Accounting is the process of recording, classifying, summarising and interpreting the financial transactions of a business.
For an Indian business, accounting is more than maintaining a profit and loss account. A proper accounting system connects bookkeeping, invoices, bank transactions, GST, TDS/TCS, payroll, depreciation, income tax, financial statements and audit.
For companies, the Companies Act, 2013 requires books of account and relevant records to be maintained so that the financial statements give a true and fair view. The Act also requires company books to be maintained on an accrual basis and according to the double-entry system. Ministry of Corporate Affairs
The accounting process in 2026 also has an important tax-law transition. The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961 for the new regime. The new law uses the term Tax Year instead of the earlier previous-year/assessment-year structure for income covered by the new Act. Etds
This guide explains the practical accounting system an Indian business can use in 2026, from recording the first transaction to completing tax and compliance work.
What Is Accounting in India?
Accounting in India generally involves recording business transactions and presenting them in a form that helps owners, management, lenders, investors, tax authorities and auditors understand the financial position and performance of a business.
A simple accounting cycle looks like this:
Transaction → Source Document → Journal Entry → Ledger → Trial Balance → Adjustments → Financial Statements → Tax & Compliance
For example, suppose a business purchases office furniture for ₹50,000 through its bank account.
The transaction is first supported by an invoice or other source document. It is then recorded in the accounting system, posted to the relevant ledger accounts and ultimately reflected in the financial statements.
The main objectives of accounting are:
- To maintain accurate financial records.
- To determine profit or loss.
- To understand assets and liabilities.
- To track receivables and payables.
- To calculate taxes and statutory liabilities.
- To support business decisions.
- To provide information required by auditors and regulators.
For companies, Section 128 of the Companies Act, 2013 specifically addresses books of account and requires the records to provide a true and fair view, with accounting on an accrual basis and under double-entry accounting. Ministry of Corporate Affairs
What You Will Learn
- The entire accounting lifecycle — from recording to reporting
- GST accounting, returns, input tax credit (ITC), and reconciliation
- TDS / TCS rules updated for FY 2025-26
- Statutory, tax, and internal audit requirements
- Best cloud accounting software for Indian businesses
- How AI is automating reconciliation, compliance, and forecasting
- DPDP Act obligations for finance and accounting teams
- ESG accounting and BRSR reporting under SEBI
Accounting Basics, Principles and Standards
Before dealing with GST, TDS or income tax, a business should understand the basic accounting structure.
The Accounting Equation
The fundamental accounting equation is:
Assets = Liabilities + Equity
For example:
A business has:
- Cash: ₹2,00,000
- Machinery: ₹3,00,000
- Loan: ₹1,50,000
The remaining ₹3,50,000 represents the owner’s equity.
Every properly recorded double-entry transaction keeps the accounting equation balanced.
Double-Entry Accounting
Under double-entry accounting, every transaction affects at least two accounts.
For example, a business receives ₹1,00,000 from a customer against an outstanding invoice:
Bank A/c Dr. ₹1,00,000
To Trade Receivables A/c ₹1,00,000
One account increases while another decreases.
This system helps businesses identify errors and prepare reliable financial statements.
Accrual Accounting
Accrual accounting records income and expenses when they are earned or incurred rather than simply when cash changes hands.
For example, if electricity for March is ₹10,000 but the bill is paid in April, the expense may need to be recognised in March based on the applicable accounting framework and circumstances.
This distinction is important when preparing financial statements.
Indian Accounting Standards and Ind AS
Indian entities may follow different accounting frameworks depending on their legal form and applicability.
Companies that fall under the applicable requirements may follow Indian Accounting Standards (Ind AS), while other entities may follow the applicable Accounting Standards (AS) framework.
ICAI maintains current compendiums and accounting-standard resources, while the notified standards are part of India’s financial-reporting framework. ICAI
For 2026, accountants should avoid using an old accounting-standard summary without checking whether amendments have been notified or become applicable to the relevant entity.
Bookkeeping vs Accounting
Bookkeeping and accounting are related, but they are not the same.
What is bookkeeping?
Bookkeeping is the systematic recording of day-to-day financial transactions.
