Companies (Accounting Standards) Amendment Rules, 2026

📢 MCA Update: Accounting Standards Get a New Twist
On March 10, 2026, the Ministry of Corporate Affairs (MCA) announced changes to the Companies (Accounting Standards) Rules, 2021. These updates are all about aligning Indian rules with the OECD’s Pillar Two model for international tax reform. Filing with MCA isn’t just paperwork—it’s proof that a company is playing by the rules. For investors, employees, and even customers, it builds confidence that the business is trustworthy.
Let’s break it down.

 🧾 What Changed?
The amendment focuses on Accounting Standard (AS) 22 – Taxes on Income. Here’s what’s new:

 • Pillar Two Taxes Introduced Companies now need to consider taxes arising from OECD’s Pillar Two rules. These include minimum top-up taxes designed to ensure large multinational companies pay a fair share globally.
 
 • Deferred Tax Exception Enterprises don’t have to recognize or disclose deferred tax assets/liabilities related to Pillar Two income taxes. This is a big relief for companies worried about complex reporting.

 • New Disclosure Requirements Companies must:
  o State clearly if they are applying the Pillar Two exception.
  o Show their current tax expense linked to Pillar Two.
  o Provide qualitative info (how Pillar Two affects them, which countries are involved).
  o Provide quantitative info (like what portion of profits might be taxed and the effective tax rate impact).

 👉 Small and Medium-sized Companies (SMCs) get a break—they don’t need to follow the detailed disclosure rules.

📅 Effective Dates
   • Immediate: Some rules (like the deferred tax exception) apply right away.
   • From April 1, 2025: Companies must start giving detailed disclosures in annual reports.
   • Until March 31, 2026: Interim reports don’t need to include Pillar Two disclosures.

✨ Why It Matters
This amendment is India’s way of keeping pace with global tax reforms. For businesses, it means:
 • More transparency in reporting.  Aligns Indian accounting with global tax reforms.
 • Clearer alignment with international standards.
• Less confusion around deferred tax treatment.

💡 Takeaway: If you’re preparing financial statements, be ready to include Pillar Two-related disclosures from FY 2025–26 onwards. For smaller companies, compliance remains simpler.