JCSS NEWSLETTER 2025 – JANUARY

Direct Tax

Case Laws

Conversion of loan into share capital would not exonerate assessee from application of provision of section 56(2)(viib)​

– This section of the Income-tax Act, 1961, applies when shares are issued at a premium exceeding their fair market value (FMV), and such excess premium is chargeable to tax under the head “Income from other sources”.​

-The conversion of a loan into share capital does not exempt the assessee from the provisions of Section 56(2)(viib). If shares are issued at a premium higher than their FMV, that excess is still taxable under this section.​

-In this case, the assessee (a company dealing in gold and diamond jewellery) issued shares at a premium on two occasions: Rs. 90 per share on 3rd November 2012 and Rs. 31.67 per share on 26th March 2013.The company valued the shares using the Discounted Cash Flow (DCF) method and determined the FMV for the first allotment.​

-The Assessing Officer (AO) rejected the DCF method and applied the Net Asset Value (NAV) method to value the shares. Based on the NAV method, the AO found the fair market value of the shares to be Rs. 34.55 per share, making the premium of Rs. 55.45 (90 – 34.55) excessive. The AO added the excess share premium (over and above the FMV) to the company’s income under Section 56(2)(viib).

-The assessee did not provide an explanation for the wide fluctuation in share premium between the two allotments made within the same financial year (Rs. 90 vs. Rs. 31.67). The AO argued that such a significant change in premium within five months was unreasonable.​

-The court upheld the AO’s decision, agreeing that there should not be such a wide fluctuation in the share premium within such a short time. The excess premium over and above the FMV was rightly charged to tax under Section 56(2)(viib).​

-The case was decided in favour of the revenue, and the excess share premium was added to the income of the company.​

Exemption under section 54EC – Premature Redemption of 54EC Bonds

-This section provides capital gains tax exemption on investments in bonds (such as those issued by PFC) if the proceeds from the sale of a residential property are reinvested in such bonds.​

-The assessee sold his residential property and invested the sale proceeds in bonds issued by Power Finance Corporation (PFC) to avail of the capital gains tax exemption under Section 54EC. ​

-The assessee sought premature redemption of these bonds, claiming that he intended to use the funds for purchasing another property​

-The bonds issued by PFC had a five-year lock-in period, which meant the bonds could not be redeemed before the completion of five years.​

-The funds raised through these 54EC bonds were specifically intended to support PFC’s financial objectives, and the lock-in period was designed to ensure that the investments remained committed to PFC’s financial stability. Permitting premature redemption would undermine the purpose of the bonds, which was to ensure long-term financial support to PFC.​

-Allowing premature redemption would contravene the statutory intent of encouraging long-term investment and compromising the object and purpose of Section 54EC bonds.​

-It was beyond the scope of judicial intervention to modify or rewrite the conditions stipulated for these bonds. Allowing premature redemption would not only be against the contractual terms but also against the statutory intent of encouraging long-term investment.

-The Court ruled in favour of the revenue, upholding the five-year lock-in period and denying the premature redemption request.

 

Section 54F exemption allowed on purchase/construction of one flat in case of non-adjacent flats

Exemption under section 54F applies when the proceeds from the sale of a capital asset are used to purchase “a residential house.’’ The residential house must be one singular unit or capable of being used as a single unit.  ​

In this case the assessee sold a plot of land and used the proceeds to purchase two non-adjacent flats in a residential society. The Assessing Officer denied the exemption under Section 54F, arguing that since the flats were not adjacent, they could not be considered a single “residential house. “​

Key Findings:​

-The flats were purchased through distinct allotment letters.

-There was no indication that the flats were intended to be combined into a single residential unit.​

-The two flats were physically located in such a way that combining them was not possible.​

The term “a residential house” in Section 54F refers to a singular residence. If floors or houses are constructed in a way that they can be used as a single dwelling unit, they may qualify as a “residential house. “​

It was held that, the purchase of two non-adjacent flats located on different floors, even in the same residential tower, did not fulfil the criteria for exemption under Section 54F. Therefore, the assessee was eligible for exemption only on one flat.​

Section 54F deduction allowed for capital gain investment into a residential house property in wife’s name

Exemption under section 54F applies when the proceeds from the sale of a capital asset are used to purchase “a residential house.’’    