Examples include:
- Sales invoices
- Purchase invoices
- Bank receipts
- Bank payments
- Expenses
- Customer receipts
- Supplier payments
- Salary transactions
- GST transactions
- TDS transactions
What is accounting?
Accounting goes beyond recording transactions.
It includes:
- Classification and analysis
- Ledger review
- Adjustments
- Depreciation
- Reconciliation
- Financial statements
- Tax calculations
- Financial analysis
- Compliance reporting
Bookkeeping vs Accounting
| Bookkeeping | Accounting |
|---|---|
| Records transactions | Interprets financial information |
| Day-to-day activity | Periodic and strategic activity |
| Maintains books and ledgers | Prepares and analyses financial statements |
| Records invoices and payments | Reviews profitability and financial position |
| Provides accounting data | Uses the data for tax, audit and decisions |
A strong accounting system starts with accurate bookkeeping. If the underlying transactions are wrong, the final financial statements and tax returns can also be wrong.
Types of Accounting Records
The exact records required depend on the business structure and applicable laws, but a practical accounting system generally contains the following.
Sales Register
The sales register records invoices issued to customers.
Important fields include:
- Invoice number
- Invoice date
- Customer name
- GSTIN, where applicable
- Taxable value
- GST
- Total invoice value
- Payment status
Purchase Register
The purchase register records purchases and expenses.
It should be regularly reconciled with supplier invoices and, where relevant, GST records.
Cash Book
The cash book tracks physical cash received and paid by the business.
Businesses should maintain strict controls because unexplained cash transactions can create accounting and tax problems.
Bank Book
The bank book records transactions through business bank accounts.
Monthly bank reconciliation is one of the most important bookkeeping controls.
General Ledger
The general ledger summarises transactions account by account.
Examples include:
- Sales
- Purchases
- Rent
- Salaries
- Bank
- Cash
- Trade receivables
- Trade payables
- GST input tax credit
- GST output liability
- TDS payable
- Fixed assets
Fixed Asset Register
A fixed asset register records assets such as:
- Computers
- Machinery
- Furniture
- Vehicles
- Equipment
- Office assets
It should contain information such as purchase date, cost, location, useful life or depreciation information, accumulated depreciation and disposal details.
GST Records
GST-registered businesses need proper records of taxable supplies, purchases, input tax credit, output tax and supporting documents.
CBIC’s GST accounting rules require registered persons to maintain appropriate records and supporting documents, including invoices, bills of supply, delivery challans, credit notes, debit notes and relevant vouchers. CBIC GST
Journal Entries
A journal entry is the basic building block of double-entry accounting.
Before making an entry, identify:
- Which accounts are affected?
- What type of accounts are they?
- Which account should be debited?
- Which account should be credited?
- What is the appropriate narration?
For a practical explanation of journal entries, you can internally link this section to your dedicated Journal Entry guide.
Example 1: Capital introduced
The owner introduces ₹1,00,000 into the business bank account.
Bank A/c Dr. ₹1,00,000
To Capital A/c ₹1,00,000
Example 2: Purchase of goods for cash
Goods purchased for ₹25,000 in cash:
Purchases A/c Dr. ₹25,000
To Cash A/c ₹25,000
GST and other tax components, where applicable, need to be accounted for separately according to the transaction.
Example 3: Sale on credit
Goods sold to a customer for ₹50,000:
Trade Receivables A/c Dr. ₹50,000
To Sales A/c ₹50,000
Example 4: Rent paid through bank
Monthly office rent of ₹30,000:
Rent Expense A/c Dr. ₹30,000
To Bank A/c ₹30,000
Where TDS applies, the entry needs to separately recognise the TDS payable.
Why journal entries matter
Good journal entries help ensure that:
- Transactions are classified correctly.
- Ledgers remain accurate.
- Trial balances can be prepared correctly.
- Financial statements are reliable.
- Tax calculations are based on better accounting data.
Your existing Journal Entry article can therefore act as a supporting cluster page, while this article remains the broader accounting hub.
GST Accounting
GST accounting is an essential part of accounting for a registered business.
