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Tenant–Landlord Relationship Disclosure to Curb Fake HRA Claims
Auditors Face Greater Responsibility for Foreign Income and Tax Credit Claims
The draft rules also impose stricter compliance requirements on auditors and companies, particularly concerning foreign income and Foreign Tax Credit (FTC) claims.
Under the proposed Form 44, accountants must independently verify foreign tax withholding certificates, payment evidence, exchange rate conversions, and compliance with tax treaty provisions, including beneficial ownership and residency conditions.
Experts noted that the enhanced scrutiny could pose compliance challenges, especially when foreign tax statements are consolidated, provisional, or issued across different financial years.
The new Tax Audit Form 26 further requires auditors to disclose whether any adverse observations, qualifications, or disclaimers in statutory audit reports impact taxable income or book profits.
This means companies will now have to examine whether issues such as incorrect revenue recognition, doubtful receivables, inventory discrepancies, or inadequate provisioning have resulted in under-reporting of taxable income.
Stricter PAN Rules and Mandatory Disclosure of Accounting Software Details
To prevent duplicate PAN registrations and identity manipulation, companies applying for a Permanent Account Number (PAN) must now declare that they do not already possess one. Entities will also be required to conduct internal due diligence to ensure that no duplicate PANs exist for branches, subsidiaries, or predecessor entities.
The draft forms also mandate disclosure of accounting infrastructure, including the software used, cloud storage details, IP address, country of storage, and the location of backup servers in India.
Experts said these measures aim to enhance data integrity, improve audit transparency, and strengthen regulatory oversight.Overall, the proposed changes reflect a broader government effort to modernise tax compliance, reduce the misuse of deductions, and improve accountability among taxpayers, auditors, and corporations under the new income tax regime.