The residential house must be one singular unit or capable of being used as a single unit. ​

The assessee sold an immovable property and used the capital gain to purchase a residential property in his wife’s name. He claimed a deduction under Section 54F.​

The Assessing Officer denied the exemption on the grounds that the property was purchased in the name of the assessee’s wife, who was separately assessed for tax purposes.​

The predominant judicial view is that under Section 54F, the residential property does not need to be purchased in the assessee’s own name.​

Since the assessee purchased the residential property in his wife’s name, the deduction under Section 54F should be allowed.

Section 43B deduction allowed for interest due to company converted into equity shares

Section 43B of income tax act deals with certain business disallowance / deductions only on actual payments.​

In this case the assessee, a software developer, converted outstanding interest due to Andhra Pradesh Industrial Development Corporation Limited (‘APIDC’) into equity shares by issuing 5,05,000 shares of Rs. 10 each.​

The revenue did not contest that the liability to pay interest ceased to exist upon issuance of the equity shares​

The Assessing Officer held that the conversion of outstanding interest liability into equity did not constitute actual payment. Therefore, the interest due to APIDC was disallowed under Section 43B, as it was not actually paid.​

Since the liability to pay interest ceased upon the issuance of shares, it was deemed an “actual payment” under Section 43B.​

The assessee was entitled to the deduction under Section 43B.​

Press Release

CBDT’s pan 2.0 project to streamline and modernize process of issuing and managing pan and tan, making it simpler, more user friendly and efficient​

– The Cabinet Committee on Economic Affairs (CCEA) has approved the Income Tax Department’s PAN 2.0 Project, aiming to streamline and modernize the issuance and management of PAN and TAN.​

– Presently, PAN-related services are spread across three platforms: e-Filing Portal, UTIITSL Portal and Protean e-Gov Portal​

– The PAN 2.0 Project will integrate these services into a single unified portal for easier access to PAN/TAN services, including Application and updates, Corrections and Aadhaar-PAN linking, Re-issuance requests and Online PAN validation.​

Benefits​

– Quicker processing times for PAN issuance.​

– A one-stop platform for all PAN/TAN-related matters​

– Focus on paperless processes to reduce paperwork.​

– PAN 2.0 supports the Digital India initiative by making processes more efficient and establishing PAN as a common identifier for all digital systems of specified government agencies.​

– Personal and demographic data will be better protected, including through a PAN Data Vault​

– A dedicated call centre and helpdesk will be available to address user queries and issues.​

– PAN will be issued free of cost, reducing financial barriers.​

– The project will ensure faster service delivery, effective grievance redressal, and better protection of sensitive data.​

– The integration of services aims to create a seamless, transparent, and inclusive system for taxpayers.​

Circulars

CIRCULAR NO. 15/2024 [F. NO. 400/08/204-IT(B)] – INSTRUCTIONS TO SUB-ORDINATE AUTHORITIES – FIXING MONITORYLIMIT OF INCOME-TAX AUTHORITIES IN RESPECT OF REDUCTION OR WAIVER OF INTERESTPAID OR PAYABLE UNDER SECTION 220(2)​

– Section 220(2) of the Income-tax Act deals with the consequences of non-payment of income tax by a taxpayer. If a taxpayer fails to pay the demanded amount under Section 156, they are liable to pay interest at 1% per month (or part of the month) on the delayed amount. ​

– Income tax act empowers specific income-tax authorities (Pr. CCIT, CCIT, Pr. CIT, or CIT) to reduce or waive the interest paid or payable under Section 220(2) under certain conditions.​

– Monetary Limits for Reduction or Waiver:​

– Pr. CIT/CIT: Powers to reduce or waive interest up to Rs. 50 lakhs.​

– CCIT/DGIT: Powers to reduce or waive interest from Rs. 50 lakhs to Rs. 1.5 crore.​

– Pr. CCIT: Powers to reduce or waive interest above Rs. 1.5 crore​

– The reduction or waiver of interest is subject to the satisfaction of the following conditions under Section 220(2A):​

