The Institute of Chartered Accountants of India (ICAI), through its notification F. No. 1-CA(7)/234/2025 dated 25th July 2025, has issued updated guidelines under the Chartered Accountants Act, 1949, reaffirming the cap on the number of tax audit assignments a Chartered Accountant in practice may undertake. Effective from 1st April 2026, the limit continues to restrict the number of tax audit assignments under Section 44AB of the Income-tax Act, 1961, to 60 per member or per partner in a firm, per financial year.
While the notification consolidates earlier guidance and provides procedural clarity, it also reopens a crucial conversation about the continued relevance and fairness of such a cap in today’s vastly transformed professional and economic environment.
Over the past two decades, the Indian economy has undergone significant changes. With formalization through initiatives like GST, digitization of records, increased regulatory oversight, and a surge in small and medium enterprises, the number of business entities requiring professional audit and tax compliance services has expanded multifold. The demand for quality Chartered Accountants has grown in tandem. Yet, the ceiling of 60 tax audits per member remains frozen in time—a threshold that does not align with the evolving complexity, scale, and compliance burden of the business world today.
The primary purpose of the tax audit cap was to ensure quality over quantity, promote equitable distribution of professional opportunities, and avoid concentration of work. These are valid concerns and continue to be relevant. However, the underlying assumptions when this cap was introduced no longer hold true in the same measure. In the current environment—marked by automation, advanced audit tools, cloud computing, and team-based execution—the capacity of professionals to deliver quality service at scale has increased exponentially.
Consider the case of senior Chartered Accountants—those who have built deep-rooted client relationships, possess decades of experience, and operate with well-structured teams and systems. Such professionals are often better positioned to handle a higher volume of assignments without compromising audit quality. The uniform cap of 60, however, treats a practitioner with 25 years of experience the same as a recently qualified member. This undifferentiated approach restricts natural growth and does not take into account capability, capacity, or track record.
The restriction, in its current form, is increasingly becoming a bottleneck for talented and high-performing professionals. In many cases, the cap results in difficult choices—turning away long-standing clients or compromising on growth to remain compliant. This not only limits professional development but also discourages investments in capacity enhancement, hiring, and technological advancement. The policy, although well-intentioned, could thus be inadvertently discouraging excellence rather than fostering it.
Furthermore, many experienced practitioners play a vital role in mentoring younger CAs and creating employment opportunities through expanding practices. Restricting their ability to scale may also affect the overall health of the profession. Rather than imposing a blanket restriction, the Institute could consider implementing a graded or tiered framework—where the cap increases based on the number of years in practice, team size, or compliance track record. This would reflect a more equitable and practical approach while continuing to uphold audit quality and ethical standards.
For instance, a Chartered Accountant in the early stages of practice may begin with a lower cap. As the firm matures, undergoes peer reviews, and invests in infrastructure, it could qualify for a higher threshold. This incentivizes professional development while enabling the Institute to monitor and guide growth in a structured manner. Such a model would also align better with global practices, where capacity and capability are recognized as important metrics for determining eligibility.
It is also important to acknowledge that the current landscape is far more regulated than when the cap was first introduced. CAs today are bound by SA 230 (Audit Documentation), SA 220 (Quality Control for Audit), peer reviews, risk-based assessments, and disciplinary mechanisms. These layers of oversight and quality checks already ensure that firms do not compromise on professional standards. Adding an arbitrary ceiling on quantity, without factoring in these controls, appears outdated.
Moreover, the professional fraternity today includes many niche firms with sectoral expertise—handling clients across geographies and industries. These firms often rely on economies of scale to remain viable and competitive. The cap, while intended to prevent concentration, may end up punishing competence and specialization. With the rise of startups, family-owned enterprises, and MSMEs seeking structured compliance support, the need for experienced professionals with the ability to serve at scale has never been greater.
It is important to emphasize that this is not an appeal to do away with regulation. Rather, it is a plea for dynamic regulation—one that grows with the profession it seeks to govern. A one-size-fits-all model does not do justice to the diversity of practitioners in India. As Chartered Accountants, we are bound by a Code of Ethics and professional standards. Trusting members to act responsibly while equipping them with a fair policy framework is the need of the hour.
The ICAI has always been a progressive and forward-looking institution. It has responded proactively to changes in the regulatory, economic, and technological environment. This is another such moment—one that calls for reflection, consultation, and courage. The President of ICAI and the Council, along with other stakeholders who have been instrumental in shaping this policy, are respectfully urged to re-examine the guidelines. A deeper engagement with the practicing community, supported by data and international benchmarks, can help chart a path that is both responsible and enabling.
It is also important to consider the reputational aspect. ICAI stands as one of the most respected professional bodies in the world. Policies that align with economic realities and professional aspirations reinforce its credibility and relevance. On the other hand, policies perceived as restrictive may lead to disillusionment, especially among the youth who are entering the profession with high expectations and ambitions.
While quality, ethics, and fair distribution of work remain non-negotiable pillars, they must be balanced with the realities of modern practice. A calibrated, progressive, and performance-based approach can ensure that these objectives are met without placing artificial ceilings on ambition and growth.
It is time the policy evolves—not just to accommodate change, but to lead it
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