The tax audit report for tax year 2026-27 will be signed in September 2027. Most of it will be written then, from books that are closed by then. But a few of its answers can't be written then at all, because they depend on things that either happened during the year or didn't.
Did the client's books get backed up every day, on a server in India? When exactly was that machine put to use? Did every deduction make it into the TDS statement? Nobody can go back to last November and make those true. They have to be true in November.
This is a short guide to the parts of Form No. 26 that are being decided now, while tax year 2026-27 is still running.
Rule 46(8), in one sentence
The Income-tax Rules, 2026 came into force on 1 April 2026. Rule 46(8) says that books of account and other documents kept in electronic mode "shall remain accessible in India at all times", and that their backup "shall be kept on a daily basis in servers physically located in India".
Companies have lived with a version of this since August 2022, under rule 3(5) of the Companies (Accounts) Rules, 2014. What is new is how far it reaches. Rule 46 is about the books kept under section 62 of the Income-tax Act, 2025, so a partnership, an LLP or a proprietor who has to keep books under that section, and keeps them on a computer, meets the same words. The sub-rule covers the books under rule 46(1) and the books that rule 46(4) and (6) prescribe for professionals, among them doctors, lawyers, engineers, architects and accountants.
Rule 46(9) adds that the books are to be kept for seven tax years from the end of the relevant tax year.
Where Form 26 asks about it
Clause 14 is the first place the new rule meets the auditor. It asks for:
- (a) the address at which the books are kept, and every address if there is more than one;
- (b) the accounting software used;
- (c) any cloud or other software used to store the books, with the location of that storage, meaning its IP address and country;
- (d) whether rule 46(8) has been complied with, Yes or No;
- (e) if yes, the address where the backup server in India is located.
Clause 14(d) is the one that matters. A Yes is a statement about every day of the year. If the backup began in August, a Yes in September 2027 isn't accurate, and a No has to be written in a report the client will read. The time to have this conversation is before the answer is fixed.
The machine and the 180 days
Form 3CD asked for the date each asset was put to use. Form 26 doesn't. Its depreciation schedule under clause 36 asks instead for additions split in two: those used for 180 days or more in the tax year, which take depreciation at the full rate, and those used for less than 180 days, which take it at half.
The column has gone, but the question behind it hasn't. Whether an asset falls on one side of 180 days or the other still depends on the day it was put to use. An asset register that records that date as each asset arrives answers clause 36 in minutes. One that doesn't turns the audit into a search through installation reports and delivery challans.
The TDS line that moves with every correction
Clause 50(b) asks, for each TDS or TCS statement the assessee has to file for the year:
- the due date and the date it was filed;
- the total number of transactions reported;
- the number of transactions not reported, and the amount involved.
A note under the table says those counts are the latest after filing of correction statement. In practice, that means the figure the auditor reports is whatever the statements say at the time, after any corrections. A deduction missed in the July statement and corrected in December is no longer a gap by September. The same deduction left uncorrected is one.
That makes the quarterly statements part of the audit trail. They're due on 31 July, 31 October, 31 January and 31 May, and a correction can now be filed only within two years. Clause 49 separately asks for every TAN the assessee holds, which is where branch TANs tend to get missed.
Part A or Part B
Rule 47(1) decides which audit report is used. An assessee whose accounts are audited under another law, a company for instance, reports in Part A of Form No. 26. Everyone else reports in Part B. The particulars in Parts C and D are the same for both.
Check a client now
Is this client’s Form 26 being built this year?
Tick what is already true today, for tax year 2026-27.
Start with these, while the year is still running
Clause 14(a) to (c). Write down where the books live now. Clause 14(c) asks for the country and IP address of any cloud storage, and that is easier to record today than to reconstruct next September.
Clause 14(d) and (e), rule 46(8). Rule 46(8) asks for a daily backup on servers physically located in India, and clause 14(d) asks the auditor whether it was complied with. A backup that starts in August cannot cover April.
Clause 36, depreciation schedule. Form 26 drops the date column, but the schedule still splits additions between those used for 180 days or more and those used for less. The split is only as good as the date behind it.
Clause 50(b). Clause 50(b) reports, for each statement, the number and amount of transactions not reported, as they stand after the latest correction. A correction filed before the audit changes that line; one filed after it does not.
Clause 49. Clause 49 asks for all of them. Branch TANs are the ones that go missing.
Rule 47(1). Part A is for an assessee whose accounts are audited under another law, such as a company; Part B for everyone else.
Form No. 26, clauses 14, 36, 49 and 50, and rules 46(8) and 47(1) of the Income-tax Rules, 2026 (G.S.R. 198(E), 20 March 2026). Your ticks stay on this page.
The timing, in full
- Form No. 26 applies to tax years beginning on or after 1 April 2026. Reports being signed this month, for assessment year 2026-27, are still Form 3CD.
- The first Form 26 reports are for tax year 2026-27. Where the return is due on 31 October 2027, the report is due one month earlier, on 30 September 2027.
- Everything clauses 14, 36 and 50 ask about is being created between 1 April 2026 and 31 March 2027, and nearly half of that year has already gone.
Where this comes from
Rules 46 and 47 and Form No. 26 are quoted from the Income-tax Rules, 2026 as published in the Gazette of India, G.S.R. 198(E), 20 March 2026: rule 46(1), (8) and (9), rule 47(1), clauses 14, 36, 49 and 50 of the form, and the depreciation and TDS/TCS schedules. The comparison for companies is rule 3(5) of the Companies (Accounts) Rules, 2014 as amended on 5 August 2022. The timing is from CBDT's FAQs on Form No. 26. For how every Form 3CD clause maps into Form 26, see the clause-by-clause mapping.
Questions this answers
What does rule 46(8) of the Income-tax Rules 2026 require?
Books of account kept in electronic mode must remain accessible in India at all times, and their backup must be kept on a daily basis in servers physically located in India.
Does rule 46(8) apply to partnership firms and professionals?
Rule 46 covers books kept under section 62, including those that rule 46(4) and (6) prescribe for professionals, so it is not limited to companies.
What does clause 14 of Form 26 ask?
The address where the books are kept, the accounting software, any cloud storage with its IP address and country, whether rule 46(8) has been complied with, and the address of the backup server in India.
Does Form 26 ask for the date an asset was put to use?
No. Its depreciation schedule splits additions into those used for 180 days or more and those used for less than 180 days in the tax year.
When is the first Form 26 tax audit report due?
For tax year 2026-27. Where the return is due on 31 October 2027, the report is due on 30 September 2027.
Look up any section
The Income-tax Act 2025 section finder lists every 1961 TDS and TCS section with its 2025 section and Table serial, the rate and threshold as enacted, and the page of the Act, with a TDS rate chart and a TCS rate chart.