GST accounting connects the commercial transaction with:
- Sales invoices
- Purchase invoices
- Input tax credit
- Output tax
- Reverse-charge transactions
- Credit notes
- Debit notes
- GST returns
- Payment of tax
- Reconciliation
GST rules require registered persons to maintain true and correct records of relevant supplies and related documents. CBIC GST
Output GST
When a registered business makes a taxable supply, GST may be charged to the customer.
For example, assume:
Sale value = ₹1,00,000
GST = ₹18,000
Invoice value = ₹1,18,000
A simplified entry could be:
Customer A/c Dr. ₹1,18,000
To Sales A/c ₹1,00,000
To Output GST A/c ₹18,000
The exact ledger structure depends on whether the transaction involves CGST/SGST or IGST and the applicable treatment.
Input Tax Credit
Eligible GST paid on purchases may be available as input tax credit subject to the applicable law and conditions.
A practical accounting process should therefore reconcile:
Purchase Register → GST Records → Input Tax Credit → Books
Do not assume that every GST amount appearing on a supplier invoice automatically becomes an available credit. Eligibility, documentation, reporting and other statutory conditions need to be considered.
GST Return Accounting
GSTR-1 is used to report outward supplies and includes invoice-level and other specified details. GST Tutorial
A strong monthly GST process should be:
Sales Register → Purchase Register → GST Reconciliation → GSTR-1 → ITC Review → GSTR-3B → Tax Payment → Books Reconciliation
E-Invoicing in 2026
E-invoicing continues to be an important accounting control for applicable businesses.
The e-invoice mandate currently covers taxpayers meeting the notified turnover and category requirements; the IRP information states that the threshold was brought to ₹5 crore AATO and above from 1 August 2023, subject to applicable exemptions. eInvoice
There is also an important reporting-time control: from 1 April 2025, businesses with AATO of ₹10 crore or more have been required to report specified e-invoices within 30 days of the invoice date, covering invoices, credit notes and debit notes. eInvoice
Therefore, in 2026, businesses subject to e-invoicing should connect their accounting software or ERP workflow with invoice-generation and IRP reporting controls.
For more detailed GST information, your separate Complete GST Guide for Indian Businesses can serve as a supporting page rather than a competing page.
TDS and TCS Accounting
TDS and TCS are important parts of Indian accounting because they create liabilities, payment obligations and reporting requirements.
For Tax Year 2026-27, businesses need to understand the transition to the Income-tax Act, 2025.
Under the new Act:
- Section 392 covers tax deduction on salary.
- Section 393 covers tax deducted at source for specified payments.
- Section 394 covers tax collection at source. Etds
Therefore, an article written for 2026 should not rely exclusively on the old section numbering.
Example: TDS on professional fees
Suppose professional fees are ₹1,00,000 and applicable TDS is ₹10,000.
A simplified accounting entry would be:
Professional Fees A/c Dr. ₹1,00,000
To TDS Payable A/c ₹10,000
To Bank A/c ₹90,000
When the TDS is deposited:
TDS Payable A/c Dr. ₹10,000
To Bank A/c ₹10,000
The actual rate, threshold and applicability depend on the nature of payment, recipient, applicable provision and current law.
TDS reconciliation
Every accounting period, reconcile:
Books → TDS Ledger → Challans → TDS Statement → Deductee Records → Tax Credit/AIS
The Income Tax Department publishes TDS compliance information and quarterly TDS statement due dates. The current schedule provides quarterly filing dates of 31 July, 31 October, 31 January and 31 May for the respective quarters. Etds
TCS
TCS is tax collected at source on specified transactions.
Under the Income-tax Act, 2025, TCS is governed principally by Section 394. Etds
For 2026, businesses should use the current Income-tax Act and Rules rather than copying rates or section numbers from an older TCS article.
Your TDS/TCS Master Table for FY 2026-27 should be the supporting detailed page, while this article explains how TDS/TCS fits into the overall accounting system.
Depreciation in Accounting
Depreciation is the systematic allocation of the depreciable amount of a fixed asset over its useful life for financial-reporting purposes.
