Recently introduced Income Tax Bill 2025: Calls for a review

By Prof. D. Mukherjee

The Income Tax Bill 2025, introduced in the Lok Sabha by the Hon’ble Finance and Corporate Affairs Minister on 13th February 2025, marks a significant legislative reform, replacing the six-decade-old Income Tax Act of 1961. With 536 clauses and 16 schedules, the bill seeks to simplify and modernize direct tax administratior , reducing compliance burdens and complexities. This forward-looking legislation strengthens investor confidence, fiscal governance, and economic administration amid a dynamic global market. Aligned with India’s Ease of Doing Business vision, the bill enhances tax compliance efficiency, mirroring the success of the GST Act of 2017, which streamlined indirect taxation. By consolidating and simplifying tax laws, it aims to create a fairer and more transparent system. However, to fully achieve its objectives, certain provisions require refinement. Specifically, Clause 2(1) read with Clause 515(3)(b) should be reconsidered to foster a more inclusive tax compliance framework, enabling broader professional participation, including Cost and Management Accountants (CMAs) and Company Secretaries (CSs), in India’s evolving tax administration.
The Hon’ble Finance Minister, in her ‘Statement of Objects and Reasons’, emphasized the need for this bill due to the complexity, frequent amendments, high compliance costs, and inefficiencies of the Income Tax Act, 1961. However, limiting the role of ‘Accountant’ solely to CAs contradicts the bill’s goal of creating a simpler, inclusive, and efficient tax administration. Expanding this definition to include Cost Accountants and Company Secretaries would enhance competition and reduce compliance costs. Currently, CAs dominate tax audits and assessments, restricting taxpayer choices and increasing compliance expenses. Recognizing CMAs and CSs would introduce competition, ensuring better service quality at lower costs, particularly benefiting MSMEs and individuals. Increased professional diversity would improve efficiency, affordability, and access to tax management services. For SMEs, compliance costs could drop significantly as CMAs and CSs bring expertise in cost efficiency and corporate compliance. A competitive tax compliance market would curb overpricing and promote a balanced professional landscape. Greater competition would also drive technological advancements, making taxation more accessible. MSMEs, startups, and individuals would gain affordable advisory services, aiding informed financial decisions.
Both Cost Accountants (CMAs) and Chartered Accountants (CAs) undergo rigorous training in taxation, accounting, auditing, and compliance. However, the Income Tax Bill 2025 does not recognize the role of CMAs and Company Secretaries (CSs) in tax administration, limiting their professional scope. CMAs specialize in direct and indirect tax laws, financial analysis, and cost efficiency, making them well-equipped to handle tax-related matters. Their expertise in cost control benefits businesses by ensuring financial prudence alongside tax compliance. Including CMAs in tax administration would improve efficiency and promote a more structured, transparent tax system. Similarly, Company Secretaries (CSs) specialize in corporate governance, financial law, and regulatory compliance, positioning them well for tax planning and administration. Their deep understanding of corporate taxation ensures businesses maintain legal adherence while optimizing financial performance. Recognizing CSs in tax assessments and audits would create a more streamlined and comprehensive compliance system. By restricting the definition of ‘Accountant’ to only CAs, the bill limits taxpayer choices and increases compliance costs. Broadening this definition would foster fair competition, improve service quality, and enhance efficiency in tax audits, assessments, and dispute resolution. Given the complexity of financial transactions and evolving tax regulations, a multidisciplinary approach is essential. Including CMAs and CSs alongside CAs would strengthen tax administration, ensuring better financial management and compliance. India’s diverse economic base requires an inclusive framework to enhance efficiency, reduce compliance costs, and improve taxpayer services, benefiting both businesses and the government.
Until 2009-2010, CMAs were the sole professionals recognized for indirect tax compliance, leveraging their expertise in cost control and financial efficiency to manage excise duties, service tax, and VAT regulations. However, recognizing the need for broader participation, the government later allowed Chartered Accountants (CAs) to engage in indirect tax audits and compliance, fostering competition, improving service quality, and reducing costs. A similar approach is now needed for direct taxation under the Income Tax Bill 2025. Restricting the definition of ‘Accountant’ to CAs excludes CMAs and CSs, limiting professional diversity and denying taxpayers access to specialized knowledge in tax compliance, corporate governance, and financial analysis. CMAs and CSs bring expertise crucial for efficient tax planning and assessments, just as indirect taxation benefitted from a more inclusive professional environment. Expanding professional recognition in direct taxation would enhance taxpayer services, lower compliance costs, and improve transparency. A diverse pool of tax experts would strengthen financial management, ensuring businesses and individuals benefit from a competitive and efficient tax administration system.
