TAX UPADESH

14 February, 2026

Appointment of Auditor — Casual Vacancy Due to Death

When a passes away during their term, the vacancy is treated as a under . ✅ The is empowered to appoint a new auditor within 30 days ✅ No shareholder approval or is required ✅ The appointed auditor holds office until the next ✅ must be filed with after appointment This provision ensures continuity in statutory audit and protects compliance timelines. If your company faces such a situation, timely Board action and proper documentation are critical for . Need guidance on , filings, or audit compliance? We’re here to help.

13 February, 2026

📌 PF & ESI Compliance — New Company with No Employees

A newly incorporated private limited company often receives PF and ESI registration along with incorporation. A common question is — are returns mandatory even when there are no employees?

Here’s the compliance clarity:

✅ PF (EPF)
If there are no employees or no PF-eligible wages, monthly contribution filing is not required. However, the employer should regularly log in and maintain correct establishment status to avoid compliance alerts.

✅ ESI
Once registered, Nil contribution filing is expected even if there are zero employees. This keeps the portal compliance status clean.

⚖ Threshold Rule
PF normally applies at 20+ employees and ESI at 10+ employees. But once registration is active, compliance continues until formally closed — even if employee count drops.

👉 Best practice: Maintain payroll records, portal hygiene, and file Nil ESI returns where applicable to avoid notices.

Need help managing statutory compliance? Professional guidance ensures smooth operations from day one.
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📢 CBDT Draft Update — Consolidated Tax Audit Form

CBDT has released Draft Form No. 26 under the proposed Income-tax Rules, 2026 — introducing a single consolidated tax audit report that replaces existing Forms 3CA / 3CB / 3CD.

✅ One unified audit + statement of particulars
✅ Expanded disclosures — GST, TDS & specified transactions
✅ UDIN & CA signature compliance

Action point: Businesses and CAs should review audit templates and prepare for enhanced reporting requirements.

Need a practical checklist to align your audit process? Message us — happy to help.

12 February, 2026

Foreign Tax Credit (FTC) — Draft IT Rules 2026 Introduce CA Verification

The Draft Income-tax Rules, 2026 propose an important compliance update for taxpayers claiming Foreign Tax Credit (FTC) — aimed at improving accuracy and documentation standards.

📌 What is Foreign Tax Credit (FTC)?

FTC allows Indian residents earning income abroad to avoid double taxation by claiming credit in India for taxes paid in a foreign country.

⚖ What’s the Proposed Change? — Draft Rule 76

Taxpayers claiming FTC through Form 44 must now obtain verification from a Chartered Accountant.

This verification becomes mandatory when:

✔ The assessee is a company, OR

✔ Foreign tax paid is ₹1 lakh or more

🧾 What the CA Certification Must Confirm

• Income details and supporting records

• FTC eligibility as per DTAA & Income-tax Act provisions

• Proof of foreign tax payment

🎯 Why This Matters

✅ Improves credibility of FTC claims

✅ Reduces disputes and documentation gaps

✅ Encourages structured compliance

✅ Aligns FTC claims with treaty provisions

📢 Practical Impact

Businesses and high-value FTC claimants should plan early for documentation and CA verification to avoid delays in tax filings.

💡 Bottom Line

FTC continues to protect taxpayers from double taxation — but Draft Rule 76 introduces a stronger verification framework for transparency and compliance.

🏢 PERQUISITES – WHAT’S CHANGED IN THE TAX LAW (Act 1961 → Act 2025 & Rules 2026)

🏢 PERQUISITES – WHAT’S CHANGED IN THE TAX LAW (Act 1961 → Act 2025 & Rules 2026)

What are Perquisites?

Perquisites are non-cash benefits provided by the employer to the employee and are generally taxable under Section 17(2) of the Income-tax Act. These include employer-provided cars, meals, gifts, loans, education benefits and similar amenities.

