality audits play a crucial role in building confidence and trust in financial markets. 

ACRA’s proposed areas of review focus for FY 2023 financial statements are: 

-Accounting impact from macroeconomic uncertainties 

-Accounting impact from climate change movements 

-Accounting impact from geopolitical uncertainties 

-Developments in (a) new accounting standards and (b) Base Erosion and profit sharing (BEPS) pillar two 

-Quality control reviews 

-Audit inspection findings 

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2. Audit Regulatory Report 2023 

On 29th November 2023, the Accounting and Corporate Regulatory Authority (ACRA) has published the Audit Regulatory Report 2023 which includes details about ACRA’s regulatory activities aimed at fostering greater confidence in the profession and protecting public interest following the amendments to the Accountants Act which took effect from 1st July 2023, and recommendations for audit professionals wishing to acquire additional skills in preparation for sustainability reporting and assurance.  

This report also provides public accountants with key insights on the implementation of the Singapore Standards on Quality Management (SSQM) and the adoption of technological tools in financial statements audits.  

Accounting entities could draw on the observations and good practices in the transition from a procedures-based system of quality control to that of a risk-based system of quality management.   

Read More

Read More: IRAS e-Tax Guide: Income Tax: Tax Treatment of Gains or Losses from the Sale of Foreign Assets

Legal Updates

1. Amendments to the Prevention of Money-Laundering Act, 2002: 

a)  The Ministry of Finance, Department of Revenue has issued two notifications on 09 November 2023, namely, the Notifications bearing S.O. 4876(E) and S.O. 4877(E), that amend the erstwhile Notifications dated 09 May 2023 and 07 March 2023, respectively*.

b)  Notification dated 07 March 2023: The Notification dated 07 March 2023 briefly stipulates that, all natural or legal persons who carry out certain activities relating to virtual digital assets will fall under the ambit of ‘reporting entity’; and thus, will have to comply with the provisions of the Prevention of Money Laundering Act, 2002 (“Act”) and the relevant rules.

c)  Notification dated 09 May 2023: The Notification dated 09 May 2023 has broadened the scope of the Act and has brought within its ambit certain activities, which, if carried out in the course of business by natural or legal persons, would amount to ‘activity’ as stipulated under Section 2(1)(sa) of the Act.

d)  The Ministry has, vide the Notifications bearing S.O. 4876(E) and 4877(E), inserted Explanations to the aforesaid Notifications dated 09 May 2023 and 07 March 2023 respectively, which clarify that the Regulator* within the meaning of rule 2(1)(fa) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, will be the Director of the Financial Intelligence Unit, India (FIU-Ind)*.

*The Ministry of Finance has also initiated the process for registering offshore virtual digital asset service providers, which will be notified soon. 

*Rule 2(1)(fa) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, sets out the definition of “Regulator”, which designates certain persons and/or a governmental body, to supervise and regulate activities of the reporting entities. 


In exercise of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003) (hereinafter referred to the as the Act), the Central Government hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance, Department of Revenue, No.F.No.P-12011/10/2023-ES Cell-DOR, published vide number S.O. 2135 (E) dated 9th May, 2023 in Part II, Section 3, sub-section (ii) in the Gazette of India, Extraordinary dated the 9 th May, 2023, namely:-  

In the said notification, the Explanation shall be renumbered as Explanation 1 thereof, and after the Explanation 1 as so renumbered, the following Explanation shall be inserted, namely:-  

“Explanation 2.- For the purposes of activities specified in this notification, the Regulator within the meaning of clause (fa) of sub-rule (1) of rule 2 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, shall be the Director, Financial Intelligence Unit, India appointed under sub-section (1) of section 49 of the said Act.”. 

 3. NOTIFICATION S.O. 4877(E) 

In exercise of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003) (hereinafter referred to the as the Act), the Central Government hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance, Department of Revenue, No.F.No.P-12011/12/2022-ES Cell-DOR published vide number S.O. 1072 (E), dated 7th March 2023 in Part II, Section 3, sub-section (ii) in the Gazette of India, Extraordinary dated the 7th March 2023, namely: – 

 In the said notification, the Explanation shall be renumbered as Explanation 1 thereof, and after the Explanation 1 as so renumbered, the following Explanation shall be inserted, namely: – 

“Explanation 2.- For the purposes of activities specified in this notification, the Regulator within the meaning of clause (fa) of sub-rule (1) of rule 2 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, shall be the Director, Financial Intelligence Unit, India appointed under sub-section (1) of section 49 of the said Act.