Examples include:
- Computers
- Machinery
- Furniture
- Vehicles
- Equipment
Depreciation is important because a business should not treat a long-term asset as if its entire cost were an expense of one day.
Example
A business purchases equipment for ₹3,00,000.
Instead of treating the entire ₹3,00,000 as a normal operating expense immediately, the accounting treatment may require the asset to be recognised and depreciation charged according to the applicable accounting framework.
Book depreciation vs tax depreciation
This distinction is extremely important.
Book depreciation is determined under the applicable financial-reporting requirements.
Tax depreciation is determined under the applicable income-tax law and rules.
The two calculations may therefore be different.
This difference can affect:
- Profit before tax
- Taxable income
- Deferred tax
- Financial statements
- Tax computation
Your site already has a dedicated Depreciation Schedule guide, which is a good supporting article for this section.
Important 2026 editorial change: update that supporting depreciation article as well. Its current content still contains references to the old Income-tax Act, 1961 for tax depreciation, so it should be reviewed against the Income-tax Act, 2025 and the 2026 Rules before you link to it prominently.
Audit and Statutory Compliance
Audit is the process of independently examining financial information and records according to the applicable legal and professional requirements.
Different types of audit may apply depending on the entity and circumstances.
Statutory audit
Companies may be subject to statutory audit requirements under the Companies Act, 2013.
The Companies Act contains a dedicated audit and auditors framework, including provisions concerning appointment, eligibility, powers and duties of auditors. Ministry of Corporate Affairs
Tax audit
Certain businesses and professionals may have tax-audit obligations when applicable statutory conditions and thresholds are met.
The Income Tax Department explains that tax audit requirements relate to maintenance of books and audit of accounts for persons falling within the prescribed provisions. Income Tax India
A business should therefore determine audit applicability based on its:
- Legal structure
- Turnover or receipts
- Nature of business/profession
- Cash transactions
- Tax regime
- Other applicable conditions
Do not determine audit applicability simply by looking at one turnover number without considering the other statutory conditions.
Accounting records and audit preparation
A business preparing for audit should maintain:
- Sales invoices
- Purchase invoices
- Bank statements
- Bank reconciliation
- Expense documentation
- GST reconciliation
- TDS reconciliation
- Fixed asset register
- Loan statements
- Debtor confirmation/ageing
- Creditor ageing
- Payroll records
- Tax computations
- Supporting vouchers
Good bookkeeping throughout the year makes year-end audit preparation much easier.
Income Tax and MAT in 2026
2026 is different from earlier years because the Income-tax Act, 2025 became effective on 1 April 2026. Etds
FY 2025-26 vs Tax Year 2026-27
This is one of the most important points accountants and business owners need to understand.
Income earned during FY 2025-26
The relevant tax compliance continues under the earlier Income-tax Act, 1961 framework for the corresponding assessment obligations.
Income earned from 1 April 2026 to 31 March 2027
This falls under Tax Year 2026-27 under the Income-tax Act, 2025.
The Income Tax Department specifically explains that Tax Year 2026-27 relates to income earned from FY 2026-27, while earlier FY 2025-26 income continues through the earlier assessment-year framework. Income Tax Department
This means accounting teams should be careful when working on transactions spanning the March-April 2026 transition.
MAT — Minimum Alternate Tax
MAT is a tax mechanism applicable to companies subject to its provisions.
For Tax Year 2026-27, the Income Tax Department’s current guidance states that MAT is governed by Section 206 of the Income-tax Act, 2025. The MAT rate has been reduced to 14% of book profit, plus applicable surcharge and health & education cess. Etds
A company generally compares its liability under the normal tax provisions with the MAT computation and applies the relevant statutory mechanism.
Why accounting matters for MAT
MAT is based on book profit, so proper financial statements are important.
The accounting team therefore needs to pay close attention to:
- Profit and loss account
- Accounting policies
- Depreciation
- Reserves
- Provisions
- Deferred tax
- Ind AS-related adjustments, where applicable
- Specific MAT adjustments
For more detailed computation, link to your MAT guide.