– Payment of the amount has caused or would cause genuine hardship to the taxpayer.​

– Default in payment was due to circumstances beyond the taxpayer’s control.​

– The taxpayer has co-operated in any inquiry related to the assessment or recovery of dues.​

– The instructions mentioned in this Circular will be applicable from the date of its issue i.e., from 4th November 2024.​

Notifications​

Income-tax (Tenth Amendment) Rules, 2024: This amendment introduces safe harbour provisions for the diamond industry and clarifies procedures for businesses wishing to opt for simplified tax treatment.​

In rule 10TD, in sub-rule (3B), The assessment years for the provision have been extended to include 2024-25.​

Introduction of New Rules:​

– Rule 10TI: Defines terms like “eligible assessee”, “eligible business”, and “gross receipts” for businesses engaged in selling raw diamonds.​

– Rule 10TIA: Specifies the safe harbour for income from the sale of raw diamonds, where the profits should be at least 4% of gross receipts for the safe harbour option to apply.​

– Rule 10TIB: Provides the procedure for exercising the safe harbour option, including the requirement to submit Form No. 3CEFC before filing the income tax return.​

– Rule 10TIC: Clarifies that the Mutual Agreement Procedure (MAP) cannot be invoked for businesses that have exercised the safe harbour option unless the option is declared invalid.​

The income-tax authorities will accept the safe harbour option unless declared invalid if:

– The profits from the eligible business are at least 4% of gross receipts.

– Specific conditions regarding deductions and losses apply.​

– The option can be invalidated if the assessee provides incorrect or concealed facts.​

– The assessee must submit this form to the Assessing Officer to exercise the safe harbour option for income from selling raw diamonds.​

– The rules are deemed to have come into force on 1st April 2024.​

Singapore Updates

Accounting and Corporate Regulatory Authority

Update on Bizfile: No late filing penalties will be imposed on filers who encounter difficulties on new Bizfile portal.

On 27 December 2024, the Accounting and Corporate Regulatory Authority (ACRA) issued a press release stating that ACRA is aware that some Bizfile users have encountered challenges with filing on the new Bizfile portal. ACRA informs that they are working on resolving the issues.

ACRA highlights the following important information:

Further to ACRA’s notice on 21 December 2024, ACRA will continue to waive late filing penalties for those who face difficulties in their filing. ACRA had earlier stated that no late lodgement penalties will be imposed for filings made by 27 December 2024.

ACRA assures Bizfile users who need to file a general lodgement (e.g. shares related transactions) that the date of transaction to be reflected in the Bizfile records will be the same as the date of the general lodgement.

Bizfile users who need more information on how to file key transactions on the new Bizfile portal may refer to ACRA’s video tutorial guides:

https://www.acra.gov.sg/about-bizfile/videos

 https://www.acra.gov.sg/news-events/news-details/id/844

Inland Revenue Authority of Singapore

Singapore Enhances International Tax Cooperation through Automatic Exchange of Information on Crypto-Assets

On 26 November 2024, Singapore, with 60 other jurisdictions at the 17th Global Forum Plenary Meeting in Asunción, Paraguay, committed to the implementation of the Crypto-Asset Reporting Framework (“CARF”). Under the Global Forum’s CARF Commitment Process, Singapore has been identified as one of the 52 jurisdictions relevant to the CARF in 2024 and is expected to commence exchanges under the CARF by 2027 or 2028 at the latest. The Global

Forum will closely monitor and update the list of jurisdictions to reflect the evolution of the crypto-asset sector.

In line with Singapore’s commitment to international tax transparency, we signed the Multilateral Competent Authority Agreement on Automatic Exchange of Information pursuant to the Crypto-Asset Reporting Framework (“CARF MCAA”) and the Addendum to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (“the Addendum to the CRS MCAA”). This further strengthens our reputation as a trusted and responsible business hub.

These agreements provide for: (a) automatic exchange of tax relevant information on Crypto-Assets between the tax authorities of signatory jurisdictions; and (b) amendments to the Common Reporting Standard (“CRS”) such as strengthening of due diligence and reporting requirements. Like other exchange of information agreements that Singapore has entered into, the agreements incorporate internationally agreed standards on confidentiality and data safeguards.

