Prof D Mukherjee
The Government on Monday, July 21, 2025, tabled the Parliamentary Select Committee’s 4,575-page report on the Income Tax Bill, 2025, introduced in Parliament on February 13, 2025, in the Lok Sabha. Aimed at establishing a codified tax framework aligned with technological advancements, global standards, and India’s evolving economic landscape, the Bill seeks to streamline digital documentation, dispute resolution, international taxation, and non-profit oversight, thereby enhancing clarity, operational efficiency, and reducing compliance costs. However, a contentious recommendation from the Select Committee-to retain Chartered Accountants (CAs) as the sole professionals authorized to conduct tax audits-has sparked criticism. While proponents argue this ensures consistency in audit quality and adherence to established standards, Cost and Management Accountants (CMAs) and Company Secretaries (CSs) contend that their rigorous training in taxation, compliance, and audit-related disciplines warrants inclusion in the tax audit domain. Critics assert that excluding CMAs and CSs contradicts the Bill’s stated objective of fostering an inclusive, progressive tax ecosystem, curbing professional opportunities, and perpetuating an uneven playing field within the compliance landscape.Allowing CMAs and CSs to participate in tax audits could foster competition, enhance audit quality, and bring diverse perspectives, strengthening the tax compliance ecosystem. Critics emphasize that expanding audit eligibility aligns with fairness, improves service standards, and promotes a dynamic, future-ready tax governance model.Critics assert that excluding CMAs and CSs contradicts the Bill’s goal of fostering an inclusive fiscal administration ecosystem, limiting professional opportunities, and perpetuating an uneven level plying roles across Indian market driven economy quite different from that of Nehruvian closed economic model. Expanding tax audit eligibility to CSs and CMAs could promote competition, enhance audit quality, and introduce diverse methodologies, thereby strengthening the tax compliance system and ultimate benefits accrue to the taxpayers.
The Select Committee reviewed stakeholder submissions, including Ernst & Young’s (EY) comparative analysis of the academic curricula and training of CAs, CSs, and CMAs. Despite this exercise, the Committee chose to retain the status quo, prioritizing regulatory continuity over reform. Critics question the rationale behind drafting a new Income Tax law that still adheres to the restrictive framework of the 1961 Act. They argue that maintaining a narrow definition of “accountant” contradicts the Bill’s modernization objectives. A more equitable legislative approach would have involved revisiting the governing statutes of CAs, CMAs, and CSs, ensuring fairness and reflecting India’s evolving professional ecosystem.Since 2008-09, successive Parliamentary Committees have recommended expanding the scope of definition of “accountant” in tax laws to include Cost and Management Accountants (CMAs) and Company Secretaries (CSs), recognizing their domain expertise. However, tax audit privileges under Section 44AB, introduced in 1984, remain exclusive to Chartered Accountants (CAs), justified then by their taxation-focused curriculum. Critics argue this rationale is outdated, as CMAs’ training and professional standards have significantly evolved.The Income Tax Bill, 2025, seeks to simplify the complex, amendment-heavy 1961 Act, aiming to reduce compliance burdens and enhance administrative efficiency. Yet, unless the legislative framework adopts an inclusive approach recognizing all professional bodies’ competencies, these reforms risk falling short. The Select Committee’s rigid compartmentalization-restricting tax audits to CAs while sidelining CMAs and CSs-fails to reflect modern tax governance demands. Notably, the “Tax Audit” concept didn’t exist when the CA Act was enacted in 1949; it was introduced in 1984, by which time ICMAI had developed into a robust institution with a globally-aligned curriculum, extensive internship programs, and comprehensive taxation modules. Excluding CMAs and CSs undermines their professional equity and impedes tax ecosystem modernization.
