New Compliance Rules for Companies in India (FY 2025-26)

Introduction

The financial year 2025-26 in India has witnessed substantial changes in corporate compliance norms, driven by digitisation, regulatory tightening, increased transparency, and global competitiveness. These shifts impact tax reporting, corporate governance, audit requirements, ESG disclosures, GST procedures, labour law compliance, and other related areas. The aim is to enhance transparency, improve regulatory oversight, and align India with global best practices.

Corporate Law & MCA (Ministry of Corporate Affairs) Reforms

The MCA (Ministry of Corporate Affairs) introduced a slew of amendments to strengthen corporate compliance:

• Enhanced E-Filing & New Digital Forms

1. Traditional forms like CRA-2, CRA-4, MGT-7, MGT-7A, and MGT-15 are redesigned with extensive fields and disclosures.

2. New requirements include geolocation of registered offices, mandatory office photographs with nameplate, and expanded shareholder data for annual reports.

3. These dynamic e-forms enhance transparency and reduce ambiguity in filings.

• More Detailed Defaults & Remedies Reporting

1. Form GNL-1 now requires granular explanations for reasons and durations of defaults, with supporting documents for condonation, AGM extensions, and other regulatory relaxations.

• Stricter Auditor Information

1. Cost auditor appointment filings now include explicit details on auditor scope, membership numbers, jurisdiction, and board resolutions.

2. Improves audit accountability and reduces conflicts. 

Small Company Definition Expanded

• The Government revised the definition of a “small company”:

1. Paid-up share capital ≤ ₹10 crore

2. Turnover ≤ ₹100 crore

• More companies benefit from simplified compliance due to higher thresholds under the Companies Act.

Director KYC (DIR-3) Compliance

• MCA extended deadlines for filing DIR-3 KYC without additional fees to ease compliance pressure on directors.

• Non-compliance can lead to DIN deactivation, preventing directorship until resolved.

Tax, GST & Financial Reporting Changes

• GST E-Invoicing & Return Filing

1. E-Invoicing is now mandatory for more businesses (turnover threshold lowered to ₹5 crore).

2. GSTR-3B returns cannot be edited after filing (from July 1, 2025), increasing the need for accuracy in monthly filings.

• Income Tax Audit Expansion

1. Form 3CD for tax audits now demands:

• Detailed reporting of payments to MSMEs (timely and delayed)

• Reporting share buybacks separately

• Disclosing expenses for regulatory settlement costs

2. Objective: Prevent misreporting and reinforce tax transparency.

• Cost Audit Requirements

1. Thresholds for mandatory cost audit are revised:

• Higher turnover limits for various sectors (e.g., manufacturing ≥ ₹75 crore)

2. Penalties for non-submission increased significantly.

3. Designed to strike a balance between oversight and burden on mid-sized companies.

CSR (Corporate Social Responsibility) Compliance Update

• CSR (Corporate Social Responsibility) 2025 Rule Changes

1. Mandatory e-form CSR-1 registration and certification from July 14, 2025.

2. Only agencies with valid CSR registration can receive funds.

3. The 2% spending rule, impact assessment, and limits on administrative expenses remain intact.

4. Strengthens transparency in CSR execution and reporting.

SEBI & Listed Companies Compliance

• ESG & BRSR Reporting

1. SEBI mandates expanded Environmental, Social, and Governance (ESG) disclosures for listed companies:

• Independent third-party assurance for top 250 listed entities.

• Scope 3 emission disclosure (indirect supply chain impact).

2. Forces companies to adopt sustainability metrics into governance structures.

Labour Law & Workplace Regulations

• New Labour Codes (Effective 2025)

1. Four Labour Codes implemented, covering:

• Wages

• Industrial Relations

• Social Security

• Occupational Safety

2. Introduces written employment contracts, social security for gig workers, and revised working hour norms.

3. Some provisions, like easier layoffs for larger firms, have sparked trade union protests.

• Workplace Compliance Statements

1. Public disclosure requirements for internal complaints (e.g., POSH Act quantitative data) are enhanced in Board Reports.

2. Raises accountability for workplace ethics.

Digital & Audit Trail Compliance

• Mandatory Audit Trail Infrastructure

1. All companies must maintain software-based audit trails that capture every transaction edit with time stamps.

2. Supports audit readiness, transparency, and fraud detection.

Practical Impacts on Businesses

How Companies Should Prepare

• Compliance Calendar Review : Update statutory calendars with new deadlines.

• Digital Tools Adoption : Invest in e-filing, audit trail, and GST automation software.

• Training & Awareness : Educate finance, HR, and legal teams on revised norms.

• Third-Party Assurance : Particularly for ESG reporting and audit quality.

• Professional Consultation : Engage CAs, CSs, and legal experts for a nuanced compliance strategy.

Conclusion

FY 2025-26 marks a significant compliance evolution in India aimed at strengthening transparency, governance, and regulatory trust, while also digitising the compliance landscape. Businesses must adapt proactively to avoid penalties, leverage compliance as a competitive edge, and build robust reporting systems.

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