The signing of the CARF MCAA and the Addendum to the CRS MCAA follows Singapore’s earlier endorsement of the CARF Joint Statement on 10 November 2023, where jurisdictions stated their intention to work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by the agreed timeline, and to implement the amended CRS under the same timeline.

Major financial centres and digital asset hubs, including France, Japan, Germany, Switzerland, United Arab Emirates, United Kingdom and United States of America, have also committed to implement the CARF.

IRAS will work with the industry to provide guidance to help reporting entities meet their reporting obligations.

https://www.iras.gov.sg/news-events/newsroom/singapore-enhances-international-tax-cooperation-through-automatic-exchange-of-information-on-crypto-assets

Monetary Authority of Singapore

Singapore Publishes National Anti-Money Laundering Strategy

On 30th October 2024, the Ministry of Home Affairs, Ministry of Finance and Monetary Authority of Singapore announced the publication of Singapore’s National Anti- Money Laundering Strategy, as part of continuing efforts to maintain the effectiveness of Singapore’s anti-money laundering (AML) framework. The national AML strategy outlines Singapore’s strategic approach to address money laundering risks and guides its risk-targeted actions to combat ML amid rapidly changing risks and criminal typologies.

MAS also publishes risk assessment reports, including the proliferation financing national risk assessment and counter- PF Strategy, updated virtual assets risk assessment of legal persons, and money laundering and terrorism financing risk assessment of legal arrangements on 30 October 2024.

The National AML Strategy has three key pillars:

– Prevent – to deter proceeds of crime from entering Singapore’s system and prevent the misuse of Singapore’s system by criminals,

– Detect – to identify illicit flows and activities and ensure timely and effective mitigation, disruption and enforcement actions, and

– Enforce – to take firm and dissuasive actions against persons who abuse Singapore’s system for ML.

These three pillars are in turn supported by three inter-dependent building blocks of (i) Whole-of-Society Coordination and Collaboration; (ii) Legal and Regulatory Framework; and (iii) International Cooperation, which form the foundation of Singapore’s AML framework.

The National AML Strategy also considers Singapore’s updated Money Laundering National Risk Assessment (ML NRA) which synthesised observations on ML risks over the years, as well as other risk assessments and reviews developed to enhance Singapore’s risks understanding and risk mitigation measures.

Money Laundering National Risk Assessment

Singapore’s Money Laundering (ML) National Risk Assessment (NRA) forms part of Singapore’s continuing efforts to maintain the effectiveness of its anti-money laundering (AML) regime amidst our evolving risk landscape. It synthesises the ML risks observed by the Singapore law enforcement agencies, Singapore’s Financial Intelligence Unit – the Suspicious Transaction Reporting Office (STRO), and supervisory authorities, as well as feedback from private sector entities and counterpart foreign authorities.

The ML NRA provides an overview of Singapore’s key ML risks, considering an extensive range of qualitative and quantitative indicators on threats, vulnerabilities and control factors. Singapore’s key ML threats arise from a range of predicate offences, as criminals seek to exploit Singapore’s political and economic stability, strong rule of law, infrastructure, and wide range of services that our financial and other sectors provide.

The ML NRA identifies Singapore’s key threats as fraud (particularly cyber-enabled fraud), organised crime, corruption, tax crimes and trade-based ML.

The banking (including wealth management) sector is assessed to pose the highest ML risks, while among the designated non-financial businesses and professions (DNFBP) sectors, corporate service providers pose higher ML risks. Other higher risk sectors include digital payment token service providers, cross-border money transfer service providers (including remittance agents), licensed trust companies, real estate sector and precious stones and metals dealers.

The findings from the ML NRA, together with other risk assessments conducted by the authorities, serve as a guide for all stakeholders, including financial institutions (FIs) and DNFBPs, to detect and keep pace with the priority and emerging risks, take appropriate preventive measures as well as to allow more timely detection, disruption and enforcement on illicit activities.

