An update has been introduced by the Institute of Chartered Accountants of India (ICAI) regarding the tax audit limit. The limit for tax audit per partner will be set at 60 w.e.f financial year 2026-27. It specifies that each partner in a CA firm shall be able to sign off on 60 tax audit reports each year. The objective of the same amendment is to improve the fairness and enhance the audit work quality.
W.e.f FY 2026-27, the new ICAI tax audit limit rule shall be implemented. A strict 60 tax audit limit per partner by the ICAI shall be executed. Under the new rule, it proposes to rectify the audit quality by ensuring equal workload distribution.
About The ICAI Tax Audit Limit
The ICAI Tax Audit limit is a policy that caps the number of tax audit reports signed by a Chartered Accountant in a given fiscal year. From FY 2026-27, this figure will be 60.
It applies to both individual audits and those conducted as part of a CA Firm. The same limit is formed to prevent any single partner from being ignored and to enhance the quality of all the audit reports. It eradicates the archaic system in which senior partners shamelessly signed documents in place of other partners.
How Does the New ICAI Tax Audit Limit Rule Work?
A CA was authorized to sign off on 60 Tax Audits under Section 44 AB of the Income Tax Act till now. But, by splitting the limit among partners, CA firms discovered a way for this. Under the names of junior or inactive partners, a senior partner can sign audits, permitting them to handle far more than the 60 audit cap. The new ICAI tax audit limit puts this practice to an end.
Personally, each partner has to adhere to the 60 audit limit from now. No one can sign more than 60 reports, whether they’re working solo or as part of a firm. Also, on behalf of another partner, one cannot sign audits, a practice called proxy signing, which is now restricted.
Read Also: Guidance For Chartered Accountants: Tax Audit Under Income Tax Law
Ideas of ICAI’s Tax Audit Limit Experts
Regarding the amendment, experts are optimistic. They assume that the ICAI Tax Audit Limit motivates CAs to be engaged. They shall devote more time to each audit with this amendment, which should assist in reducing the mistakes.
Now every partner must be engaged actively. You cannot sit back and allow others to sign off on your behalf. The same move is anticipated to make a fairer system.
Now the CA audit distribution policy is clearer. Each partner is needed to pull their weight.
ICAI Tax Audit Limit Amendment Before and After
Below, we mentioned what changes will be made in the Tax Audit process after the new rule:
| Changes before and after the ICAI Tax Audit Limit | ||
| Criteria | Before the Rule | After FY 2026-27 Rule |
| ICAI Tax Audit Limit | 60 audits per CA, pooling allowed | 60 audits per partner only |
| Proxy Signing | Allowed | Not Allowed |
| Workload Sharing | Few handled many audits | All parents must share work equally |
| Focus on Quality | Less due to bulk audits | Improves due to limited audits |
ICAI Officially Notifies New Tax Audit Cap from AY 2026-27
Updated guidelines posted in the E-gazette by the Institute of Chartered Accountants of India ( ICAI ) cap the number of tax audit assignments that a chartered accountant or each partner of a chartered accountancy firm may take on.
No chartered accountant in practice will be authorized to accept or sign more than 60 tax audit assignments in a single financial year, beginning on April 1, 2026 (Assessment Year 2026-27), nonetheless of whether the taxpayers are corporate or non-corporate entities. Also, each partner in a chartered accounting firm will be subject to this limit on an individual basis.
Under Section 15(2)(fa) of the Chartered Accountants Act, 1949, such new guidelines, which were published in the Gazette of India (Extraordinary) on July 25, 2025, are issued. They desired to ensure professional diligence, facilitate audit quality, and address problems pertinent to overload and potential compromises in audit efficacy.
The cap does not apply to tax audits conducted in compliance with Section 44AB clauses (c), (d), and (e), which are cases covered by presumptive taxation schemes such as Sections 44AD, 44ADA, and 44AE of the Income Tax Act, 1961.
As per the norms, it specifies that in computing the cap of 60 assignments, the audit of each fiscal year will be deemed a separate assignment. Also, the audits of multiple branches of the identical entity shall be considered as a single audit assignment, and revised audit reports would not count towards the limit. Also, part-time partners in CA firms shall not be included in the cap computation for firm-level audits.
Such changed limits shall replace all earlier norms on the subject and substitute Chapter VI of the 2008 Council General Guidelines, which will stay applicable only until March 31, 2026. Every Chartered Accountant to ensure compliance in practice shall be required to keep accurate records of all accepted and signed tax audit assignments in a specified format as mandated by the ICAI council.
Several scenarios are explained by the norms-
- Partner Overlap: If a CA is a partner in multiple firms, the total limit of 60 will apply in aggregate across all firms.
- Individual + Firm Assignments: Assignments taken individually via a partner will count toward the same 60-limit tally.
- Exemptions: Audits under Sections 44AE, 44ADA, and 44AD of the Income-tax Act, 1961, are excluded from the audit count.
- Revised Reports: Revisions of audit reports won’t be included in the audit count.
- Branch Audits: Audits of branch and head offices of the same entity will be deemed as one single assignment.
While determining a firm’s capacity for tax audits, part-time practicing partners will not be counted.
CAs to improve clarity and compliance shall be needed to keep proper records of the tax audit assignments in a format prescribed by the ICAI Council.
The previous regulations have been replaced by the revised guidelines and have the objective to ensure audit quality, reduce the concentration of audits among a few professionals, and promote wider distribution of assignments in the profession. The Council also keeps the authority to issue clarifications to address any issues in implementation.
Audit planning for Chartered Accountants and their firms may get impacted by such amendments, particularly as the 2026-27 financial year approaches.
Check out the official notification: https://egazette.gov.in/WriteReadData/2025/265051.pdf
