SEBI Digital Accessibility Deadline 2027: Tax Compliance for Regulated Entities

What Happened?

The Securities and Exchange Board of India (SEBI) has extended the deadline for digital accessibility compliance to 31 January 2027. This extension covers the appointment of IAAP (Internal Accessibility Assurance Programme) auditors, completion of accessibility audits, and implementation of remediation measures for all SEBI-regulated entities. This is a significant relief for regulated entities that were previously working under tighter timelines.

Background & Legal Context

Digital accessibility refers to making websites, applications, and digital platforms accessible to all users, including persons with disabilities. While this is primarily a regulatory compliance matter under SEBI's jurisdiction, it has important tax and accounting implications for regulated entities under the Income Tax Act 2025 and Accounting Standards.

Key Legal Framework:

• Section 35AB of Income Tax Act 2025: Allows deduction for capital expenditure on scientific research. Digital infrastructure investments for accessibility compliance may qualify as capital expenditure, potentially claiming depreciation under Section 32 of the IT Act 2025.
• Section 37 of Income Tax Act 2025: Allows deduction for revenue expenditure incurred wholly and exclusively for business purposes. Costs of accessibility audits, consulting fees, and remediation training qualify as revenue expenses.
• Accounting Standards (Ind-AS 16): Property, Plant & Equipment — capital investments in digital accessibility infrastructure must be capitalised and depreciated over useful life.
• SEBI Circular Requirements: Regulated entities must maintain proper documentation of compliance measures, audit reports, and remediation evidence for regulatory inspection purposes (Assessment Year 2025-26 onwards).

This extension is particularly relevant for AY 2025-26 and AY 2026-27 as regulated entities can now spread their compliance-related expenditures across these financial years without penalty.

What Does This Mean for You?

For Investment Advisers & Brokers:

• Extended Compliance Window: You now have until 31 January 2027 to complete your digital accessibility audit and remediation. This means expenditures can be claimed in FY 2025-26 and FY 2026-27 as business expenses.
• Tax Planning Opportunity: Spread your accessibility-related costs across two financial years to optimise your tax position. Large infrastructure costs claimed under Section 37 (revenue) or Section 32 (depreciation) can be allocated based on your current tax bracket.
• Audit Documentation: Maintain detailed records of IAAP auditor appointment, audit scope, findings, and remediation steps. These documents are crucial for both SEBI compliance and Income Tax authorities during scrutiny assessment.

For Regulated Entities (Fund Managers, Custodians, etc.):

• Internal Control Implementation: The extended deadline allows you to implement robust internal control systems for tracking accessibility compliance costs. Maintain separate general ledger codes for audit fees, remediation costs, and training expenses.
• GST Implications: Audit and consulting fees for accessibility compliance attract 18% GST (under SAC 9105 — Professional, Scientific and Technical Services). Ensure proper ITC (Input Tax Credit) capture and documentation. If your organisation is GST-registered, these are creditable inputs.
• Reporting Controls: SEBI requires evidence of remediation efforts. For Income Tax purposes, maintain reconciliation between your financial statements and SEBI compliance reports. Any material expenses should be separately disclosed in Board minutes and audit committee meetings.

For Technology Service Providers:

• If you provide accessibility consultation or remediation services to SEBI-regulated entities, ensure you issue proper invoices with GST. Your service income is taxable under the normal provisions of the Income Tax Act 2025.
• If you are developing accessibility software/tools, costs incurred can claim deduction under Section 35AB (scientific research) if the activity qualifies as research and development.

What Should You Do Now?

Immediate Actions (By November 2026):

• Conduct Internal Assessment: Review your current digital accessibility status. Identify gaps in website, mobile app, and client-facing platforms. Engage an IAAP-accredited auditor if not already done.
• Segregate Costs: From your financial records, identify and segregate all accessibility-related costs incurred so far. Categorise them as:
  • Capital expenditure (infrastructure, software licenses — claim depreciation under Section 32)
  • Revenue expenditure (audit fees, consulting, training — claim fully under Section 37)
  • GST-paid amounts (maintain ITC records)
• Appoint IAAP Auditor: If not already appointed, select an accredited accessibility assurance auditor immediately. This is mandatory by 31 January 2027.

Medium-Term Actions (By December 2026):

• Plan Remediation: Based on audit findings, prioritise remediation tasks. Develop a timeline that spans into FY 2026-27 if needed. This helps in claiming expenses across two assessment years.
• Audit Trail Documentation: Create a compliance file containing:
  • IAAP auditor engagement letter
  • Audit scope and methodology
  • Accessibility audit report (draft/final)
  • Remediation plan and progress tracker
  • Invoices and payment records for all services
  • Board/Management approvals
• Tax Provisioning: Update your tax provisions for FY 2025-26 if any accessibility costs are still pending. Ensure your financial statements reflect the correct expense classification.

Before 31 January 2027:

• Complete the accessibility audit by IAAP auditor.
• Submit audit report and compliance certificate to SEBI as required.
• Finalize all remediation activities and document completion.
• Ensure all invoices and supporting documents are recorded in your books by 31 March 2027 (end of FY 2026-27).

Key Takeaways

• Extended Timeline is a Tax Planning Window: The 31 January 2027 deadline gives you 14 months to spread compliance costs across FY 2025-26 and FY 2026-27, optimising your overall tax liability.
• Capital vs. Revenue Distinction Matters: Correctly classify accessibility infrastructure as capital (Section 32 depreciation) vs. audit/consulting as revenue (Section 37 deduction). Misclassification can trigger Income Tax scrutiny.
• GST on Professional Services is Key: All accessibility audit and consulting services attract 18% GST. Ensure proper ITC capture and GST return filing to avoid penalties.
• Maintain Robust Documentation: SEBI compliance files and audit evidence are critical for both regulatory and tax audit defence. Weak documentation can lead to denial of expense claims by Income Tax authorities.
• Early Action Pays Off: Entities that appoint IAAP auditors and complete audits before end of FY 2025-26 can claim full deductions in that year and plan remediation spending strategically into FY 2026-27.

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