FIs and DNFBPs, especially entities in sectors which are assessed to pose higher ML risks, should also take reference from the ML NRA in assessing their risks and enhance their controls accordingly.

https://www.mas.gov.sg/news/media-releases/2024/singapore-publishes-national-anti-money-laundering-strategy

MAS Announces Green Finance and Capital Markets Initiatives to Strengthen Financial Cooperation with China

On 11th November 2024, the Monetary Authority of Singapore (MAS) has announced new green finance and capital markets initiatives to strengthen financial cooperation with China. The initiatives were announced at the 20th Joint Council for Bilateral Cooperation (JCBC) meeting in Singapore, which was co-chaired by Singapore Deputy Prime Minister, Mr Gan Kim Yong, and People’s Republic of China Vice Premier of the State Council, Mr Ding Xuexiang.

The initiatives include:

– Catalysing Green Financing Flows. The China-Singapore Green Finance Taskforce (GFTF), established by MAS and the People’s Bank of China (PBC) in 2023, has been working to expand the Common Ground Taxonomy (CGT) under the International Platform on Sustainable Finance’s (IPSF) to include the Singapore-Asia Taxonomy. The exercise, which compares the green criteria of the European Union, China and Singapore taxonomies, will be completed by the end of this year. This will enable easier comparison of the green taxonomies of Singapore and China and facilitate the provision of cross-border green loans, green bond issuance and fund investments. In this regard, industry partners from both countries have been collaborating on Panda Bond issuances[1] through a Green Corridor, to further catalyse green financing flows between Singapore and China.

– Explore Piloting the “Over-the-Counter” Bond Market Framework between China and Singapore. MAS and the PBC are exploring a pilot with Singapore and Chinese banks to enhance international investors’ access to China’s bond market. The pilot will leverage the existing “over-the-counter” bond market framework in China, to enable participating banks in Singapore to provide trading and custody services for selected fixed income products for the China Interbank Bond Market.

– Strengthening Collaboration in Indices and Exchange Traded Funds (ETF) Product Links. Building on the good progress and strong investor interest in the ETF Product Links between the Singapore Exchange (SGX) and the Shenzhen and Shanghai Stock Exchanges[2], MAS and the China Securities Regulatory Commission (CSRC) are also in discussions to expand the suite of products on the ETF Product Links. In addition, SGX and China Securities Index are in discussions to develop a second index after the successful launch of their Emerging Asia Technology Index in January 2024. These collaborations will enrich the regional capital markets ecosystem with new ETF products and indices to cater to the evolving needs of investors.

– Facilitating Financial Institutions’ Access to Chinese Markets. Singapore and China continue to work in collaboration to facilitate the growing interest of financial institutions based in Singapore and China to expand in each other’s markets:

– First Listing of Panda Bond in Singapore. MAS and PBC welcome the first Panda Bond to list on the Singapore Exchange – UOB’s three-year, RMB 5 billion Panda Bond[3]. The listing of Panda Bonds in Singapore will foster greater interest and participation by international investors and issuers in the Panda Bond market.

– Memorandum of Understanding (MoU) between UOB and the Shanghai Gold Exchange (SGE). UOB and SGE have concluded an MoU to cooperate in proprietary trading and physical delivery of gold products and provide innovative services to ASEAN gold suppliers and investors.

At the JCBC meeting, MAS also welcomed the listing of eligible Chinese companies interested to expand business operations in Southeast Asia on SGX. This is in line with CSRC’s policy of supporting eligible onshore companies to access international capital markets for growth. https://www.mas.gov.sg/news/media-releases/2024/mas-announces-green-finance-and-capital-markets-initiatives-with-china

More than 4,700 companies were prosecuted in 2023 for late or non-filing of tax returns, amounting to total penalties that exceeded S$4.9 million, said the Inland Revenue Authority of Singapore (IRAS) in a statement on Thursday, 26th September 2024.

Amid the Corporate Income Tax (CIT) filing season, the tax regulator reminds all companies, including those with no business activities and those in a loss position, to file their CIT returns by 30th November 2024. 

Companies that do not file their CIT Returns by the due date can be fined up to $5,000. Depending on factors such as the company’s past compliance records, IRAS may compound the offence instead of taking prosecution actions. A company that receives a letter of composition must pay the composition amount and file the overdue tax return, failing which it will be issued a Notice to Attend Court. Errant companies that fail to file their returns for 2 years or more may be ordered by the courts to pay a penalty twice the amount of tax assessed, in addition to the fine.    

