ICAI Revamps Tax Audit Limit to Boost Quality and Fairness: New Rules Effective April 2026
The Institute of Chartered Accountants of India (ICAI) has introduced a significant reform to enhance audit quality and ensure equitable distribution of work among Chartered Accountants (CAs). Starting April 1, 2026, the ICAI will enforce a strict limit of 60 tax audits per financial year for individual CAs, closing a loophole that allowed multi-partner firms to bypass this cap.
Stricter Enforcement of Tax Audit Limits
ICAI President CA. Charanjot Singh Nanda announced that the revised rule will prevent partners in CA firms from pooling their individual audit limits. Previously, senior partners could sign off on more than 60 tax audits by leveraging the unused quotas of junior partners. From the financial year 2026-27, each CA will be restricted to conducting only 60 tax audits, ensuring a fair workload distribution and reducing the concentration of audits among a few senior partners.”This measure is crucial for elevating professional standards and curbing anti-competitive practices,” said Nanda, emphasizing the ICAI’s commitment to audit quality.
Current Guidelines and the Need for Change
Under the existing system, a single CA can conduct up to 60 tax audits annually, while partnership firms can collectively handle audits up to the combined limit of all partners. This has led to senior partners exhausting their quotas and utilizing those of junior colleagues, creating an uneven workload. The new regulation aims to address this issue, promoting fairness and transparency in audit assignments.
Boom in Global Capability Centres (GCCs)
Speaking at a GCC summit in the national capital on June 27-28, 2025, Nanda highlighted the growing opportunities for Indian CAs. He projected that the number of global capability centers (GCCs) in India will nearly triple to over 5,000 in the next two years. Currently, approximately 80,000 CAs are employed in GCCs, benefiting from the diverse services these centers demand. “India is a prime destination for GCCs,” Nanda noted, adding that the ICAI will host additional GCC summits in Ahmedabad, Mumbai, and Hyderabad between August 2025 and February 2026 to further engage with this sector.
Building Domestic ‘Big Four’ Audit Firms
To strengthen India’s audit ecosystem, the ICAI is developing a framework to enable domestic CA firms to form global tie-ups. The deadline for stakeholder comments on the draft overseas networking guidelines has been extended to July 16, 2025, from June 27. These guidelines aim to foster the growth of large home-grown audit firms, comparable to global giants like EY, Deloitte, KPMG, and PwC. The proposed framework will allow domestic firms to collaborate with international peers, acquire expertise, and establish a stronger presence in India. Firms with existing global affiliations will need to register with the ICAI, which previously required only a form submission, discontinued four years ago.
Dominance of Big Four in India
As of March 2025, affiliates of the Big Four—EY, Deloitte, KPMG, and PwC—along with Grant Thornton and BDO, audited 326 of the 486 Nifty-500 companies, according to primeinfobase.com. The new guidelines aim to level the playing field, enabling domestic firms to compete with these global players.
Why This Matters for CAs and Businesses
The ICAI’s reforms are set to transform the audit landscape in India by:
- Enhancing Audit Quality: Limiting audits per CA ensures thorough and high-quality work.
- Promoting Fairness: Equal distribution of audit assignments prevents overburdening senior partners.
- Boosting Global Competitiveness: Domestic firms can scale up through international collaborations, creating Indian audit powerhouses.
- For businesses, these changes promise more reliable audits and a stronger domestic CA ecosystem, while CAs stand to benefit from increased opportunities in GCCs and global partnerships.
The ICAI’s decision to enforce a strict 60-tax-audit limit per CA, effective April 2026, marks a pivotal step toward improving audit quality and fairness. Coupled with efforts to build domestic ‘Big Four’ firms and capitalize on the GCC boom, these reforms position Indian CAs for growth and global competitiveness.