Quick Summary
The Draft Income Tax Rules, 2026 have introduced detailed compliance conditions for stock exchanges seeking recognition under Section 2(92) of the Income-tax Act. Rule 4 lays down strict operational, reporting, and data retention standards, especially in relation to derivatives trading and audit tra
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FAQ :
The main purpose is to tighten compliance conditions for stock exchanges seeking recognition, aiming to enhance transparency, strengthen tax reporting, and prevent manipulation of trading data.
Key requirements include mandatory SEBI approval for derivatives trading, detailed client data recording (including PAN and UCC), a seven-year audit trail for all transactions, and restrictions on erasing or modifying recorded transactions without justification.
Stock exchanges must preserve a complete audit trail of all cash and derivatives market transactions for seven tax years on their system.
No, once a transaction is recorded, it cannot be erased. Modifications are only allowed for genuine errors, provided they are justified, logged, and traceable.
Stock exchanges must maintain detailed data of all modified transactions and submit a monthly statement in Form No. 1 to the Director General of Income-tax (Systems) within 15 days of the end of each month.
For traders, these rules reinforce the importance of accurate client documentation and compliant trading practices, as enhanced oversight and traceability are being implemented.
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