For companies that do not file their returns, IRAS may issue notices to the company directors to request the company’s financial information. Directors who fail to furnish the information by the stipulated date will be subject to heavier penalties of up to $10,000 or court attendance. Failure to attend court may result in a warrant of arrest issued against the company director. In 2023, 1,690 court summons were issued to directors who did not comply with these notices.

https://www.iras.gov.sg/news-events/newsroom/corporate-income-tax-(cit)-filing–over-4-700-companies-prosecuted-for-late-or-non-filing-of-tax-returns-in-2023

MAS plans to support asset tokenization commercialization

On 4th November 2024, The Monetary Authority of Singapore (MAS) has announced its plans to advance tokenization in financial services.

These include:

– Forming commercial networks to deepen liquidity of tokenised assets;

– Developing an ecosystem of market infrastructures;

– Fostering industry frameworks for tokenised asset implementation; and

– Enabling access to common settlement facility for tokenised assets.

Deepening liquidity of tokenised assets through formation of commercial networks

MAS has, under Project Guardian, convened over 40 financial institutions, industry associations and international policymakers across seven jurisdictions to carry out industry trials on the use of asset tokenisation in capital markets. To date, more than 15 industry trials have been conducted in six currencies across multiple financial products.

As Project Guardian participants commercialise their products and services following successful industry trials, MAS is facilitating commercialisation to take place in a coordinated, networked manner. By connecting a broader set of participants’ products and services across multiple currencies and assets, greater improvements in capital raising, secondary trading, asset servicing and settlement of tokenised assets may be realised. This will deepen liquidity across primary and secondary markets for tokenised asset transactions. To this end, Citi, HSBC, Schroders, Standard Chartered and UOB have formed the Guardian Wholesale Network industry group, with the intent of establishing a multi-member network to commercialise their respective asset tokenisation trials and scale usage.

Developing ecosystem of market infrastructures to facilitate seamless cross-border transactions

MAS launched the Global Layer One (GL1) initiative in 2023 to foster the development of foundational digital infrastructures, upon which commercial networks could be deployed. Since the launch, a core group of global banks, BNY, Citi, J.P. Morgan, MUFG and Societe Generale-FORGE have been leading efforts to define the business, governance, risk, legal and technology requirements of the GL1 platform.

To build on this, GL1 is expanding its scope to support the development of an ecosystem of compatible market infrastructures, enabling tokenised assets to be traded seamlessly across borders. Specifically, GL1 will undertake the following additional activities:

– Control Principles – Alignment on governance, risk management controls and settlement arrangement conventions for cross-border transactions. This provides clarity on roles, responsibilities and controls needed to safeguard market integrity and financial stability.

– Specifications – Development of specifications for market infrastructures and asset lifecycle. This encourages interoperability between diverse systems.

– Compliance by Design – Creation and provision of templates including programmable compliance checks to build an ecosystem of compatible service providers. This accelerates onboarding for new participants. 

To support these developments, MAS is pleased to announce the addition of new industry participants, including Euroclear and HSBC. GL1 will also set up a new market infrastructure working group, comprising global financial market infrastructure providers, that will focus on digital asset securities control principles.

Industry frameworks for implementation of tokenisation

To facilitate broad based acceptance and implementation of tokenised assets by financial institutions, two industry frameworks developed by Project Guardian industry group members were published today.

– Guardian Fixed Income Framework (GFIF) – GFIF integrates the International Capital Market Association’s Bond Data Taxonomy, Capital Markets and Technology Association’s Token Standards, and the Global Financial Markets Association’s Design Principles for Tokenised Securities. This provides an industry guide to implementing tokenisation in debt capital markets, strengthening industry capabilities and catalyse adoption of tokenised fixed-income solutions. • Guardian Funds Framework (GFF) – GFF provides a set of recommendations for industry best practices for tokenised funds. This includes the Guardian Composable Token Taxonomy to facilitate the development of tokenised investment vehicles comprising multiple assets, simplifying the process of incorporating new tokenised funds, and help achieve efficiencies in fund settlement.

