On 10th March 2026, the Ministry of Corporate Affairs issued a new notification numbered G.S.R. 169(E). Some new changes have been made in the Companies (Accounting Standards) Rules, 2021, through this notification. The biggest change has been made in AS 22 related to income tax accounting.
This change is related to the OECD’s Pillar Two tax rules. These new rules aim to ensure that large multinational groups pay a minimum level of tax across jurisdictions. Companies affected by this amendment must review their accounting policies, tax disclosures, and MCA compliance framework to ensure timely reporting.
This new rule is very important for finance teams, auditors, tax consultants, and multinational companies. Now companies will have to do tax reporting and disclosure more carefully.
Understanding the Ministry of Corporate Affairs Notification (10th March 2026)
MCA issued the Companies Amendment Rules, 2026, on 10th March 2026. This amendment has been brought under Section 133 and Section 469 of the Companies Act, 2013. MCA has also discussed the matter with the National Financial Reporting Authority (NFRA).
This notification has come into effect from the date of its publication. Its main objective is to align Indian accounting standards with international tax reforms. It also creates alignment with OECD Pillar Two tax rules.
Important points:
- A new provision has been added to AS 22
- New disclosure rules for Pillar Two income taxes have come into effect
- Exemption from deferred tax recognition in some cases
- Large multinational companies will be the most affected
- Companies will now have to disclose new tax exposure
So, the Government of India is already preparing companies for the global minimum tax system. This will make accounting and compliance reporting more transparent.
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Understanding OECD Pillar Two Rules
The OECD Pillar Two rules are international tax rules. They are designed for large multinational companies. This rule reduces tax avoidance. Many times, companies try to save tax by showing profits in low-tax countries. Since pillar two rules directly affect tax exposure and reporting, companies should strengthen their income tax compliance process.
According to this framework, a minimum 15% tax rate may have to be maintained. If a company pays very little tax, it may have to pay extra tax.
Many countries are now adding this rule to their tax system. India has amended AS 22 to address accounting and disclosure treatment for pillar two income taxes where applicable. In this, Indian companies will be able to adapt to the future international tax system easily.
The concept of Qualified Domestic Minimum Top-Up Tax (QDMTT) is also important here. Countries can collect additional minimum taxes in their own country through this.
Simple example:
- If a company does business in a country where the tax rate is very low, then additional tax liability may arise
- Many countries are now updating their accounting and tax systems
- Global companies are required to maintain country-wise tax data
India has updated AS 22 so that Indian companies can keep pace with global accounting practices. This will make future tax reporting and international compliance easier.
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Major Changes Introduced in AS 22
Here are the major changes introduced in AS 22-
Inclusion of Pillar Two Taxes
A new paragraph 2A has been added to AS 22 through MCA notification. So, AS 22 will now be applicable to income taxes falling under OECD Pillar Two legislation.
Here, “Pillar Two legislation” refers to those tax laws that have been made following the OECD global minimum tax rules. And “Pillar Two Income Taxes” refers to taxes levied under that law.
Through this, companies will have to follow accounting treatment as per international tax reforms.
Deferred Tax Exception
The most important part of this amendment is the deferred tax exception. According to the new rules, companies will not have to recognize deferred tax assets or liabilities for Pillar Two income taxes.
So, deferred tax means the calculation of the tax amount payable or adjustable in the future. But in the case of Pillar Two taxes, this calculation can become very complex. So, the MCA has given some relief in this regard.
As a result:
- The accounting process will be simplified
- The compliance burden will be reduced to some extent
- Companies will be able to avoid unnecessary calculations
Mandatory Disclosure Requirement
Although deferred tax recognition has been exempted, companies will still have to provide some important disclosures.
Companies will have to disclose:
- Whether they have used the deferred tax exception
- Current tax expense or income of Pillar Two taxes
- Potential future tax exposure
- What assumptions have been used
These disclosure rules make financial statements more transparent so that investors and regulators can easily understand the tax position of the company.
New Disclosure Requirements Under AS 22
New paragraphs 32A to 32D have been added to AS 22 through MCA notification. As per these new rules, companies will now have to show some additional disclosures related to Pillar Two income taxes in the financial statements. This makes tax reporting more transparent.
This disclosure can be of two types- qualitative and quantitative disclosure.
