Income Tax Budget 2026: ICAI’s key proposals include joint filing, F&O clarity, simpler returns

The Institute of Chartered Accountants of India (ICAI) has presented several recommendations in its pre-Budget memorandum for 2026–27, focusing on simplifying compliance, reducing litigation, and promoting a fair and transparent tax system.

The suggestions relevant to individual taxpayers are listed below.

1. Exclusion of F&O trading and speculation business from presumptive income

ICAI has proposed that Futures and Options (F&O) trading and speculation business should be excluded from the scope of presumptive taxation.

2. Optional joint taxation for married couples

ICAI has proposed the introduction of an optional joint taxation mechanism for married couples.

3. Mandatory return filing for agricultural landowners

It has been suggested that individuals owning more than a prescribed limit of agricultural land should be required to file income-tax returns.

4. Audit requirement for profit-linked deductions

ICAI has recommended a mandatory audit of accounts in all cases where profit-linked tax deductions are claimed, to ensure accuracy and compliance.

5. Introduction of a year-wise e-ledger system

The institute has proposed a year-wise electronic ledger for taxpayers to track TDS, TCS, and advance tax payments.

6. Clarification on surcharge rates for MMR calculation

To avoid ambiguity, ICAI has called for clear guidelines on surcharge rates applicable in computing the Maximum Marginal Rate (MMR), especially relevant for high-income individuals.

7. Decriminalisation and rationalisation of penalties

The ICAI recommends decriminalising certain prosecution provisions and eliminating dual penalties for the same default.

8. Simplified processing of returns

It is suggested that the processing of returns be restricted to arithmetical errors and prima facie incorrect claims, ensuring quicker processing and reduced disputes.

"Through our pre-Budget Suggestions for 2026–27, we aim to support a tax ecosystem that promotes ease of doing business, drives sustainable growth and strengthens India's journey towards a resilient and green economy," ICAI President Charanjot Singh Nanda said.

The ICAI has proposed an exemption from obtaining a TAN (Tax Deduction and Collection Account Number) for individuals or entities making payments to non-resident transferors.

The institute has suggested removing TCS on the sale of scrap, which would ease the compliance burden for small traders and individuals involved in recyclable material transactions.

ICAI has recommended incentives for investments in green and sustainable projects, encouraging individuals to contribute to environmental sustainability through eco-friendly initiatives.