https://www.mas.gov.sg/news/media-releases/2024/mas-announces-plans-to-support-commercialisation-of-asset-tokenisation

MAS Rationalises Leverage Requirements and Introduces Additional Disclosures for REITs

On 28 November 2024, the Monetary Authority of Singapore (“MAS”) announced the following changes affecting real estate investment trusts (“REITs“), which will take immediate effect:

1. Imposition of a minimum interest coverage ratio (“ICR”) of 1.5 times and a single aggregate leverage limit of 50% on all REITs; and

2.Requirement on REITs to perform and disclose sensitivity analyses on the impact of changes in EBITDA and interest rates on their ICR in their financial result announcements and annual reports.

Under the revised CIS Code, a minimum ICR of 1.5 times and a single aggregate leverage limit of 50% will be applied to all REITs. This revision rationalises the requirements across all REITs. Previously, a minimum ICR of 2.5 times was imposed only on REITs which intended to increase their aggregate leverage from 45% to 50%.

Enhanced Disclosures

REITs will be required to provide additional disclosures concerning the outlook and management of their leverage and ICR levels in their financial result announcements and annual reports.

The following stepped-up disclosures will apply:

– Leverage and ICR levels: REIT managers will be required to disclose how they intend to manage the REIT’s aggregate leverage and ICR levels in the REIT’s interim and full-year financial result announcements, and annual reports for any financial period ending on or after 31 March 2025. Where the ICR of a REIT has fallen below 1.8 times, the REIT manager should

take steps and/or have plans in place to improve the REIT’s ICR and will also need to disclose this additional information.

– Sensitivity analyses: REITs must perform and disclose sensitivity analyses on the impact of changes in EBITDA and interest rates on the REITs’ ICRs. The sensitivity analyses should minimally include two separate scenarios based on: (i) a 10% decrease in EBITDA; and (ii) a 100-basis point increase in interest rates. REIT managers may include additional scenarios, apart from the aforementioned prescribed base-case scenarios. MAS also clarified that loans with fixed interest rates or hedged against fixed rates should not be excluded from the sensitivity analyses, as such exclusions would underestimate the impact of movements in interest rates, especially in scenarios where such loans or their hedges are nearing maturity.

These additional disclosure requirements are meant to enhance accountability in REITs’ financial management to enable investors to be aware of how a REIT’s credit profile could be affected by changes in market conditions. With these enhanced requirements, REIT managers must exercise greater care when considering additional leverage or when a REIT’s ICR position is weakened.

https://www.mas.gov.sg/news/media-releases/2024/mas-rationalises-leverage-requirements-and-introduces-additional-disclosures-for-reits

https://www.mas.gov.sg/-/media/mas/resource/publications/consult_papers/2024/mas-response-to-feedback-on-proposed-amendments-to-reit-leverage-requirements.pdf

MAS and ABS Announce Launch of Electronic Deferred Payment Solutions in Mid-2025 and Extension of Deadline for Cessation of Corporate Cheques

On 5 December 2024, The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) has announced that two new payments solutions will be launched in mid-2025 to support the transition to e-payments for both corporate and retail cheque users. These solutions will complement Singapore’s existing suite of e-payment modes, including PayNow, FAST, GIRO and MEPS+. To allow corporates sufficient time to adopt these new solutions, MAS and ABS have also announced a one-year extension of the deadline to cease processing of corporate cheques.

To provide greater convenience to corporates and individuals, ABS, in partnership with the Domestic Systemically Important Banks (D-SIBs) will be launching the new EDP and EDP+ solutions in mid-2025 to address the use cases of post-dated payments and transactions requiring greater certainty of payment respectively. Both EDP and EDP+ will be accessible via digital banking platforms and will leverage PayNow to allow payers to identify payees conveniently when making payments via either solution. MAS encourages all cheque users to adopt these e-payment alternatives once they are made available.

