India's senior executives, directors, and key managerial personnel are discovering that their corporate titles no longer guarantee corporate cover. According to reports from Business Standard, enforcement agencies are increasingly moving to hold individuals, rather than just the institution, responsible for alleged financial misconduct, tax evasion, and compliance failures. From the Goods and Services Tax (GST) law and the Foreign Exchange Management Act (FEMA) to the Companies Act, customs law, the Prevention of Money Laundering Act (PMLA) and insolvency proceedings, authorities are targeting CEOs, chief financial officers (CFOs), directors, and even mid-level executives with far greater frequency.
The trend has been accelerated by technological advancement, as reported by Business Standard. Regulators now have access to transaction-level data, GST returns, bank records, email trails, audit logs, WhatsApp communications and other digital evidence that was often unavailable or difficult to access in the past. This technological capability enables authorities to reconstruct decision-making chains and pinpoint individuals allegedly responsible for violations with far greater precision. The shift came into sharp focus recently with the arrest of Rishi Gupta, managing director and CEO of Fino Payments Bank, in a GST evasion case involving its programme managers, demonstrating that even the top of the corporate pyramid is not beyond scrutiny.
Despite heightened enforcement, courts have consistently held that personal culpability cannot be imposed merely because someone occupies a senior position. According to Business Standard, in Jaipur IPL Cricket Pvt. Ltd. v. Enforcement Directorate (2019), the tribunal held that mere directorship is not sufficient and that the ED must prove the director was in charge of, and responsible for, the day-to-day affairs of the company at the time of the alleged violation. The Madras High Court in Khalid Buhari v. Assistant Commissioner of CGST (2026) held that recovery from directors cannot be initiated unless tax is first unrecoverable from the company and a proper hearing is given. The Bombay High Court went further in the Shemaroo Entertainment case (2026), quashing personal penalties of over ₹400 crore on the CEO, CFO and joint MD, ruling that personal liability under Section 122(1A) requires clear evidence of active involvement or personal benefit.
While judicial safeguards remain in place, professionals report challenging practical realities on the ground. As reported by Business Standard, Sudipta Bhattacharjee, partner at Khaitan & Co, highlighted instances under GST where authorities allegedly invoke personal liability provisions to pressure senior executives into making large tax payments even before issuance of formal show-cause notices. Nemin Shah, director at EQX Business Consultancy, noted that prosecution is increasingly initiated against employees who serve merely as authorised signatories, often designated for operational convenience with little appreciation of personal risk involved. Former CBDT member Akhilesh Ranjan emphasized that criminal liability should not automatically attach to authorised signatories unless it can be shown that the default occurred due to gross negligence or malfeasance.
As liability risk grows, corporate governance practices are becoming increasingly critical. According to Business Standard, Manish Gupta from AKM Global noted that regulators are increasingly examining board processes, delegation structures, dissent records and internal compliance mechanisms. M S Mani from Deloitte urged restraint from regulatory side, holding that personal liability provisions should be invoked sparingly after rigorous investigation establishes deliberate involvement. A former Chairman of the Central Board of Indirect Taxes and Customs emphasized that while Indian law broadly conforms to underlying principles governing executive liability across major jurisdictions, enforcement practice and institutional maturity remain work in progress. The emerging regulatory approach reflects a broader shift where procedural defaults are increasingly being decriminalized while regulators pursue more targeted strategies against serious violations.
