RBI Cancels NBFC Certificate 2026 - Gandhinagar Leasing Finance Ltd

What Happened?

On November 9, 2026, the Reserve Bank of India (RBI) cancelled the Certificate of Registration (CoR) issued to Gandhinagar Leasing and Finance Ltd, an NBFC registered at 420, Times Square Arcade, Ahmedabad, Gujarat. The cancellation became effective from October 29, 2026. The company's CoR (No. 01.00279) was originally issued on December 8, 1998, making this a 28-year-old registration that has now been terminated. Following this cancellation, Gandhinagar Leasing and Finance Ltd is no longer permitted to conduct any business as a Non-Banking Financial Institution (NBFI) as defined under the RBI Act, 1934.

Background & Legal Context

This cancellation was issued under Section 45-IA(6) of the Reserve Bank of India Act, 1934. While this falls under RBI's regulatory domain, it has significant implications for Income Tax compliance and GST obligations of all stakeholders involved with this company.

• Legal Framework: Section 45-IA(6) of RBI Act empowers the Reserve Bank to cancel CoR of any NBFC if it fails to comply with regulatory requirements, maintains inadequate capital, misuses funds, or violates other statutory conditions.
• What is an NBFC? A Non-Banking Financial Company is any entity engaged in lending, investment, or financial services but not licensed as a bank. They include leasing companies, loan providers, and investment firms.
• Income Tax Act 2025 Connection: Under the Income Tax Act 2025, financial transactions with unregistered NBFCs lose their legitimate status. Any deductions claimed under Section 36 (interest paid on borrowed funds) or depreciation under Section 32 may face challenges if the lending entity was not a valid NBFC at the time of transaction.
• GST Compliance Impact: If Gandhinagar Leasing had issued GST invoices for financial services, all such invoices issued after October 29, 2026, are invalid. Customers claiming input tax credit (ITC) on such invoices may face reversal.

What Does This Mean for You?

For Loan Holders & Borrowers:

• If you have active loans from Gandhinagar Leasing and Finance Ltd, you must immediately verify the status of your outstanding amounts.
• The company cannot legally continue lending operations. You should seek clarification on loan repayment procedures and whether the company will wind down operations or transfer loan portfolios.
• For Income Tax purposes in AY 2026-27, any interest you paid on loans from this entity after October 29, 2026 may not qualify for deduction under Section 36(1)(iii) of Income Tax Act 2025 since the NBFC was unregistered at that time.

For Businesses Leasing Equipment:

• Leasing transactions are a common financing method. If your company entered into lease agreements with Gandhinagar Leasing, you should review the lease deeds immediately.
• Depreciation and lease rental deductions claimed under Sections 32 and 36 of Income Tax Act 2025 may face scrutiny in Income Tax assessments for AY 2026-27 onwards.
• You must separately disclose any pending lease obligations to your CA and file amended returns if necessary.

For Investors & Shareholders:

• If you hold shares or investment securities issued by this NBFC, their value is now at significant risk. The company cannot continue operations and faces potential liquidation.
• Any dividends received or capital gains claimed in previous assessment years may attract scrutiny if the NBFC was operating without proper compliance.

For GST Compliance:

• If you received invoices from Gandhinagar Leasing for financial services (charges, commission, or lease-related services), your input tax credit (ITC) claimed on such invoices is now questionable.
• CBIC may issue notices asking for reversal of ITC on invoices issued by an unregistered / deregistered service provider.
• You must maintain documentary evidence of all transactions and be prepared to respond to such notices.

For the Company's Employees & Suppliers:

• Employees should verify pending salary and benefit payments. Suppliers should immediately pursue outstanding payables before liquidation proceedings begin.
• Any TDS deducted by Gandhinagar Leasing on payments to vendors should be tracked for claiming credit in personal tax returns.

What Should You Do Now?

Immediate Actions (Next 30 Days):

• Review All Transactions: If you have any financial relationship with Gandhinagar Leasing and Finance Ltd (loans, leases, investments), document all transaction details, dates, amounts, and payment records.
• Consult Your CA: Reach out to your Chartered Accountant to review your Income Tax returns for the last 3 years (AY 2024-25, AY 2025-26, AY 2026-27) to identify any claims related to this NBFC.
• Check GST Invoices: If you're a GST-registered business, immediately retrieve all GST invoices received from Gandhinagar Leasing and verify the transaction dates and ITC claimed.
• File Revised Returns (if needed): If you claimed deductions or credits for transactions with this NBFC after October 29, 2026, file revised returns under Section 139(5) of Income Tax Act 2025 before the deadline for each assessment year.

Compliance Steps (Next 60 Days):

• Await RBI Guidelines: The RBI is likely to issue detailed circulars on wind-down procedures, loan transfers, or investor protection. Monitor RBI communications.
• Preserve Documents: Maintain all original agreements, payment receipts, bank statements, and correspondence with Gandhinagar Leasing for at least 7 years (as per Income Tax Act 2025 record retention rules).
• Reverse ITC (if applicable): If you're subject to GST audit or notice, proactively reverse the ITC claimed on Gandhinagar Leasing invoices to avoid penalties under GST law.
• Monitor for Notices: Expect that Income Tax Department and GST authorities will cross-check transactions with this NBFC. Be ready with explanations and supporting documents.

Long-term Strategy:

• Always verify NBFC registration status before entering into financial commitments. Check the RBI's official list of registered NBFCs.
• Ensure your auditor reviews all related party financial transactions and regulatory compliance in audit reports.
• Maintain robust record-keeping systems to quickly respond to tax authority queries.

Key Takeaways

• Registration Cancelled: Gandhinagar Leasing and Finance Ltd's CoR is cancelled effective October 29, 2026. It cannot conduct NBFC business henceforth.
• Income Tax Impact: Interest and lease rental deductions for transactions after October 29, 2026, may be disallowed under Sections 36 and 32 of Income Tax Act 2025 during assessment for AY 2026-27 and onwards.
• GST Reversal Risk: Any input tax credit claimed on invoices from this entity is questionable and may be reversed on audit or departmental notice.
• Immediate Action Required: All stakeholders must review their transaction records, consult their CA, and prepare documentation to respond to potential tax authority queries.
• Future Prevention: Always cross-verify NBFC registration status before lending, borrowing, or leasing to ensure regulatory compliance and protect your tax position.

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