ICAI’s Charanjot Singh Nanda discusses US tariffs, the new income tax bill, GST reforms, and how chartered accountants are driving India’s growth towards a USD 5 trillion economy
Charanjot Singh Nanda, president of the Institute of Chartered Accountants of India (ICAI), said that rationalising Goods and Services Tax (GST) rates is essential to address the inverted duty structure in the textile sector. He explained that aligning input and output GST rates, for example, at 12 per cent, would prevent the accumulation of input tax credits and ease the financial pressure on manufacturers. Edited excerpts:
With the introduction of the new income tax bill, how do you assess its impact and in what ways should an ordinary individual approach their financial planning in light of these changes?
The ICAI was the first body invited by the Parliamentary Committee on 6 March 2025. Although two hours had been allotted, discussions extended to three hours. Three key initiatives were addressed: the reduction of sections from 700 to 536 to allow a more comprehensive study by the common man; the simplification of language to ensure accessibility and minimise interpretative issues; and structural and textual clarity to improve coherence.
The new IT bill introduces no major tax changes, ensuring continuity and certainty for taxpayers. Tax rates remain unaltered, preserving predictability for those engaged in long-term planning. The simplification of the Act’s language and structure is expected to facilitate ease of doing business in India. Salaried individuals and property owners can continue with their financial planning as before, without needing to make significant adjustments.
The US tariffs have risen to 50 per cent and you were quoted as saying that India will emerge stronger as a result. Could you explain the reasoning behind this view?
It has already come out. What I said was on Sunday when I was in Lucknow. The imposition of strict tariffs by the United States is undoubtedly a challenge for several key export sectors, such as textiles, gems and jewellery, and small businesses. At the same time, it catalyses India to accelerate reforms and strengthen global competitiveness.
India’s large and youthful consumer base, with 68 per cent of the population under the age of 40, is a source of strength. With merchandise exports accounting for just 10 per cent of gross domestic product (GDP), nothing adverse can happen to India. More importantly, the Prime Minister has created a strategy. Three of the major countries of the world, India, Russia and China, have come together to ensure that trade continues without obstruction. India has begun sending merchandise to 40 other countries to neutralise the potential impact of US tariffs. As a result, we are strategically better placed today, with greater momentum, than under the earlier regime.
Given the prevalence of financial frauds today, such as the recent Gensol case, what measures is the Institute implementing to address and mitigate these challenges?
The ICAI is the first accounting body globally to release detailed forensic accounting and investigative standards. Currently, ICAI has issued 23 forensic standards designed to strengthen forensic engagements and support legal processes, serving as benchmarks for financial investigations across jurisdictions. Plans are underway to introduce global forensic standards accessible internationally.
In addition, ICAI has established robust systems for forensic audits and is developing forensic system audit standards to further enhance accuracy and reduce fraud. The Institute currently has over 14,000 forensic professionals and more than 35,000 Chartered Accountants who have completed information system audits. On the regulatory side, ICAI operates disciplinary benches, ethical standards boards, and a Financial Review and Reporting Board (FRRB), which conducts desk reviews before matters are escalated for further action or referral to disciplinary committees as needed.
Recognising that fraudsters are often highly sophisticated, the Institute emphasises preventive measures to stop the recurrence of fraud. In collaboration with Tuhin Kanta Pandey, Chairman of Sebi, ICAI has formed a study group titled From Reaction to Resilience: A Preventive Approach to Capital Market Financial Fraud in India. The group focuses on identifying early signs of scams and frauds to mitigate risks proactively, ensuring a regulatory-driven environment that promotes integrity and accountability.
You recently visited Pahalgam, a destination many perceive as sensitive or challenging. What motivated you to hold a council meeting there despite such concerns?
Referring to the words of former President of India, the late Dr APJ Abdul Kalam, who described Chartered Accountants as partners in nation building, I would say that the council stands firmly with the nation in times of distress. The entire council, along with their families, travelled to Pahalgam for a four-day meeting, where professional issues were discussed at length.
The purpose was clear: to send a strong message that terrorism has no place in a society that is progressing rapidly. Every part of the country is integral, and to demonstrate solidarity and reaffirm our commitment to national unity, the council convened in Pahalgam from 13 to 15 August.
How can the Goods and Services Tax (GST) reforms be further optimised to effectively address the challenges posed by the inverted duty structure in the textile sector?
Inverted duty structure occurs when a manufacturer purchases goods at a higher GST rate, for example, 18 per cent, but sells them at a lower rate, such as 12 per cent, resulting in a shortfall of 6 per cent GST. Previously, the government reimbursed this difference in certain sectors, including textiles, but this practice has since been restricted. A key reform, therefore, would be to rationalise GST rates so that the input and output rates are aligned, such as 12 per cent on both, eliminating the accumulation of input tax credits. Trade bodies have advised the government to implement such rationalisation, ensuring a uniform slab and reducing the financial burden on manufacturers.
As India progresses towards becoming a USD 5 trillion economy, could you please elaborate on the role that CAs can play in supporting and advancing this objective?
Chartered Accountants are fully prepared to contribute to this objective. They are actively engaged in areas such as digital transformation, emerging technologies, AI, blockchain, data analytics, the Internet of Things, cybersecurity audits, and information security audits. They also play a crucial role in the digital payments revolution, with India leading globally through platforms like UPI, which accounts for 49 per cent of worldwide digital transactions.
CAs possess a deep understanding of risk management, credit assessment, and regulatory compliance. Their expertise extends to wealth advisory, market analysis, sustainability, and non-financial reporting, particularly in the growing areas of ESG, green finance, and impact investing. Businesses increasingly rely on professionals who can ensure transparent sustainability reporting and effective CSR practices.
In addition, Indian Chartered Accountants excel in international services, including IFRS advisory, cross-border taxation, and forensic accounting, with 23 forensic standards promulgated under their guidance. They also support startups and MSMEs by guiding compliance and regulatory requirements, as demonstrated during programmes conducted across 180 branches on International MSME Day. Overall, they remain a vital asset to the nation, continuing to play a central role as partners in economic and policy reforms, contributing not only to national growth but also to India’s emergence on the global stage.
