The Pillars of Fiscal Integrity: Cost Management Accountants deserve a big role in the Budget

AS THE UNION BUDGET 2026 approaches, there is a compelling case for Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to amend the definition of ‘Accountant’ under the Income Tax Act to include Cost and Management Accountants (CMAs). Recognising CMAs at par with Chartered Accountants (CAs) would significantly enhance the efficiency of India’s tax administration as CMAs are uniquely equipped to identify revenue leakages and ensure rigorous tax compliance. Such a move aligns with the government’s Ease of Doing Business initiative by providing taxpayers with a wider pool of competent professionals, thereby reducing compliance costs and fostering healthy competition.

For decades, the Indian taxation landscape has been anchored to a definition of accountant that was appropriate in the 1950s than a reflection of a modern, multi-disciplinary economy. Under the Income Tax Act, 1961 and per Clause 515(3)(b) of the recent Income Tax Bill, 2025, the authority to conduct tax audits continues to remain with CAs. As the Union Budget 2026 approaches, the government should expand the scope to also embrace the specialised expertise offered by CMAs.

The legal grounds for this change are robust. Section 2(1)(b) and 2(ii) of the Cost Accountants Act, 1959 in essence defines a Cost Accountant in practice as a professional capable of verification or certification or auditing of cost records of costing facts or data. A tax audit, in essence, is a compilation and verification of such data. By amending Section 515(3)(b) of the Income Tax Act, 2025 to include cost accountants holding a valid Certificate of Practice under Section 6(1) of the 1959 Act, the government would align the tax code with international standards where accountant is a broad, inclusive category.

The exclusion of CMA professionals from the ambit of income tax law today is a glaring statutory anomaly. CMAs are already granted parity with CAs across nearly every other critical economic regulation. They conduct audits under the GST Act, VAT Acts, co-operative sector, certification in foreign policy, SEBI; serve as internal auditors under the Companies Act, 2013; and function as authorised Insolvency Professionals and Registered Valuers. If a CMA is legally qualified to audit the complex input tax credit chains of a multistate corporation or verify the internal controls of a listed entity, it is but natural they be deemed ‘qualified’ to certify tax audit reports as well.

At the heart of a tax audit is the verification of data to ensure the government is not deprived of its due revenue. CMAs possess a unique techno-commercial perspective that regular financial accountants may lack. While traditional auditing focuses on historical financial reporting, CMAs specialise in cost management, valuation, and process efficiency. In sectors like manufacturing, infrastructure, and services, a CMA’s ability to conduct a granular analysis of cost structures allows them to identify leakages, inflated expenses, and valuation errors that a standard financial audit might miss. By excluding CMAs, the tax department is effectively turning away the very experts best trained to spot cost-based tax evasion.

Furthermore, the current monopoly creates a massive compliance bottleneck for the MSME sector. With millions of taxpayers requiring audit services, there is severe pressure on the existing recognised pool leading to higher costs and rushed audits during ‘deadline season’. Including CMAs would foster healthy competition, driving down compliance costs for small businesses and increasing the overall pool of qualified professionals available.

As India marches toward its $5-trillion goal, it cannot afford to be held back by restricting professional participation. The upcoming Budget is the perfect platform to further modernise the Income Tax Act by recognising that CMAs are not just “cost experts” but vital pillars of the nation’s fiscal integrity. It is time to open the doors of Section 515 to ensure a transparent, competitive, and technically superior tax regime for a Viksit Bharat.

The inclusion of Cost Accountant as defined in Section 2(1)(b) of the Cost Accountants Act, 1959 and holding Certificate of Practice (COP) is the need of the hour. CMAs undergo a three-tier examination process (Foundation, Intermediate, and Final) that mirrors the depth of the CA curriculum.

The CMA syllabus for Direct Tax Laws and International Taxation is virtually identical in scope. Both curricula cover assessment of entities, detailed study of individuals, HUF, firms, and companies. Under International Taxation they cover Transfer pricing, Double Taxation Avoidance Agreements (DTAA), and BEPS, and Tax Planning covers Strategic tax management to ensure legal compliance and cost efficiency.

The CMA curriculum also includes Corporate Accounting and Auditing (Intermediate) and Cost and Management Audit (Final). Unlike financial audits, which focus on “True and Fair” views of balance sheets, a CMA’s audit training emphasises Internal Control Systems, Forensic Audit, and Operational Audits.

Modern income tax scrutiny increasingly revolves around Inventory Valuation and Profitability Ratios. Since CMAs are the sole professionals authorised to conduct Statutory Cost Audits under the Companies Act, they possess a superior understanding of how production costs translate into taxable profits and reconcile Financial Profit with Cost Profit of the organisation to optimise the resource utilisation.

Including a professional who holds a valid Certificate of Practice under Section 6(1) of the Cost Accountants Act ensures that the person signing the tax audit has been vetted by a statutory body and is subject to the same professional ethics and disciplinary jurisdiction as a CA.

By aligning Section 515(3)(b) with the Cost Accountants Act, 1959, the government will rectify a legislative gap that will now recognise the specialised tax and audit training CMAs receive. This change will not only provide CMAs with their hard-earned professional recognition but also provide the Income Tax Department with additional support in the form of a technologically and operationally aware class of auditors.

Indian CMA firms have established global credibility by providing audit support to Indian subsidiaries of US-listed companies. In the UK and Canada, multiple professional bodies are legally recognised as ‘Accountants’ for tax and audit purposes. With the Udyam portal now reporting around 7.5 crore registered MSMEs, India has reached a critical tipping point. Including CMAs under the Income Tax Act is both a professional dem and and an economic necessity.