New Income Tax Regulations: Strengthening Transparency and Responsibility

The draft income tax forms unveil new requisites for tenant-landlord disclosures, heightened auditor duties, and stricter tax credit assessments on foreign income. The new regulations emphasize transparency and accountability, aiming to curb fraudulent claims and enhance governance in accounting and tax reporting.

The government has introduced draft income tax forms mandating tenant-landlord relationship disclosures for claiming tax deductions, along with increased auditor responsibilities regarding foreign income tax credits. These measures are part of the new Income Tax Act, 2025, replacing the old law and taking effect in April 2026.

The draft requires Company Auditors to check and prevent PAN duplication, an initiative aimed at curbing identity manipulation. Enhanced auditor responsibilities include verifying foreign tax credit claims, examining documentation, and interpreting international tax treaties to ensure valid claims.

With introduction of Form 124, tax experts say the move promotes transparency by potentially reducing fictitious rental claims. Companies must now align audit observations with tax computations, ensuring that any statutory audit remarks are comprehensively addressed, impacting tax reporting standards significantly.

(With inputs from agencies.)