Key accounting tasks to be undertaken by Businesses before March 31

As the clock strikes midnight on March 31, 2026, the Indian business landscape undergoes a historic transformation. We aren’t just moving into a new financial year; we are entering the era of the Income Tax Act, 2025, which officially replaces the six-decade-old 1961 Act. For accountants and business owners, this transition is more than just a calendar flip. It is a complete technical “reset.”

From remapping TDS codes to navigating the new “Tax Year” terminology, here is your professional roadmap to a seamless year-end closure and a compliant start to FY 2026-27.

1. The “Big Reset”: New Invoice Series for FY 2026-27

As per GST and accounting best practices, a fresh invoice series should be initiated every financial year. This prevents duplicate invoice numbers and ensures clarity during audits.

• Action: Ensure your new series is unique (e.g., TR/26-27/001).
• E-Invoicing: If your turnover exceeds ₹5 Crores, ensure your ERP is configured to generate the IRN (Invoice Reference Number) for the new series from day one.
• Audit Trail: If the business constitution is a company and the books are maintained electronically, it is important to adhere to the Audit Trail requirements.

2. Transitioning to the Income Tax Act, 2025

The new Act simplifies language but changes the structure of compliance.

• Terminology Shift: Say goodbye to “Assessment Year” and “Previous Year.” The new Act introduces a unified “Tax Year” concept.
• Section Remapping: Many familiar sections have been consolidated. For instance, the general TDS provisions are now largely housed under a new table-based structure (often referenced as Section 393 in draft frameworks).
• New Payment Codes Introduced: Though Sections have been consolidated and a unified table is introduced, Payment codes are also introduced for each type of payment. Business should take note of the same

3. Mapping New TDS Codes & Forms

Perhaps the most critical task for your bookkeeping team is updating the TDS/TCS ledger logic. The Income Tax Act, 2025 uses a numeric code system (1001–1067) for reporting.

Key TDS Changes to Note:

Nature of Payment	Old Section	New FY 26-27 Status/Rate
Partner Salary/Interest	New!	Section 194T (10% TDS over ₹20,000)
Professional Fees	194J	Threshold raised to ₹50,000
Rent (Land/Bldg)	194-I	Threshold now ₹50,000/month (for specified persons)
Life Insurance Payouts	194DA	Rate reduced to 2%

Accounting Tip: You must update your ERP’s “TDS Master” to reflect these new thresholds and codes to avoid over-deduction (which hurts vendor relations) or under-deduction (which attracts 1.5% interest).

4. Year-End Reconciliation Checklist (Closing FY 2025-26)

Before you open the new ledgers, ensure the old ones are bulletproof:

• GSTR-2B vs. Books: Finalize your Input Tax Credit (ITC). If a vendor hasn’t filed, March is your last chance to nudge them before the year-end “cutoff” for FY 25-26 credits.
• The 45-Day MSME Rule: Under Section 43B(h), ensure all payments to MSME-registered vendors are cleared within 45 days (or 15 days without an agreement). Any delay means you cannot claim the expense this year.
• Bank & Suspense Clearing: Your “Suspense A/c” must be zero. Perform a line-by-line reconciliation of all bank statements and digital payment gateways.

5. Ledger Setup for FY 2026-27

When creating the new company/period in your software:

1. Carry Forward Balances: Cross-verify that the Closing Balance of March 31 matches the Opening Balance of April 1.
2. Depreciation: Update the Fixed Asset Register. Note that the new Act may have refined depreciation schedules for certain “Digital Assets.”
3. VDA Tracking: With the broadened scope of Virtual Digital Assets (VDA), ensure you have separate ledgers for crypto or digital asset transactions to simplify the 1% TDS tracking.

Final Word: Proactive over Reactive

The shift to the Income Tax Act, 2025 is designed to reduce litigation, but the transition phase is where most errors occur. By automating your threshold alerts and remapping your tax codes this week, you save your business from the “Interest & Penalty” trap.