Institute of Chartered Accountants of India (ICAI) today said the government must decriminalise direct taxes, limiting prosecution only to cases of willful tax evasion. The move will bring the much needed fairness, the authority said.

“With Budget 2026, the government must send a strong signal of trust by accelerating decriminalisation under direct taxes and limiting prosecution strictly to cases of wilful tax evasion. Removing dual penalties and rationalising punitive provisions will bring much-needed fairness and certainty to the tax system,” said Charanjot Singh Nanda, president, ICAI.  

Need measures on TDS, TCS and advance tax front: ICAI

Further initiatives pertaining to TDS, TCS and advance tax are some of the other measures ICAI called for in the upcoming budget. “Introducing a year-wise income-tax e-ledger for TDS, TCS and advance tax, similar to GST, can be a game-changer in reducing disputes and taxpayer interface,” Nanda said.  

Nanda also suggested a closer coordination between the GST and customs. “On the indirect tax front, while GST 2.0 has substantially addressed key issues, particularly GST rate rationalisation, the focus now needs to shift towards closer coordination between GST and Customs, faster refunds and a more robust input tax credit mechanism, especially for MSMEs and exporters,” he said.  

“Together, these measures will significantly improve ease of doing business, strengthen voluntary tax compliance and help Indian exporters compete on an equal footing in the global market,” he added.

Exclude F&O from presumptive income, says ICAI

Earlier, ICAI has also made a strong pitch for exclusion of Futures and Options from presumptive income, and making ITR mandatory for persons holding more than specified acres of agricultural land. The institute has also called for increase in surcharge. ICAI said in its pre-budget recommendations to the Centre are aimed at facilitating ease of doing business and encouraging environmental sustainability.

The statutory tax body said its recommendations on direct taxes and international taxation encapsulate a spectrum of suggestions on tax policy and framework at the macro-level as well as specific-section wise suggestions aimed at mitigating litigation, reducing compliance burden, rationalisation of the provisions of income-tax law, preventing tax avoidance and improving tax collection.