India, aspiring to be a global economic power, must adopt an inclusive, competitive approach to tax compliance by recognizing multiple professional accountancy bodies. To align with international best practices in fiscal administration, India needs a diversified system similar to leading economies. For instance, the United Kingdom (UK) acknowledges various accounting bodies, including the Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institute of Management Accountants (CIMA), the Chartered Institute of Public Finance and Accountancy (CIPFA), the Association of Chartered Certified Accountants (ACCA), the Association of International Accountants (AIA), and the Chartered Institute of Taxation (CIOT). This model fosters competition, efficiency, and cost-effectiveness in taxation, auditing, and compliance. Other nations also embrace pluralistic frameworks. Canada’s Chartered Professional Accountants (CPAs) integrate competencies from legacy bodies like the Certified General Accountants (CGA) and Certified Management Accountants (CMA). Australia recognizes Chartered Accountants Australia & New Zealand (CA ANZ), CPA Australia, and the Institute of Public Accountants (IPA) for tax-related roles. In the United States, tax compliance is shared among Certified Public Accountants (CPAs), Enrolled Agents (EAs), and tax attorneys, ensuring taxpayers have multiple professional choices. India must adopt a similar system to enhance tax compliance, efficiency, and global competitiveness
With India’s 1.5 billion population and diverse economy, relying solely on ICAI for tax compliance is inadequate. Including ICMAI and ICSI in tax administration would align India with global best practices, offering taxpayers broader professional choices, improved service quality, and competitive pricing. The UK’s Chartered Institute of Taxation (CIOT) sets a precedent by recognizing multiple institutions for taxation expertise, ensuring fairness, transparency, and efficiency. Expanding the definition of ‘Accountant’ in the Income Tax Bill 2025 to include CMAs and CSs would enhance tax administration, reduce compliance costs, and create a more inclusive financial ecosystem.
A strong tax administration system is crucial for a robust financial framework. Expanding the role of CMAs and CSs in tax assessments, appeals, and compliance would make the process more structured, responsive, and transparent. With tax laws becoming increasingly complex, a larger pool of qualified professionals would accelerate assessments, reduce backlogs, and enhance dispute resolution, ensuring faster settlements that benefit both taxpayers and the government. CMAs, with expertise in cost accounting and financial management, offer valuable insights into tax-saving strategies and compliance planning. CSs, specializing in corporate law and governance, help businesses stay compliant with evolving tax regulations, reducing penalties and litigation risks. Their inclusion would lead to better tax planning and management, benefiting businesses and individuals alike. Additionally, recognizing CMAs and CSs would curb tax evasion and revenue leakages by ensuring expert guidance and greater adherence to tax laws. A diverse pool of professionals in tax compliance discourages unethical practices and maximizes revenue collection. A more inclusive tax administration system would also improve India’s business environment. A well-structured, transparent tax framework aligns with the government’s vision of ‘Ease of Doing Business.’ By reducing compliance bottlenecks and fostering professional competition, businesses—especially SMEs—would find tax obligations more manageable, leading to a stronger and more thriving economy.
To fully achieve the objectives of the Income Tax Bill 2025, the government should amend Clause 2(1) read with Clause 515(3)(b) to define ‘Accountant’ as: “Accountant means a Chartered Accountant (CA) within the meaning of section 2(1)(b) of the Chartered Accountants Act, 1949, holding a certificate of practice, a Cost Accountant (CMA) within the meaning of section 2(1) (b) of the Cost Accountants Act,1959(as amended), holding a certificate of practice or a Company Secretary (CS) within the meaning of section 2(1)(b) of the the Company Secretaries Act, 1980, holding a certificate of practice” . The Bill, currently under review by the Parliamentary Standing Committee on Finance, should expand the scope of professionals involved in tax compliance management. Additionally, establishing a new regulatory body, the Indian Institute of Accountants (IIA), as proposed in the CA/CMA/CS Amendment Bill 2022, would address the growing demand for tax professionals, aligning with global best practices. Restricting the definition of ‘Accountant’ solely to CAs contradicts the Bill’s intent. Including CMAs and CSs would enhance competition, efficiency, and fairness in tax administration, benefiting taxpayers and the economy. A broader definition is essential for long due meaningful tax reforms. Moreover, inclusion of CMA and CS in draft bill 2024 was rightfully considered but exclusion of the same from the final bill placed in the parliament on 13th February 2025 seems to be l miscarriage of legislative intent and against openness and globalization.
(The Author is an Educationist, a Management Scientist and an Independent Researcher)

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