TaxTMI 
TaxTMI 
Guidance Note - Form 26
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....uidance Note - Form 26<BR>Income Tax<BR>Dated:- 26-3-2026<BR><BR>Form No. 26 is the prescribed Audit Report and Statement of Particulars under Section 63 of the Income-tax Act, 2025 read with Rule 47 of the Income-tax Rules, 2026, consisting of Parts A to D, which cover the statement of particulars and audit-related information for assessees whose accounts are audited or not audited under any other law. Parts A & B of Form No. 26 [corresponding to erstwhile Form 3CD] - Statement of Particulars Required to Be Furnished under Section 63 Part C of Form No. 26 [corresponding to erstwhile Form 3CA] [e-Form] - As prescribed under Rule 47, the audit report under Section 63 for Assessees Whose Accounts Are Audited Under Any Other Law Part ....
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....D of Form No. 26 [corresponding to erstwhile Form 3CB] [e-Form] - As prescribed under Rule 47, the audit report under Section 63 where Assessee's Accounts Are Not Audited Under Any Other Law Purpose of Part C of Form No. 26 Part C of Form No. 26 is applicable where the assessee's books of account have already been audited under any other statute. The primary purpose of this Part C is to link the statutory audit conducted under another law with the tax audit under section 63 of the Income-tax Act, 2025 enabling the tax auditor to place reliance on the audited financial statements prepared in accordance with the applicable statute and to confirm that such accounts have been duly examined. Purpose of Part C of Form No. 26 Ensu....
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....res That • An audit has been conducted under another law, and the same audited books of account form the basis of the tax audit. • The statutory audit report is annexed to Form No. 26 where applicable and forms an integral part of the tax audit documentation. • Audit observations, qualifications, adverse remarks, disclaimers or emphasis of matters, if any, shall be reported clause-wise and mandatorily categorised as (i) test- check basis, (ii) based on management representation, or (iii) unable to verify. The auditor shall report the impact, if any, on the profit/loss or book profit arising from such observations. • The tax auditor verifies and reports all tax-sp....
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....ecific particulars in Parts A & B along with schedules which are to be read together with Part C of the Form. Purpose of Part D of Form No. 26 Part D of Form No. 26 is applicable where the assessee's accounts are not required to be audited under any other law. The auditor conducts an audit specifically for the purposes of section 63 and expresses an opinion on the financial statements whether the financial statements give a true and fair view. Part D of Form No. 26 Ensures That • The tax auditor examines the books of account and financial statements in accordance with the provisions of the Income-tax Act, 2025. • The auditor expresses an opinion on the Profit & Loss Account / Income & Expenditure Accou....
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....nt and Balance Sheet. • The tax auditor verifies and reports all tax-specific particulars in Parts A & B along with schedules which are to be read together with Part D of the Form Parts A & B of Form No. 26 constitute the substantive factual disclosure component of the tax audit. They contain quantitative and qualitative particulars required for computing taxable income and facilitating computation and compliance verification with the Income- tax Act, 2025. It includes detailed reporting on subpart: i. General Information ii. Particulars of Books of Account and Method of Accounting iii. Particulars of Receipt / Income iv. Particulars of Expenses v. Particulars of Prior Period Item....
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....s vi. Particulars of Losses, Depreciation and Deductions vii. International Taxation viii. Other Key Parameters ix. Particulars of TDS / TCS x. Particulars of Indirect Taxation xi. Quantitative Details Who Should File Form No. 26 The requirement to furnish Form No. 26 [corresponding to erstwhile Forms 3CA/3CB read with 3CD] is applicable when a business entity or professional meets the specified limits or conditions that make a tax audit mandatory under section 63 of the Income-tax Act, 2025. For Businesses A tax audit is required if the total sales, turnover, or gross receipts of the business exceed: • Rs.1 crore during the tax year; or • Rs.10 cror....
