ICAI in the Pre-budget Meeting for Union 2026-27, presented its Pre-budget Suggestions advocating prudent tax reforms sought at easing the operations of business and encouraging environmental sustainability. ICAI, concerning such aims, inter alia, recommended that tax-neutral status be extended to business reorganisation in LLPs, TDS on partners’ remuneration be rationalised, and incentives be provided for promoting green projects.
Pre-budget Suggestions of ICAI on direct taxes and international taxation summarize a spectrum of suggestions on tax policy and framework at the macro-level, along with particular section-wise recommendations that have the motive to mitigate litigation, reduce compliance burden, rationalise the provisions of income-tax law, prevent tax avoidance, and improve tax collection.
CA. Charanjot Singh Nanda, President, ICAI, on this occasion, said, “ICAI has always been at the forefront of nation-building and continues to work closely with the Government as its trusted knowledge partner. Through our Pre-Budget Suggestions for 2026-27, we aim to support a tax ecosystem that promotes ease of doing business, drives sustainable growth and strengthens India’s journey towards a resilient and green economy”.
Detailed ICAI Recommendations for the Above Components
On mitigating litigation
- decriminalisation of specific prosecution provisions
- removal of the dual penalty for the same default
- processing of returns to be confined to addressing arithmetical errors and prima facie wrong claims
- retrospective application of notifications explaining treaty terms not to lead to unintended tax consequences.
- guarantee fees to be excluded from the meaning of interest for the limitation of interest deduction.
On reducing compliance burden
- Introduction of year-wise E-Ledger system for crediting TDS/TCS as well as advance tax payments, which can be adjusted against the income-tax due.
- Tax Deduction on the appropriate proportion of income leviable to tax based on a chartered accountant’s certificate, by a person accountable for making payment to a non-resident
- Exemption from the need to obtain a TAN in the case of a transferee responsible for paying to a non-resident transferor
- Removal of TCS on the sale of scrap
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On preventing tax avoidance/enhancing tax collection
- Exclusion of Future and option trading, as well as speculation business, from the scope of presumptive income.
- Optional joint taxation introduction of married couples
- Need for the audit of accounts in all provisions furnishing for profit-linked tax deductions.
- Need for obligatory return filing via persons that has more than the specified acres of agricultural land.
On the rationalisation of the provisions of the income-tax law
- The rise in the surcharge limit and provision of deduction for medical insurance premiums paid and expenditure on maintenance of dependent disabled under the default tax regime for individuals.
- Explanation of the applicable rate of surcharge for the computation of the Maximum Marginal Rate (MMR).
- Explanation of auto-renewal for small trusts registered/approved before the extension of the period of validity from 5 years to 10 years by the Finance Act, 2025.
- A time limit is to be specified for acceptance or rejection of the application for an advance ruling.
ICAI’s recommendations concerning the Comprehensive review of the Income-tax Act, 1961, submitted last year, and its Memorandum of Suggestions on the Income-tax Bill, 2025, submitted in April this year, were positively obtained, with more than 100 suggestions considered in the Income-tax Act, 2025, which comes into effect dated 1st April, 2026.
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