ICAI Proposes 'Prudent' Tax Reforms for Budget 2026-27, Suggests F&O Exclusion and Agri-Land ITR Mandate

Economy

Updated on 03 Nov 2025, 12:07 pm

Reviewed By

Aditi Singh | Whalesbook News Team

Short Description :

The Institute of Chartered Accountants of India (ICAI) has submitted its pre-budget recommendations for the Union Budget 2026-27, advocating for prudent tax reforms. Key proposals include excluding Futures and Options (F&O) trading from presumptive income, making Income Tax Returns (ITR) mandatory for individuals holding more than specified agricultural land acreage, and increasing the surcharge. ICAI aims to enhance ease of doing business, promote sustainability, and reduce tax litigation.

ICAI Proposes 'Prudent' Tax Reforms for Budget 2026-27, Suggests F&O Exclusion and Agri-Land ITR Mandate

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Detailed Coverage :

The Institute of Chartered Accountants of India (ICAI) has put forth its pre-budget recommendations for the Union Budget 2026-27, emphasizing the need for 'prudent' tax reforms. Among its significant suggestions are the exclusion of Futures and Options (F&O) trading and speculation businesses from the ambit of presumptive income, a move that could affect traders. Furthermore, ICAI has proposed making Income Tax Returns (ITR) mandatory for individuals who own agricultural land exceeding a specified acreage, aiming to widen the tax net. The institute also called for an increase in the tax surcharge.

ICAI's recommendations extend to facilitating ease of doing business and encouraging environmental sustainability. For business reorganisation in Limited Liability Partnerships (LLPs), it suggested extending tax-neutral status and rationalizing Tax Deducted at Source (TDS) on partners' remuneration. The institute also proposed incentives for promoting green projects.

To mitigate litigation, ICAI suggested measures such as the decriminalisation of certain prosecution provisions, removal of dual penalties for the same offense, and limiting return processing to addressing only arithmetical errors and prima facie incorrect claims. To prevent tax avoidance and improve tax collection, besides F&O exclusion and mandatory agricultural land ITR filing, it suggested joint taxation of married couples. Rationalization proposals include increasing the surcharge threshold and providing deductions for medical insurance premiums and expenses for dependent disabled individuals under the default tax regime.

Impact: These recommendations aim to simplify compliance, encourage sustainable practices, and potentially increase tax revenue. Changes related to F&O, agricultural land taxation, and surcharge could directly or indirectly impact various investor segments and businesses. The overall thrust is towards a more efficient and equitable tax system. Rating: 7/10.