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....e in the tax year, provided that • cash receipts do not exceed 5% of the total receipts and payments, respectively • cash payments do not exceed 5% of the total payments For Professions A tax audit is required if the gross receipts from the profession exceed Rs.50 lakh during the tax year. Under Presumptive Taxation Schemes Form No. 26 is required for taxpayers who is eligible to opt for a presumptive taxation scheme but do not meet the specified conditions: • Section 58(2) or 61(2) (Table: SI. Nos 4 and 5): If a person who is eligible to opt for the presumptive taxation scheme but claims the profits or gains for such business or profession to be lower than the profit and gains computed as ....
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....per the presumptive taxation scheme, the requirement to file Form No. 26 becomes applicable . Opting out of Presumptive Taxation as per section 58(2) (Table: Sl No.1): If a taxpayer opts out of the presumptive scheme in any of the five consecutive years (the "lock-in period"), they are not eligible for presumptive tax for next 5 years. Further, during such period, the taxpayer shall be required to furnish Form No. 26 under section 63, if the total income exceeds the basic exemption limit. Frequency & Due Dates: Form No. 26 is required to be furnished within the time prescribed under the Act, generally one month prior to the due date prescribed under Section 263(1), unless extended by the Board. Structure of Form No. 26: Fo....
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....rm No. 26 is divided into the following Parts under the new framework Part A - Particulars of the Assessee This Part contains the basic particulars of the assessee, including name, address, PAN, status, tax year, residential status, and contact details. Part B - Statement of Particulars under Section 63 This Part contains the detailed statement of particulars and disclosures required to be furnished under section 63, covering general information, books of account, method of accounting, income and receipts, expenses and disallowances, prior period items, losses, depreciation and deductions, international taxation, TDS/TCS, indirect taxation, quantitative details, and other key statutory parameters. ....
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.... Part C - Audit Report under Section 63 (where accounts are audited under any other law). This Part is applicable where the accounts of the assessee have been audited under any other law and contains particulars relating to such statutory audit and is read together with Parts A and B. Part D - Audit Report under Section 63 (where accounts are not audited under any other law) This Part is applicable in cases where the accounts of the assessee have not been audited under any other law and contains the audit-related particulars, including observations and qualifications, if any, read with Parts A and B of the Form Following documents may be required to file the Form No. 26 • Books of account and relevan....
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....t financial statements of the assessee (Balance Sheet, Profit & Loss Account / Income & Expenditure Account and Notes to Accounts). • Audit report and audited financial statements, where the accounts are audited under any other law. • Supporting documents and workings for particulars and disclosures required under Part A & B of Form No. 26. • TDS/TCS and indirect tax (GST) records, returns, challans and reconciliations, as applicable. • Quantitative and inventory records for trading, manufacturing, raw materials, finished goods, by-products and scrap, wherever applicable. What is the process flow of filing Form No. 26? The process flow includes following steps • Audit by....
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.... Accountant under any other law or under section 63 • Preparation of Part A & B to Form No. 26 • Furnishing of Form No. 26 online by Chartered Accountant (e-form) • E-verification of Form via DSC of auditor • Acceptance of Form by taxpayer Outcome of Processed Form No. 26: • Various fields of the tax audit report are validated against the ITR of the taxpayer. Discrepancies, if any, are brought to the notice of the taxpayer for revision. • If required, system-driven discrepancies may trigger system-driven action where applicable under the provisions of the Act, as applicable, e.g. Adjustment u/s 270(1)(a) Common Changes Made Across Forms: • To en....
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....hance system compatibility and facilitate e-filing, fields such as Name, Designation, Address, PAN, have been separated into individual boxes to address earlier grouping issues. • References to Assessment/Financial/Previous Year(s) have been updated to "Tax Year(s)" throughout the Form and its Annexures. • Sections, Clauses, and Schedules have been revised in accordance with the provisions of the Income-tax Act, 2025. • The currency symbol "Rs." has been replaced with "Rs." for standardization. • Uniform adoption of Yes / No response format across the form. • Mandatory schedule-based reporting wherever the response is "Yes" • Increased use of tabular and structure....