Extended timeline for processing SGD corporate cheques

MAS and banks will extend the deadline to cease processing of corporate cheques by an additional year. MAS had previously announced that corporate cheques would be eliminated and that all banks in Singapore would stop issuing new corporate cheque books in 2025. MAS and the banks have assessed that more time should be given to corporates to familiarise themselves with new and existing e-payment modes, as well as for corporates to shift from cheques to EDP and EDP+. In view of this, while banks will stop issuing new cheque books to corporates by 31 December 2025, the deadline to cease processing of corporate cheques will be extended to 31 December 2026.

Corporate cheque payees should present their cheques for clearing well before 31 December 2026, to ensure that their cheques can be processed before the deadline.

https://www.mas.gov.sg/news/media-releases/2024/mas-and-abs-announce-launch-of-edp-solutions-in-mid-2025

Legal Updates

Introduction of The Bharatiya Vayuyan Adhiniyam, 2024:

The Ministry of Law and Justice on 11 December 2024 notified ‘The Bharatiya Vayuyan Adhiniyam, 2024’ (“Act”). The Act came into force with effect from 01 January 2025 vide the notification issued by the Ministry of Civil Aviation dated 31 December 2024.

The Act regulates and controls the design, manufacture, maintenance, possession, use, operation, sale, export and import of aircraft, along with related matters. The Act applies to (a) Indian citizens worldwide; (b) the aircraft and persons on board; (c) an Indian-registered aircraft regardless of location; (d) foreign-registered aircraft and their occupants within or over India; and (e) aircrafts operated by non-citizens whose principal place of business or permanent residence is in India.

The Act provides the framework for carrying out and overseeing safety and regulatory functions, including aerodrome use, aircraft operations, air traffic control, air traffic management and civil aviation security. The Act also sets out the manner in which aircraft accidents and incidents will be investigated under the supervision of the Director General, appointed by the Central Government.

The Act outlines compensation mechanisms for loss or damage caused to any person due to the directions issued under the Act. The Act also envisages the penalties and procedures for offences related to aviation safety and regulations. Offences, including improper handling of dangerous goods, non-compliance with government directions, and pollution near aerodromes, may result in fines up to ₹1,00,00,000/- (Indian Rupees One Crore Only) imprisonment up to 3 (Three) years, or both. Penalties also apply for violations caused by the construction of buildings and the plantation of trees within the specified radius near the aerodromes.

Bharathiya Vayuyan Athiniyam.pdf

BVA Notification.pdf

Cybersecurity Updates

CRITICAL SECURITY ADVISORY: update your outlook now!

Microsoft recently announced a critical security patch addressing a newly discovered vulnerability in Outlook, designated as CVE-2025-21298. This vulnerability poses a severe risk to users by enabling attackers to execute arbitrary code remotely through a zero-click remote code execution (RCE) exploit, merely by sending a malicious email.

Vulnerability Details

CVE-2025-21298 is classified as a “Use After Free” weakness (CWE-416), which can be easily exploited without user interaction, over the network. The Common Vulnerability Scoring System (CVSS) score for this vulnerability is a staggering 9.8, signifying its critical severity.

Despite the vulnerability not being publicly disclosed or exploited at the time of the patch release, cybersecurity experts warn about its high exploitability potential, making it crucial for users to act swiftly.

Impact Assessment

The potential impact of CVE-2025-21298 is rated high concerning confidentiality, integrity, and availability. This underscores the urgency for all users to apply the necessary patch without delay.

Recommended Actions

To mitigate the risks posed by CVE-2025-21298, Microsoft recommends the following best practices:

– Update-Outlook: The most effective defense against this vulnerability is to install the official patch immediately. This update resolves the core flaw and provides protection against possible exploitation.

– Email-Viewing-Settings: Consider configuring Microsoft Outlook to read email messages in plain text format. This adjustment reduces the risk of executing malicious content that may be embedded in rich text formats. For detailed guidance on adjusting these settings, refer to Microsoft’s official documentation.

– Caution-with-Attachments: Exercise vigilance when opening RTF files and other attachments from unknown or untrusted sources, as they can be potential vehicles for exploitation.

Conclusion

Given the critical nature of CVE-2025-21298, we strongly urge all Outlook users to prioritize the immediate update of their software and adhere to the recommended safety practices. By remaining vigilant and proactive, users can significantly reduce their risk of falling victim to this serious security threat and ensure that their systems remain secure against potential exploits.