Important: Your existing MAT article currently says 15%. That should be updated before you use it as an internal supporting page because the current 2026 government guidance says 14% for Tax Year 2026-27. Etds
Accounting Compliance Calendar 2026-27
The exact compliance calendar varies according to business type, GST status, tax registration, turnover, audit applicability and other factors. The following is a practical general calendar, not a substitute for checking the applicable portal notification or statutory due date.
| Compliance | Common timing |
|---|---|
| GST monthly GSTR-1 | Generally 11th of following month |
| GST monthly GSTR-3B | Generally 20th of following month |
| GSTR-1 under QRMP | Generally 13th after quarter |
| GSTR-3B under QRMP | Generally 22nd or 24th after quarter, depending on applicable State/UT grouping |
| TDS quarterly statement – Q1 | 31 July |
| TDS quarterly statement – Q2 | 31 October |
| TDS quarterly statement – Q3 | 31 January |
| TDS quarterly statement – Q4 | 31 May |
| Advance tax | 15 June, 15 September, 15 December and 15 March |
| GSTR-9 | Generally 31 December of following financial year, where applicable |
| GSTR-9C | Generally 31 December of following financial year, where applicable |
| E-invoice reporting for AATO ₹10 crore+ | Within 30 days for applicable documents |
| Annual financial statements/audit | According to applicable company, tax and regulatory requirements |
GSTN’s guidance confirms the general QRMP dates for GSTR-1 and GSTR-3B, including the 22nd/24th distinction for quarterly GSTR-3B filing. GST Tutorial GSTN material also identifies 31 December as the general annual-return date for GSTR-9/GSTR-9C, subject to applicable conditions and extensions. GST Tutorial
For advance tax, the Income-tax Act, 2025 specifies instalments by 15 June, 15 September, 15 December and 15 March, with the applicable percentages accumulating through the year. Income Tax India
A practical monthly accounting routine
1st–5th:
Collect invoices, bills, bank statements and expense documents.
5th–10th:
Close bookkeeping, reconcile sales and purchases and review GST data.
Before GST filing:
Check GSTR-1 data, input tax credit reconciliation, output liability and payment.
Monthly:
Reconcile bank accounts, debtors, creditors, GST and TDS.
Quarterly:
Review TDS/TCS, advance tax, GST trends and management accounts.
Year-end:
Complete depreciation, provisions, reconciliations, tax computation, financial statements and audit preparation.
Accounting for Small Businesses in India
Small businesses often do not need an unnecessarily complicated accounting system.
The objective should be simple, accurate and consistent bookkeeping.
A small business should at minimum track:
- Sales
- Purchases
- Expenses
- Bank transactions
- Cash
- Receivables
- Payables
- GST, if registered
- TDS/TCS, if applicable
- Loans
- Fixed assets
- Owner’s capital/drawings
- Tax payments
Example: Monthly system for a small business
Suppose a small trading business has ₹10 lakh monthly sales.
At the end of each month, the accountant should review:
Sales: ₹10 lakh
Purchases: ₹6 lakh
Expenses: ₹2 lakh
Gross/operating margin: Analyse according to the business model
Bank balance: Reconcile
Customers outstanding: Review ageing
Suppliers outstanding: Review ageing
GST: Reconcile
TDS/TCS: Reconcile where applicable
Inventory: Check physical/accounting records
Profit: Review monthly P&L
This allows the owner to understand the business before year-end.
Cloud Accounting and Automation
Accounting software can reduce repetitive data entry, but automation does not replace accounting judgment.
Modern accounting systems can help with:
- Invoice generation
- Bank feeds
- Recurring expenses
- GST reports
- Receivable reminders
- Payable tracking
- Inventory
- Payroll
- Reconciliation
- Financial reports
AI can also help identify anomalies or categorise transactions, but accountants should review automated classifications before relying on them for tax or financial reporting.
A useful principle is:
Automate repetitive work; review important accounting decisions manually.
Common Accounting Mistakes in India
Mistake 1: Delaying bookkeeping
Recording everything months later increases the chance of missing invoices and transactions.
Better approach: close the books every month.
Mistake 2: Mixing personal and business expenses
Using a business bank account for personal spending makes bookkeeping and tax analysis more difficult.