The information that companies may have to disclose:
- In which country or jurisdiction may Pillar Two tax exposure arise
- How much additional tax liability may be possible
- How much may the effective tax rate change
- What proportion of the company’s profit may be subject to Pillar Two tax
If exact figures are not available, then companies can give an indicative range or estimated amount. Again, if the information is not yet available, then the company should state that the assessment process is still ongoing.
Benefits of these disclosure rules:
- Investors will be able to understand the tax risk of the company more easily
- Financial reporting will be more reliable
- Transparency will increase
- Alignment with global reporting standards will be created
Exemption for Small and Medium-Sized Companies
MCA has provided some compliance relief for small and medium-sized companies. Some disclosure requirements of paragraphs 32C and 32D of AS 22 may not be mandatory for SMCs. This is part of the balanced compliance approach of MCA. Because not all companies will be equally affected by Pillar Two tax rules.
Benefits for SMCs:
- Complex disclosure requirements will be reduced
- Compliance costs will be lower
- No additional reporting burden on small businesses
- The financial reporting process will be simplified
So, most small businesses do not fall directly under the global minimum tax framework. MCA has kept the simplified treatment for them so that unnecessary compliance does not create pressure.
Effective Date and Applicability
The Companies (Accounting Standards) Amendment Rules, 2026, came into effect from 10th March 2026. These rules have started to be applied from the date of publication in the Official Gazette.
However, not all provisions have been made mandatory at the same time. The MCA has followed a phased implementation approach.
Important points of applicability:
- Paragraphs 2A and 32A will apply immediately and on a retrospective basis
- Paragraphs 32B to 32D will apply for annual reporting periods beginning on or after 1st April 2025
- This disclosure is not mandatory in interim financial reports till 31st March 2026
This approach gives companies time to update the new reporting system and accounting process.
Benefits for companies:
- Reduce sudden compliance pressure
- Provides time to update internal systems
- Finance teams will be able to adopt the new framework gradually
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Impact of the MCA Notification on Indian Companies
Impact on Large Companies
The MCA notification will have the biggest impact on multinational companies (MNCs) and listed companies. Companies with international operations will now have to maintain more detailed tax reporting.
Changes for large companies:
- Stronger tax reporting systems will have to be created
- Pillar Two exposure will have to be tracked
- Additional compliance documentation will have to be maintained
- Global tax data will need to be collected
Many companies may also have to update their accounting software and reporting structure.
Impact on Finance and Tax Teams
More coordination will now be required between finance, accounting, legal, and tax departments. Because Pillar Two compliance is not just an accounting issue but also a tax and regulatory matter. Businesses may require professional accounting and bookkeeping services to update accounting policies, prepare disclosure notes, and maintain tax-related records.
Key Things Teams Need to Do:
- Create New Reporting Process
- Monitor Tax Exposure
- Prepare Disclosure Notes
- Increase Internal Compliance Reviews
Impact on Audits and Compliance
Auditors and regulators will now review tax reporting more closely for the new disclosure rules. Proper documentation will be important during NFRA inspections.
Companies Will Need:
- Updated Accounting Policies
- Proper Disclosure Notes
- Accurate Tax Calculations
- Better Audit Preparedness
Companies with strong compliance systems will face lower future regulatory risks.
Challenges Companies May Face
After the new MCA notification comes into effect, many companies may face some practical challenges. This compliance can be a bit complex for companies that run international business or cross-border operations.
Problems that companies may face:
- Difficulty understanding international tax laws
- Estimating Pillar Two tax exposure can be difficult
- Collecting tax-related data from different countries can take time
- Existing ERP and accounting systems may need to be updated
- Training the finance team on the new rules
- There may be additional costs for compliance implementation
This entire framework is new to many companies. So, professional support is often needed. This helps companies manage compliance smoothly.
How does Corpbiz help Businesses?
Understanding and applying this new MCA notification correctly can be challenging for many businesses. Corpbiz can provide practical compliance support to companies. Our expert team helps them understand new accounting and regulatory requirements.
Our services:
- Accounting compliance advisory
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- Certification and licensing assistance
- Virtual CFO services
Corpbiz offers customized support for startups, SMEs, and large enterprises.
Special benefits with Corpbiz:
- Simplifies complex compliance processes
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Regulatory rules are changing very rapidly these days. So, professional compliance support is essential. At Corpbiz, we help businesses stay compliant with evolving MCA and global regulatory requirements.
