Banking Unit licensing in an International Financial Services Centre is structured around an IFSC Banking Unit operating as a branch and an IFSC Banking Company operating as a subsidiary of its Parent Bank. Indian and foreign banks require licence or permission to establish a Banking Unit. Licensing requirements distinguish between branch and subsidiary structures through prescribed Parent Bank capital, home-regulator no-objection requirements and, for an IFSC Banking Unit, a liquidity-support undertaking. Prudential obligations cover liquidity coverage, net stable funding, leverage and reserve requirements, with distinct treatment for IFSC Banking Units and IFSC Banking Companies.

Service conditions for whole-time employees cover recruitment, probation, appointment, seniority, promotion, reversion, resignation, retirement, pay, allowances, leave, conduct, discipline, appeals, medical benefits, gratuity, and pension membership. Recruitment may occur through direct selection, campus selection, deputation, absorption, or contract arrangements, subject to prescribed eligibility and selection procedures. Employees must maintain confidentiality, integrity, and discipline, while restrictions apply to political activity, outside employment, gifts, investments, property dealings, and post-retirement employment. Major penalties require a formal inquiry with written charges, defence opportunities, evidence procedures, and a reasoned report; suspension and appeals operate under specified conditions.

Section 80P(2)(d) permits a co-operative society to deduct interest or dividend derived from investments with another co-operative society. A co-operative bank remains a co-operative society under applicable co-operative societies law; Section 80P(4) restricts a co-operative bank's deduction on its own income but does not deny the investing co-operative society a deduction for interest received from it. Where two reasonable interpretations of a taxing provision exist, the interpretation favourable to the assessee applies. Disallowance of expenditure allegedly incurred to earn exempt income under Section 14A and Rule 8D requires verification of the expenditure's factual nexus with exempt income and may require fresh adjudication.

Naresh Kumar, Assistant Commissioner, W-62, is appointed as Nodal Officer for GST Audit in addition to his existing official duties. The appointment takes immediate effect and continues until further orders, with prior approval of the competent authority.

The amendments redefine a Banking Unit as a licensed financial institution undertaking permissible activities and introduce Global Administrative Offices and Representative Offices in IFSCs. A Global Administrative Office may coordinate operations or provide support services to a Parent Bank and its Group entities, subject to relevant foreign regulatory directions for activities outside the IFSC. A Representative Office may market financial products, collect data and conduct outreach operations. Parent Banks may establish these offices through a suitable mechanism subject to specified conditions.

Refund sanctioning powers under section 54 of the Delhi Goods and Services Tax Act, 2017 are allocated by claim value. Claims up to Rs. 10 lakhs are sanctioned by the Assistant Commissioner or GSTO of the concerned ward, while higher-value claims are assigned to zonal senior officers, with separate allocation for Zone-08. Refund applications must be filed in the concerned ward and placed before the competent sanctioning authority. Designated appellate authorities hear section 107 appeals, while previously filed appeals remain with the existing appellate authority.

Regulation 13(8) is corrected to provide for functioning as a trading member for interest rate or currency derivatives and/or as a clearing member for clearing and settlement in any derivative segment. The correction removes the qualification restricting clearing membership to a professional clearing member.

IFSC Banking Units must be capitalised by their Parent Banks at the prescribed minimum level and comply with Home Regulator directions unless otherwise specified. Leverage ratio and exposure ceiling requirements are subject to applicable norms and guidelines. Banking Unit liabilities are generally exempt from reserve requirements, except deposits raised from individuals resident in India or outside India. Banking Units may maintain freely convertible foreign currency accounts for eligible persons and undertake permitted financial-services and banking activities, subject to prescribed conditions, including design, execution and risk-management requirements.

Banking activities in International Financial Services Centres are expanded to permit banking units to offer Portfolio Management services and Investment Advisory services to persons resident in India and persons resident outside India. These activities are inserted into the permitted activities framework under the International Financial Services Centres Authority (Banking) Regulations, 2020, with effect upon publication in the Official Gazette.

Computation of the deduction under section 80IC requires verification where the prescribed Rule 18BBB report and complete particulars for allocating common expenses between eligible and non-eligible units are not furnished. Coordinate-bench rulings may be distinguishable where the evidentiary record lacks the information needed to test the deduction calculation. Fresh examination by the Assessing Officer, after providing the assessee a reasonable opportunity, is required on the basis of complete particulars.

Regulation 22 supersedes the specified Reserve Bank circular from commencement of the International Financial Services Centres Authority (Banking) Regulations, 2020. Actions taken or purportedly taken under that circular are preserved and deemed taken under corresponding provisions of these regulations. Banking Units already operating in an International Financial Services Centre must meet any additional requirements within three months of notification, subject to an extension specified by the Authority.

GST administration for entertainment and luxury services is centralised through creation of Ward No. 209 (Entertainment), with jurisdiction extending across the National Capital Territory of Delhi. Registered dealers engaged in entertainment and luxury services are to be transferred to the specialised ward, and future registrations for entertainment activities are to be dealt with there. Officers appointed under the Delhi GST framework may exercise their statutory powers in relation to the ward.

Failure by a Parent Bank applicant or Banking Unit to comply with conditions attached to a banking licence may result in withdrawal of that licence. Before withdrawal, the Banking Unit must be given thirty days to make submissions. The Authority may additionally take any other action considered appropriate under the Act.

Power to specify procedures and issue clarifications enables the Authority to prescribe norms, procedures, processes and manners through guidelines or circulars for implementing the banking regulations and incidental matters. The Authority may also grant relaxations to facilitate and regulate financial services relating to banking and investment activities in an International Financial Services Centre.

Regulation 19 permits a Banking Unit to exchange margins with a counterparty Banking Unit or overseas regulated entity under a legally enforceable netting arrangement for non-centrally cleared over-the-counter currency, interest-rate, credit and commodity derivative contracts. The exchange reflects mark-to-market exposure and may involve specified foreign currencies, permissible listed debt securities and sovereigns. Effective 7 July 2023, "freely convertible currency" was replaced with "specified foreign currencies" as the eligible currency description.

Deposit insurance for deposits of a Banking Unit may apply only where and to the extent provided under the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and its rules or regulations. Coverage depends on the applicability, scope and limits of that statutory deposit-insurance regime. This replaces the earlier position that no centralised deposit insurance scheme applied to deposits of a Banking Unit.

A Banking Unit may maintain an INR account out of specified foreign currencies to meet administrative and statutory expenses and other purposes specified by the Authority. It must also maintain separate nostro accounts with correspondent banks, distinct from nostro accounts maintained by other branches of its parent bank in India.

Banking Units must maintain books of accounts, records and documents in the specified foreign currencies declared when applying under Regulation 3. The requirement replaces the earlier formulation requiring maintenance in a freely convertible foreign currency.

Banking Units must furnish the Authority with operational information at such times and in such manner and form as specified by the Authority. Reports are required to be submitted in US Dollar unless otherwise specified. The reporting framework permits the Authority to determine applicable timing, format and currency requirements.

Regulation 14 requires every Banking Unit to comply with Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines issued by the Authority. The substituted framework, effective from 7 July 2023, replaces the earlier requirement to follow Reserve Bank-issued Know Your Customer norms, terrorist-financing controls, anti-money-laundering requirements and related reporting obligations, unless otherwise specified by the Authority.