India backs global ambitions of domestic accounting companies

Core Viewpoint - The Government of India aims to enhance the global competitiveness of domestic accounting and advisory firms through policy changes in the Union Budget 2025–26 [1][2]. Group 1: Policy Changes - The Finance Minister announced a revision of the definition of an accountant under safe harbour provisions in the income tax regime to support the global ambitions of home-grown firms [2]. - The safe harbour rules allow taxpayers to choose specified margins and parameters that, if followed, are accepted by tax authorities without detailed verification, thereby reducing disputes and documentation [2]. Group 2: Compliance Simplification - The adjustment to the definition of accountant is part of a broader initiative to simplify compliance and facilitate business operations in India [3]. - The distinct accounting requirements based on Income Computation and Disclosure Standards (ICDS) will be discontinued starting from the assessment year for the tax year 2027–28 [3]. Group 3: Integration of Standards - Currently, ICDS operates separately for tax computation, requiring reconciliations with financial statements prepared under Indian Accounting Standards (IndAS) [4]. - A joint committee will be established to integrate ICDS provisions into IndAS, aligning tax computation rules with existing financial reporting standards [5].