Conclusion
This new notification of MCA is an important update for Indian companies. India is aligning its accounting standards with global tax reporting developments.
These changes are mainly important for large companies. They will now have to do tax reporting and disclosures more carefully. Some relief has been kept for small companies, so they will not be under much pressure.
All companies need to understand the new rules well and start preparing now. The compliance process may be complex for many companies. So, it is better to get expert help.
Corpbiz helps companies manage accounting, legal, and regulatory compliance easily. With proper guidance, following the new MCA rules becomes much easier. So, contact us today for better compliance.
Answers to Common Questions About MCA Accounting Standards Amendment Rules
What is MCA Notification G.S.R. 169(E)?
MCA Notification G.S.R. 169(E) is a new amendment notification of the Ministry of Corporate Affairs. It was issued on March 10, 2026. Some changes have been made in the Companies (Accounting Standards) Rules, 2021, through this notification. It has been mainly updated in AS 22. This change is related to Pillar Two tax rules. India is aligning its accounting system with global tax reporting rules. Companies will have to make tax disclosure clearer.
What is OECD Pillar Two legislation?
OECD Pillar Two legislation is a global minimum tax framework. It is designed for large multinational companies. It ensures that companies do not pay less tax by shifting profits to low-tax countries. According to this framework, a minimum 15% effective tax rate may have to be maintained. If a company pays less tax, then additional tax liability may arise. Many countries now include these rules in their tax system.
What changes were made to AS 22?
Some new provisions have been added to AS 22. Paragraph 2A has been inserted. It defines the scope of Pillar Two income taxes. In addition, paragraphs 32A to 32D have been introduced. Companies will now have to disclose Pillar Two tax exposure-related information. However, some exemptions have been given in the deferred tax recognition. These changes will make financial reporting more transparent.
Are companies required to recognize deferred tax for Pillar Two taxes?
No, as per the MCA amendment, companies do not have to recognize deferred tax assets or liabilities for Pillar Two income taxes. This exemption has been given through paragraph 2A. This could have increased the accounting burden for the complex tax calculation. So, the MCA has given some relief to companies.
Which companies are mainly affected by the amendment?
This amendment will mainly impact large multinational companies and listed companies. Companies that have operations in multiple countries will have to assess their Pillar Two tax exposure. These rules are also important for companies with foreign subsidiaries. Small local businesses are not directly impacted. However, if they are part of large business groups, they may also have to follow some reporting requirements.
Are SMCs exempt from these disclosure requirements?
Yes, some simplified treatment has been provided for SMCs. Some disclosure requirements of paragraphs 32C and 32D may not apply to small and medium-sized companies. The MCA has given this exemption to balance the compliance burden. Because small businesses generally do not fall within the direct scope of the Pillar Two framework. This will reduce their unnecessary reporting pressure and simplify the accounting process.
When do the new MCA rules become effective?
These rules have come into effect from 10 March 2026. It has been effective from the date of publication in the Official Gazette. However, not all the provisions at the same time. Paragraphs 2A and 32A will apply immediately. And Paragraphs 32B to 32D will apply for annual reporting periods that start on or after 1 April 2025. Interim disclosure is not mandatory till 31 March 2026. This gives companies some time to update their reporting systems.
What disclosures are required under paragraphs 32A–32D?
Companies will have to provide qualitative and quantitative disclosures as per paragraphs 32A–32D. This may include the jurisdiction in which the tax exposure is estimated, additional tax liability, effective tax rate changes, and estimated profit portion subject to Pillar Two taxes. If exact data is not available, an indicative range can be given. And if the assessment is not complete, the company will have to disclose that the assessment is in progress.
Why is this amendment important for Indian companies?
This amendment is important for Indian companies because it aligns India with global accounting and tax reporting standards. It will increase financial transparency. Investors will be able to understand the company's tax position better. It will also make future international compliance easier. It also creates an opportunity for early preparation for large companies.
How can Corpbiz help companies comply with the MCA notification?
Corpbiz helps companies understand and apply these new MCA compliance requirements. We provide accounting compliance advisory, company law support, regulatory filing assistance, audit readiness support, and legal guidance. Our team also provides FEMA compliance, business registration, and certification services. Corpbiz provides customized support for startups, SMEs, and large enterprises. This helps companies manage compliance easily and reduces the risk of errors.
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