Better approach: maintain separate business and personal transactions wherever possible.
Mistake 3: Not reconciling the bank
A ledger balance does not automatically equal the bank statement balance.
Better approach: perform monthly bank reconciliation.
Mistake 4: Treating GST as business income
GST collected from customers is generally a tax amount connected with taxable supplies, not simply business revenue.
Better approach: maintain separate GST ledgers and reconcile the returns.
Mistake 5: Ignoring TDS
TDS needs accounting recognition, deduction, deposit, reporting and reconciliation where applicable.
Better approach: create separate TDS payable ledgers and reconcile them regularly.
Mistake 6: Using the wrong depreciation basis
Book depreciation and tax depreciation can follow different requirements.
Better approach: maintain separate calculations where needed and reconcile the differences.
Mistake 7: Using outdated tax section numbers
This is particularly important in 2026 because the Income-tax Act, 2025 changed the structure and numbering of provisions.
For example, Section 393 now deals with TDS and Section 394 with TCS under the new Act. Etds
Mistake 8: Copying old tax rates from previous articles
Tax rates, thresholds, forms and procedural requirements can change.
Better approach: check the current Income Tax Department, GST portal, CBIC, MCA or other primary source before publishing or filing.
Mistake 9: Ignoring receivables
High sales do not necessarily mean strong cash flow.
A business can show accounting profit while customers still owe significant amounts.
Better approach: maintain receivable ageing and follow up on overdue invoices.
Mistake 10: Waiting until March to fix records
Year-end accounting becomes difficult when the previous eleven months contain unreconciled transactions.
Better approach: close and reconcile every month.
2026 Accounting Checklist for Indian Businesses
Use this checklist throughout Tax Year 2026-27.
Daily
Record:
- Sales
- Purchases
- Receipts
- Payments
- Expenses
- Credit/debit notes
Weekly
Review:
- Bank transactions
- Cash
- Customer balances
- Supplier balances
- Missing invoices
Monthly
Complete:
- Bank reconciliation
- Sales reconciliation
- Purchase reconciliation
- GST reconciliation
- TDS reconciliation
- Payroll accounting
- Expense review
- Receivable ageing
- Payable ageing
Quarterly
Review:
- TDS/TCS statements
- Advance tax
- GST trends
- Profitability
- Cash flow
- Inventory
- Outstanding liabilities
Annually
Complete:
- Depreciation
- Provisions and adjustments
- Financial statements
- Tax computation
- Audit requirements
- Annual GST compliance where applicable
- Annual tax return
- MCA compliance where applicable
2026 Transition Checklist: Income-tax Act, 2025
Because 2026 is a transition year, businesses should also perform these checks.
Check 1: Update accounting software
Ensure tax-related reports and configurations support the current 2026 framework.
Check 2: Update TDS/TCS references
Review old section numbers, forms and rate tables.
Check 3: Separate old and new tax periods
Do not mix FY 2025-26/AY 2026-27 transactions and Tax Year 2026-27 obligations without checking the applicable transition rules.
Check 4: Update tax templates
Review:
- Tax computation spreadsheets
- TDS/TCS templates
- Accounting software ledgers
- Tax invoices where relevant
- Compliance checklists
- Internal SOPs
Check 5: Update published accounting content
Every 2026 accounting article should be reviewed for outdated references to the Income-tax Act, 1961 where the new Act now applies.
The Income Tax Department maintains the Income-tax Act, 2025, Rules 2026, forms and transition guidance on its official website. Etds
Frequently Asked Questions (FAQ)
What is accounting in India?
Accounting in India is the process of recording, classifying, summarising and analysing business transactions while complying with the applicable accounting, tax and regulatory requirements.
What is bookkeeping?
Bookkeeping is the recording and organisation of day-to-day financial transactions such as sales, purchases, receipts, payments and expenses.
What is the difference between bookkeeping and accounting?
Bookkeeping focuses mainly on recording transactions. Accounting uses those records for analysis, financial statements, tax calculations, reconciliation, compliance and decision-making.
What are the basic accounting principles?
