Compliance Notes &
Regulatory Updates

The Union Budget 2026–27 focuses on continuity and simplification. Key benefits from Budget 2025 remain fully in force: zero tax up to ₹12 lakh under the new regime, enhanced Section 87A rebate of ₹60,000, and standard deduction of ₹75,000 for salaried individuals and pensioners. The New Income Tax Act, 2025 comes into force from 1 April 2026, replacing the 65-year-old Act of 1961. TCS under the Liberalised Remittance Scheme (LRS) is reduced to a flat 2% on overseas tour packages, education, and medical remittances. Disability pension for Armed Forces personnel invalided out of service remains fully exempt.

Source: Finance Bill 2026 | Income Tax India | Budget 2026–27. For personalised advice, consult a qualified CA.

India's 65-year-old Income Tax Act, 1961 stands repealed effective 1 April 2026. The Draft Income Tax Rules, 2026 — released by CBDT on 7 February 2026 — reduce total forms from 399 to 190 (eliminating 209 redundant forms) and rules from 511 to 333. ITR forms for AY 2026-27 (FY 2025-26) continue under the old Act — brand-new ITR forms under the 2025 Act will apply from FY 2026-27 returns filed in FY 2027-28. Key allowance revisions include Children's Education Allowance raised 30× to ₹3,000/month per child, and meal vouchers increased to ₹200 per meal per day.

Source: CBDT, Draft Income Tax Rules 2026 (released 7 Feb 2026). Final rules subject to change. Consult a qualified CA for personalised guidance.

Form 15G (for individuals below 60) and Form 15H (for senior citizens aged 60+) are declarations preventing banks from deducting TDS on Fixed Deposit / Recurring Deposit interest where income is below the taxable limit. From April 2026, both forms can be submitted entirely online through CDSL, NSDL, or the depositor's bank website — eliminating the need to visit a branch annually. Depositories receive the declaration and relay it directly to deductors, removing manual processing. Lower/nil TDS certificates are also being auto-issued by the system.

Source: Union Budget 2026–27 | Income Tax Act 2025. This note is for awareness only. Verify eligibility before submission; incorrect declaration attracts penalty.

The law prescribes two separate and sequential obligations for first auditor appointments. Step 1: under Section 139(6) of the Companies Act, 2013, the Board must appoint the first auditor within 30 days of incorporation. Step 2: under Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014, Form ADT-1 must be filed within 15 days of the Board Meeting at which the appointment was made. A company incorporating on Day 1, holding its Board Meeting on Day 29, has until Day 44 to file ADT-1 — and is fully compliant. The MCA portal, however, treats Day 30 as the ADT-1 deadline and levies fees from Day 31 onward — a position with no statutory basis. From 14 July 2025 (G.S.R. 359(E)), ADT-1 filing became mandatory for first auditors, significantly increasing the volume of filings affected by this error.

Source: Section 139(6), Companies Act 2013 | Rule 4(2), Companies (Audit and Auditors) Rules, 2014 | G.S.R. 359(E) dated 30 May 2025. Prepared for professional discussion and representation purposes.

TReDS (Trade Receivables Discounting System) is an RBI-regulated platform enabling MSMEs to receive early payment on invoices: MSMEs upload invoices → banks bid to finance → MSME gets paid immediately → buyer repays the bank on the due date. Under Budget 2026-27, all Central Public Sector Enterprises (CPSEs) are now mandatorily required to use TReDS for all MSME purchases. Government procurement invoices will flow directly to TReDS via GeM integration. TReDS receivables are now securitisable and can be sold to Mutual Funds, AIFs, and Insurance companies. For the private sector, TReDS remains voluntary — but the MSMED Act 2006 obligations continue: MSMEs must be paid within 45 days, failing which compound interest at 3× the bank rate applies, disclosures must be made in the Annual Report, and auditors are required to report payment delays.

Source: Union Budget 2026–27 | MSMED Act 2006 | RBI TReDS Directions. Consult your compliance team for entity-specific guidance.