A S BANKA ADVISORS

When the MCA quietly notified the Companies (Accounting Standards) Amendment Rules, 2026 on March 10, most finance teams were busy with year-end closings. But this notification has significant implications for Indian subsidiaries of multinational groups, and ignoring it could mean non-compliant financial statements from April 1.

What Changed in AS-22?

The amendment introduces a mandatory exemption from recognizing deferred tax assets (DTAs) and deferred tax liabilities (DTLs) arising from Pillar Two income taxes. This includes India’s own Qualified Domestic Minimum Top-up Tax (QDMTT).

The key word here is “mandatory.” This is not an accounting policy choice. If your company falls within scope, you must de-recognize any existing Pillar Two-related deferred tax positions.

Does This Apply to Your Startup?

The amendment affects companies applying AS (non-Ind AS) under the Companies (Accounting Standards) Rules, 2021, whose group exceeds EUR 750 million (approximately INR 6,750 crore) in consolidated revenue. Specifically:

• Indian subsidiaries of large MNEs subject to the OECD/G20 Inclusive Framework on BEPS
• Indian entities with overseas operations in Pillar Two jurisdictions
• Companies whose parent entities are subject to the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR)

If your startup is backed by a large global investor or is part of a multinational structure, check whether your group crosses the EUR 750M threshold.

The Disclosure Timeline You Cannot Miss

The amendment provides transitional relief for interim periods ending on or before March 31, 2026. But from April 1, 2026, full disclosure obligations begin. Your FY 2026-27 financial statements must include:

• Whether your entity is within Pillar Two scope
• Known or estimated exposure to Pillar Two taxes
• Qualitative information about the group’s Pillar Two tax position
• Jurisdictional effective tax rate analysis (if material)

What Your Team Should Do Now

1. Confirm scope: Check whether your group exceeds the EUR 750 million consolidated revenue threshold
2. De-recognize immediately: Review and remove any existing Pillar Two-related deferred tax positions in FY 2025-26 financial statements
3. Update policies: Revise your tax accounting policies to reflect the AS-22 amendment
4. Prepare disclosures: Build enhanced Pillar Two disclosure procedures for FY 2026-27
5. Engage your auditor: Discuss the financial statement impact with your statutory auditor before the upcoming audit season

Download the full carousel PDF for a detailed visual breakdown of the amendment, applicability criteria, and compliance roadmap.

Need Guidance on Pillar Two Compliance?

The intersection of global minimum tax rules and Indian accounting standards creates complex questions for finance teams. If your company is part of a multinational group or has cross-border operations, getting the accounting treatment right before the April 1 deadline is critical.

Talk to an expert at A S Banka Advisors Private Limited to understand how the AS-22 amendment impacts your specific situation.