The basic accounting system is based on concepts such as double-entry accounting, accrual accounting, consistent classification, proper documentation and accurate financial reporting.
What accounting records should a business maintain?
Depending on the business, important records may include sales and purchase registers, cash and bank records, general ledgers, invoices, vouchers, fixed asset records, GST records, TDS records, payroll records and financial statements.
Companies are subject to specific requirements under the Companies Act, 2013, including rules concerning books of account
What is GST accounting?
GST accounting involves recording GST on taxable purchases and sales, tracking input tax credit and output tax, reconciling GST records and maintaining the information necessary for applicable GST returns.
What is TDS accounting?
TDS accounting records the tax deducted from specified payments, creates a TDS payable liability, records payment to the government and supports periodic reporting and reconciliation.
What is TCS accounting?
TCS accounting records tax collected at source on specified transactions and tracks the related liability, payment, statement and certificate requirements.
For 2026, TCS is governed by Section 394 of the Income-tax Act, 2025.
What is depreciation in accounting?
Depreciation is the systematic allocation of the depreciable amount of a fixed asset over its useful life for financial reporting purposes.
The tax treatment may be different from book depreciation.
What is MAT?
MAT stands for Minimum Alternate Tax. For Tax Year 2026-27, MAT is governed by Section 206 of the Income-tax Act, 2025, and the current government guidance specifies a 14% rate on book profit, plus applicable surcharge and cess.
What changed in income tax in 2026?
The Income-tax Act, 2025 came into force on 1 April 2026. It introduced the new Tax Year terminology and replaced the Income-tax Act, 1961 for income and compliance governed by the new Act.
What is the accounting compliance calendar?
The accounting compliance calendar is a schedule used by a business to track GST returns, TDS/TCS statements, advance tax, annual returns, audit activities, financial statements and other applicable regulatory filings.
Conclusion: Building a Strong Accounting System in India
Good accounting is not simply about entering numbers into Tally, Excel or accounting software.
A reliable accounting system connects:
Bookkeeping + Journal Entries + Bank Reconciliation + GST + TDS/TCS + Depreciation + Financial Statements + Income Tax + Audit + Compliance
For Indian businesses, this integrated approach is particularly important in 2026 because the tax environment has entered a major transition with the implementation of the Income-tax Act, 2025 from 1 April 2026. Etds
The best accounting system is one in which transactions are recorded on time, documents are preserved, ledgers are reconciled regularly and tax and compliance obligations are reviewed before their deadlines.
For small businesses, accurate monthly bookkeeping can be the difference between simply knowing how much money is in the bank and actually understanding whether the business is profitable, tax-compliant and financially healthy.
The fundamentals remain simple: record every transaction correctly, reconcile the books regularly, use the current law, keep supporting documents and review the numbers before filing any return or financial statement.
Author
Yuvraj Vihol is an accounting and tax professional who focuses on GST compliance, TDS/TCS management, bookkeeping, financial accounting and tax-related guidance for Indian businesses and taxpayers. Finance and Tax Guide publishes practical accounting and tax educational content designed to make complex Indian financial rules easier to understand. Finance And Tax Guide
Disclaimer: This article is for educational purposes only and does not constitute professional financial, tax or legal advice. Tax rates, thresholds, forms, filing dates and regulatory requirements may change. Always verify the applicable requirement using the current government notification, portal or professional advice before filing.
Sources for This Article
For credibility, I recommend keeping a Sources / References section at the bottom of the article and linking to primary sources.
Income-tax Act, 2025 — Income Tax Department Etds
Income-tax Act, 2025 comes into force from 1 April 2026 — CBDT Etds
Tax Year / transition FAQs — Income Tax Department Income Tax Department
Section 393 — TDS under Income-tax Act, 2025 Etds
Section 394 — TCS under Income-tax Act, 2025 Etds
MAT and AMT — Income Tax Department Etds
Companies Act, 2013 — MCA Ministry of Corporate Affairs
GST Accounts and Records — CBIC CBIC GST
GSTR-1 — GST Portal GST Tutorial
E-Invoice Mandate — GST/IRP eInvoice
Indian Accounting Standards — ICAI



