The Government of India, in its Union Budget 2025–26, has announced a policy drive to position domestic accounting and advisory companies on the global stage.
Presenting the Budget, Finance Minister Nirmala Sitharaman said the government will revise who qualifies as an accountant under safe harbour provisions in the income tax regime, Firstpost reported.
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“To support PM Modi’s vision of home-grown accounting and advisory firms to become global leaders, I propose to rationalise the definition of accountant for the purposes of Safe Harbour Rules,” Sitharaman said.
Under safe harbour rules, taxpayers can opt for specified margins, parameters or price ranges that, if adhered to, are accepted by the tax authorities without granular verification.
This mechanism is intended to lower the risk of disputes, reduce documentation and bring predictability to tax outcomes.
The proposed adjustment to the definition of accountant within this framework is positioned as a compliance simplification measure and is tied to the broader agenda of making it easier to operate businesses in India.
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By GlobalDataSitharaman further announced that the distinct accounting requirement based on Income Computation and Disclosure Standards (ICDS) will be discontinued from the assessment year corresponding to the tax year 2027–28.
At present, ICDS operates as a separate layer for tax computation, often necessitating reconciliations with financial statements prepared under Indian Accounting Standards (IndAS).
To bridge this gap, the government plans to constitute a joint panel with representatives from the Ministry of Corporate Affairs and the Central Board of Direct Taxes.
This joint committee will be tasked with incorporating ICDS-related provisions into IndAS itself, effectively integrating tax computation rules into the existing financial reporting standards.