📜 STATUTORY SHIFT — Income-tax Act 1961 → Income-tax Act, 2025

✔ The Income-tax Act, 2025 replaces the old Income-tax Act, 1961 effective 1 Apr 2026 with an updated framework.
✔ Section 17(2) in Act, 1961 continues to govern perquisites and remains a concept in Section 17 of the new Act.
✔ The new Act retains perquisites as taxable income but modernises definitions and simplifies structure of provisions compared to the 1961 law.

📊 KEY RULE CHANGES — Perquisite Valuation (Rules 1962 → Draft Rules 2026)

The Income-tax Rules 2026 introduce updated perquisite valuation limits, addressing long-pending outdated thresholds in old Rules (1962):

Perquisite Type	Under Old Rules (1962)	Draft Rules 2026
Meal benefits	₹50 per meal exempt	₹200 per meal exempt (→ up to ₹1,05,600/yr if 2 meals × 22 days × 12 mo)
Gifts (non-cash)	₹5,000 p.a.	₹15,000 p.a.
Child education allowance	₹100 /mo per child	₹3,000 /mo per child
Hostel allowance	₹300 /mo per child	₹9,000 /mo per child
Employer-provided car (basic val.)	₹1,800 /mo (≤1.6 L)	₹5,000 /mo (≤1.6 L) + ₹3,000 driver
Medical treatment loans (perq)	Rs 20k limit	Rs 2,00,000 counterpart limit exempt {{with conditions}}

➡ Earlier perquisite ceilings had not been updated for decades; the new proposal aligns benefits with inflation and current cost realities.

📌 ACT VS RULE INTERPLAY
🔹 The Act (2025) continues to define what counts as a perquisite and retains the key taxation rule under Section 17.
🔹 The Rules (2026 draft) shape how perquisites are valued and set monetary exemption limits — these are administrative details tied to the Act.

🎯 IMPACT ON SALARIED TAXPAYERS

✔ Higher exempt thresholds: More perquisite benefits will be tax-free or have a higher exemption limit.
✔ Modernised car perq valuation: Car benefit values updated to reflect actual costs, though overall taxable value for some vehicles may rise relative to old rules.
✔ Meal & education perks more meaningful: Substantial uplift in meal, education and hostel exemptions makes salary structuring more tax-efficient.

📌 KEY TAKEAWAYS

• Income-tax Act, 2025 modernises perquisite provisions without materially altering the concept — perquisites remain taxable income.
• Income-tax Rules 2026 significantly update monetary valuation and exemptions for perks — making several common non-cash benefits more tax-friendly.

🏠 HRA EXEMPTION – WHAT CHANGED FROM 2026 & HOW IT BENEFITS SALARIED TAXPAYERS

What is HRA?

House Rent Allowance (HRA) is a salary component paid by employers to employees who live in rented accommodation. It helps reduce taxable income under the old tax regime.

✅ Legal Provision
HRA exemption is governed by Section 10(13A) of the Income-tax Act read with Rule 2A.

📊 How HRA Exemption is Calculated
The exempt amount is the least of:

• Actual HRA received
• Rent paid minus 10% of salary
• Prescribed % of salary
– 50% for metro cities
– 40% for non-metro cities

(Salary = Basic + DA forming part of retirement benefits)

🔄 Key Change under Income-tax Rules 2026
Additional major cities are now treated on par with metros for HRA purposes.

➡ Earlier: Only Delhi, Mumbai, Chennai, Kolkata qualified for 50% limit
➡ Now added: Bengaluru, Hyderabad, Pune, Ahmedabad

This increases the eligible exemption ceiling for salaried employees residing in these cities.

⚖ Old vs New Tax Regime
✔ Old regime → HRA exemption available
✖ New regime → HRA exemption not available

Employees must opt for the regime that gives better net tax efficiency.

💡 How This Helps Taxpayers
• Higher exemption for urban renters
• Reduced taxable salary
• Better take-home pay under the old regime
• Reflects rising urban housing costs

📌 Bottom Line
If you live in the newly classified cities and claim HRA under the old regime, your exemption potential increases — translating into tangible tax savings.

For salary structuring or tax planning, evaluate regime choice carefully.