Friday, July 13, 2012


The Profession of Chartered Accountants is witnessing a major shift in professional requirements and practices. More importantly the following major changes require attention :

  • The various taxation statutes including value added tax, income tax, service tax are becoming compliance oriented and procedural requirements have been increased significantly.
  • The use of technology and electronic filing has resulted into new problems of mismatches resulting into high demand in case of VAT. Also in case of tax deduction at source (TDS), it is becoming very difficult to obtain credit of tax deducted by other parties, even if Form 26AS is reflecting such deductions. Some times technical error may even impact reflection of credit in 26AS. The Income Tax department is not even considering 26AS as final and is relying on its own system OLTAS. A large number of credits appearing in 26AS are not appearing on OLTAS resulting into unnecessary demand and delay in refund.
  • A large number of penalties and prosecutions have been legislated for non compliance of procedure, imposing large fines and penalties. In fact, earlier penalties and prosecutions were limited to substantive default. For example, even tax but now the government have been misdirected to concentrate on procedures and compliance's.
  • The compliance oriented atmosphere do not leave enough time to Chartered Accountants community to advise businesses on financial planning, business planning and tax planning and planning for growth.
  • The recent service tax amendment bringing out comprehensive taxation on all the services except those which are in the negative list and list of exempted services, has created a lot of confusion including -
  • Exempting CAG services indicate that the government feels that the services provided by Municipal Corporation, State Governments and various central government departments, judiciary as well as legislature may be subjected to service tax. It is important to appropriately  carve out legislative and regulatory function from the definition of services itself.
  • A number of services have been brought into reverse charge method, for example, legal services. It is noted that the chartered accoun-tants also provide services which are similar to the services being provided by lawyers under various legislations including representation before tax authorities, CLB, BIFR, ITAT, SEBI, SAT etc. - will these services be subjected to reverse charge? 
  • Education at school level is subjected to exempt, which indicate that any person including coaching organizations providing education up to high school education is exempted from service tax.
  • Services provided by transporter is included in exempted services, except those which are provided by a transport agency, how to distinguish a transport agency and a transporter will result in litigation.
  • The Direct Tax Code, GST and New Companies Bill being the pipe line may bring further stream of comprehensive changes for which all of us chartered accountants need to gear up. The Council of the Institute is actively working on taking up necessary issues to the Government  and at the same time warning the profession to meet the new challenges.


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