For over five decades, ICMAI has included advanced Direct, International, and Indirect Taxation papers at the Final level, alongside Financial and Corporate Accounting modules at Intermediate and Final stages-closely mirroring the CA curriculum. ICMAI’s internship structure, unchanged in duration but enhanced in content, ensures industry-relevant training similar to ICAI’s three to 3 years ( of late extended to 3.5-year) internship model.Structurally, ICAI offers 16 papers (Foundation: 4, Intermediate: 6, Final: 6), whereas ICMAI has a 20-paper structure (Foundation: 4, Intermediate: 8, Final: 8), both including Strategic Financial Management at the Final level. Given the academic and training parity, the persistent exclusion of CMAs and CSs from the statutory definition of “accountant” is seen as unjustifiable.Similarly, ICSI has reformed its programs significantly over the past 45 years, focusing on compliance management, secretarial audits, and corporate governance in line with global standards, reinforcing the case for inclusive recognition of professional expertise across all three institutes.Critics question the government’s decision to engage Ernst & Young (EY), a financial audit firm, for mapping the curricula of ICAI, ICMAI, and ICSI, arguing that a neutral, multidisciplinary panel would have ensured balanced representation. The lack of transparency around EY’s recommendations raises concerns about alignment with the Bill’s objectives of enhancing service quality, compliance efficiency, and tax administration effectiveness. Critics further assert that the Select Committee focused on linguistic refinements rather than addressing deeper policy reforms essential for a modern, inclusive tax framework.
Some quarters lauded that present IT Draft language is simple and easy to understand and it is worth mentioning that ‘complex language in drafting law syndrome’ seems to be misnomer as professional discipline-law, economics, management, technology, medicines and so on -operate with distinct terminologies and approaches. Legal drafting requires precision, structural clarity, and adherence to statutory interpretation principles, differing fundamentally from literary styles. Simplistic language compromises legal enforceability. Furthermore, CMAs historically held exclusive rights to conduct Special Audits and Indirect Tax Compliance Audits under Sections 14 and 14AA until 2012. Post-2012 amendments extended these functions to CAs, despite indirect tax compliance being inherently aligned with CMA expertise. Critics argue this shift diluted domain-specific roles, undermining professional equity and effective tax governance.
Critics argue that engaging EY, a financial audit-centric firm, for curriculum mapping was misaligned with the broader legislative vision of the Income Tax Bill, 2025. A multidisciplinary panel comprising ICAI, ICMAI, ICSI, Bar Council of India, economists, and a retired Supreme Court judge as chairperson would have ensured a fairer, more holistic assessment. Assigning ICAI-historically resistant to statutory recognition of CMA and CS professions-the role of reviewing the Bill raises concerns of bias, perpetuating a monopolistic framework that stifles healthy professional competition. In a dynamic economy, competition drives quality, innovation, and efficiency in audit and compliance services; its absence risks stagnation and weakens tax administration. Furthermore, critics highlight the selective interpretation of the CA Act (1949), CMA Act (1959), and CS Act (1980). Despite the Select Committee’s claims, CMAs and CSs remain excluded from the “accountant” definition, while CAs continue to dominate nearly 80% of cost-related functions. Overlaps in corporate governance and compliance being domain of CSs further question the legislative commitment to fairness, inclusivity, and professional equity.
In today’s dynamic economic environment, driven by technological advancements and demand for specialized services, synergy among distinct professions is essential. Consolidating diverse domains into a single entity undermines unique expertise and hampers India’s vision of ‘Atmanirbhar Bharat’ and ‘Viksit Bharat.’ Critics emphasize that Chartered Accountants (CAs), Cost and Management Accountants (CMAs), and Company Secretaries (CSs) bring complementary skills vital for a specialized professional ecosystem. They advocate renaming the Institute of Cost Accountants of India to the Institute of Cost and Management Accountants of India (ICMAI) to align with global standards and restore the significance of ACMA/FCMA designations. Additionally, cost audits, indirect tax compliance, and tax management should be reserved for ICMAI members; corporate governance and secretarial audits for ICSI members; and financial reporting, statutory audits, and direct tax compliance for ICAI members. This structured demarcation would eliminate professional overlaps, foster competition, and enhance service quality. Critics urge the government to uphold professional identities, prevent monopolistic practices, and ensure balanced, specialized growth.The Income Tax Bill, 2025 awaits Parliamentary approval. Let us hope that our lawmakers will thoughtfully reconsider these critical concerns, revisit the Select Committee’s report, and ensure a balanced, inclusive framework before passing it for Presidential assent, enacting a law that truly reflects India’s modern economic and professional realities.
(The author is an Educationist, a Management scientist and Independent Researcher)
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