The Central Board of Direct Taxes (CBDT) has released Draft Form No. 26, prescribing a new audit report and statement of particulars to be furnished under Section 63 of the Income-tax Act, 2025. The draft form is a key compliance document for assessees whose accounts are subject to audit, marking a shift towards structured reporting, standardisation and enhanced disclosures under the new tax regime.
Who is Required to Furnish Draft Form 26?
Draft Form 26 applies to two broad categories of assessees:
- Persons carrying on business or profession who are required to get their accounts audited under any other law, and
- Persons carrying on business or profession not covered by statutory audit under other laws but falling within the audit thresholds prescribed under the Income-tax Act.
Depending on the category, assessees are required to furnish Part A and Part B, along with Part C or Part D, as applicable.
Key Structure of Draft Form 26
The draft form is divided into clearly demarcated parts, making compliance more systematic:
- Part A: Particulars of the Assessee - Captures basic details such as name, address, PAN, status, residential status, contact details and tax year.
- Part B: General Information - Requires disclosure of the specific clause of section 63 under which the audit is conducted, the nature of business or profession, and whether presumptive taxation provisions have been opted for.
- Part C / Part D: Audit-Specific Disclosures - These parts differ based on whether the assessee is already subject to audit under another law, ensuring tailored reporting rather than a one-size-fits-all approach.
Enhanced Focus on Transparency and Traceability
One of the notable features of Draft Form 26 is its emphasis on clarity in audit applicability, partner/member details in case of firms or associations, and changes in profit-sharing ratios or business activities during the tax year. This aligns with the broader objective of the Income-tax Act, 2025 to reduce ambiguity and improve risk-based assessment and verification.
What This Means for Taxpayers and Auditors
- Auditors will need to familiarise themselves with the revised format and ensure accurate mapping of disclosures to section 63.
- Taxpayers must prepare for more granular data reporting, especially where multiple business activities or presumptive taxation options are involved.
- Firms and LLPs will need to pay special attention to partner-level disclosures and changes during the year.
Way Forward
As Draft Form 26 is currently released in draft form, stakeholders are expected to review the proposed format and provide feedback before final notification. Once finalised, the form will become a central compliance document for tax audits under the Income Tax Act, 2025, replacing legacy reporting formats used under the earlier law.
Official copy of the Form has been attached
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