Assurance Gazette – Feb 2026 Edition

Welcome to the Assurance Gazette for February 2026 Edition. This edition presents a concise analysis of the transition from Form 3CD to Draft Form No. 26 under the Income-tax Act, 2025. This shift represents a significant structural and technological transformation in the tax audit framework, moving from a clause-based reporting model to a comprehensive, schedule-driven, and digitally aligned system. In this publication, we have briefly highlighted the key structural changes, section re-mapping, new reporting requirements, and practical implications for professionals.

This edition also features an article examining the accounting treatment of commission paid on Performance Bank Guarantees (PBGs) under the Ind AS framework. It analyses whether such commission, though mandatory and commercially significant, qualifies as a “directly attributable” cost under Ind AS 16 or must be expensed as incurred.

Through analysis of the Expert Advisory Committee’s opinion, the discussion clarifies the distinction between regulatory compliance costs and construction costs, providing practical guidance for capitalization decisions in regulated infrastructure projects.

Transition from Form 3CD to Draft Form No. 26

(Income-tax Act, 1961 → Income-tax Act, 2025)

Introduction

The Income-tax Act, 2025 introduces a complete overhaul of the tax audit reporting framework by replacing Form 3CD (Section 44AB) with Draft Form No. 26 (Section 63). This change represents a structural, technological, and compliance-driven transformation rather than a simple format revision.

1. Structural Overhaul

Forms 3CA / 3CB / 3CD → Draft Form No. 26

Under the Income-tax Act, 1961, tax audit reporting was carried out through three separate forms:

• Form 3CA – Audit report (where statutory audit existed)
• Form 3CB – Audit report (where no statutory audit existed)
• Form 3CD – Statement of particulars (44 clauses)

This resulted in a multi-form, clause-based reporting framework with a relatively flat structure.

Under the Income-tax Act, 2025, Draft Form No. 26 consolidates Forms 3CA, 3CB, and 3CD into a single integrated reporting framework, structured into Parts A–D along with detailed schedules.