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....d disclosures instead of narrative reporting • Separate identification of items chargeable to tax but not credited/debited to the profit and loss account • Consolidation of repetitive disclosures into common schedules referenced throughout the form • Standardisation of language, formats and response patterns across all parts of the form TABLE 1: Overall Objective of the Form No. 26 : Aspect Earlier Form New Modified Form Benefit / Outcome Compliance approach Narrative, auditor- driven Structured, system- driven Designed to significantly reduce interpretational disputes Legal alignment IT Act, 1961 IT Act, 2025 Future-ready compliance Reporting style Mixed na....
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....rrative & tables Drop-downs, Yes/No, schedules Faster and uniform reporting TABLE 2: Benefits to Users (Taxpayers & Auditors) Area New Provision User Benefit Structured disclosures Yes/No based triggers Reduced ambiguity, fewer reporting errors Section-wise mapping Each clause mapped to IT Act, 2025 Legal certainty and easier statutory correlation Area New Provision User Benefit Schedule-based reporting Detailed info only if applicable Proportionate compliance and reduced reporting burden Depreciation Classification based on usage period (more than 180 days / 180 days or less) instead of asset-wise date of put to use Simplified reporting, reduced asset- level tracking, and lower....
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.... compliance effort for auditors GST Limited and focused GST break-up instead of exhaustive transaction-wise or tax- component-wise disclosures Significant reduction in compliance burden and time spent on GST reconciliation Employees' State Insurance (ESI) Reporting restricted to disallowable amounts only, instead of detailed employee-wise or month-wise data Focused compliance, reduced data collation, and clarity on tax impact E-Form validation Built-in checks Fewer defective filings and reduced revision requirements TABLE 3: How the New Form Curbs Tax Evasion Risk Area New Disclosure Requirement How Evasion is Curbed Digital data Accounting software, cloud, IP address Mitigates risk of pos....
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....t-facto data tampering Offshore data Country of data storage Mitigates concealment via foreign servers Prior period items Separate reporting Prevents timing arbitrage Foreign Remittance reported in Part-D of Form 15CA during the tax year Nature of remittance, taxable / non-taxable, Prevents treaty misuse and revenue leakage through incorrect classification or non-deduction TDS Mat Credit details Year-wise MAT credit entitlement, utilization, and carry forward Prevents excess credit claims, duplicate utilisation, and carry- forward manipulation TABLE 4: Technology & Data-Driven Advantages Feature Earlier Position New Position Impact Accounting software Not required Mandatory disclos....
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....ure Data authenticity Cloud storage Not reported IP & country mandatory Traceability Backup server Not required India-located backup server Data security Automation Limited High Faster processing Cross-matching Manual System-based Early detection of mismatch TABLE 5: User-Friendliness Improvements Parameter Earlier Form New Modified Form User Advantage Form structure Linear & bulky Modular (Parts A-K) Easy navigation Language Technical narrative Simplified confirmations Better understanding Irrelevant clauses Mandatory Trigger-based Less compliance burden Data entry Repetitive Auto-linked schedules Time saving TABLE 6: Alignm....
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....ent with Risk-Based Assessment Aspect Earlier System New System Result Department resources Spread thin Targeted Efficient administration Litigation High Likely reduction in litigation Improved certainty & trust TABLE 7: Stakeholder-Wise Impact Summary Stakeholder Impact Taxpayers Simplified compliance, fewer notices Auditors Structured responsibility, reduced ambiguity Tax administration Better data analytics, targeted scrutiny Economy Higher voluntary compliance Judiciary Reduced interpretational disputes TABLE 8: One-Line Presentation Summary (Ready to Use) Theme Key Message User benefit Less narrative, more certainty Anti-evasion Traceable da....
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....ta, targeted scrutiny User-friendliness Compliance only when relevant System reform Risk-based, technology-driven taxation =============<BR> News - Press release - PIB....