This letter addresses the Finance Minister of India, highlighting the need to include Cost and Management Accountants under Section 288(2) of the Income Tax Act. Author claims that current monopoly of Chartered Accountants in tax audits creates obstacles for voluntary compliance and limits the potential contributions of Cost and Management Accountants in this domain.
The letter argues that Cost and Management Accountants possess specialized skills that can complement Chartered Accountants’ capabilities, resulting in more comprehensive tax audits. By allowing Cost and Management Accountants to conduct tax audits, taxpayers will have more choices, leading to greater adherence to tax compliance and increased tax revenues for the government. Inclusivity in the tax audit domain is expected to promote fair competition among professional bodies, improve service quality and efficiency, and enhance the global recognition of the Institute of Cost Accountants of India.
The letter concludes by respectfully requesting the Finance Minister’s consideration to amend Section 288(2) of the Income Tax Act to include Cost and Management Accountants as eligible tax auditors.
FULL TEXT OF THE LETTER IS AS FOLLOWS:-
The Finance Minister Of India,
Ministry of Finance,
Government of India,
North Block,
New Delhi – 110001
Subject: Inclusion of Cost and Management Accountants in the Definition under Section 288(2) of the Income Tax Act
Respected Madam,
With due respect, I am writing to bring your attention to a matter that has significant implications for voluntary compliance with the Income Tax Act in India. The Institute of Cost Accountants of India, being the 2nd largest professional body globally, plays a pivotal role in promoting the principles of cost and management accountancy. However, the current tax audit monopoly held by Chartered Accountants under Section 288(2) of the Income Tax Act creates undue hurdles for voluntary compliance and limits the potential contributions of Cost and Management Accountants in this critical domain.
The Institute of Cost Accountants of India, with its vast pool of qualified professionals and their expertise in cost analysis, budgeting, and financial management, can significantly contribute to enhancing the efficiency and effectiveness of tax audits in the country. By including Cost and Management Accountants within the ambit of Section 288(2) of the Income Tax Act, we can foster a more competitive and inclusive environment for tax auditing services while encouraging taxpayers to voluntarily comply with tax laws.
Allow me to present the following points in support of this proposal:
Expertise and Specialization: Cost and Management Accountants possess specialized skills in cost accounting, budgetary control, and financial management. Their expertise would complement the existing capabilities of Chartered Accountants and lead to more comprehensive tax audits.
Encouraging Voluntary Compliance: With a broader pool of qualified professionals, taxpayers would have more choices in selecting tax auditors. This competitive environment would foster greater adherence to tax compliance, leading to increased tax revenues for the government.
Promoting Fair Competition: Inclusivity within the tax audit domain will encourage fair competition among professional bodies, leading to improved service quality and efficiency.
Global Recognition: The Institute of Cost Accountants of India has achieved international recognition, with members contributing significantly to the global financial and management accounting landscape. Inclusion within the Income Tax Act would further enhance their standing and promote their expertise.
In light of these points, I respectfully request your kind consideration to amend Section 288(2) of the Income Tax Act to include Cost and Management Accountants as eligible tax auditors. This step would not only bolster voluntary compliance but also unlock the potential of skilled professionals in the cost and management accounting domain for the benefit of the Indian economy.
I am confident that your esteemed leadership and foresight will help create an environment conducive to the growth and progress of the financial sector in India. Your support in this matter will be highly appreciated by the Institute of Cost Accountants of India and its members.
Thank you for your time and attention to this crucial matter. I am available at your convenience to discuss this proposal further.
With utmost respect,
Rakesh Bansal Adv
Author Bio
If govt allow CS & CMA in Tax Audit ,Statutory Audit then B Com Graduate also will claim such a right .Because so many commerce graduates have much knowledge/expert than CMA & CS in auditing and accounting .
It is not a good sign. CA Course is a full time course and CAs are educated with wide range of subjects and trained to do audit. The Tax Audit should not be done by CMAs. Their area should be confined to COST Audit only.
What do you mean by full time course?? and CMAs have more subjects than CAs. So please clarify yourself.
Please sir tell me how can you say CMA is not a full time course and CA is. Please justify your answer with valid rules of both Institute.
What is the use of CMA Syllabus while conducting Tax Audit & Statutory Audit ?
Why don’t allow Commerce Graduate to conduct tax Audit & Statutory Audit While CMA & CS allow to do so ?
If govt do like that then there is no meaning of running ICAI institute . Nobody will go to that institute .Who will spend much time & study much syllabus while CMA & CS easily pass with some irrelevant syllabus?
Have you gone through the syllabus sir ?
Please have a look and then make a comparative analysis.
Without having a detailed knowledge please refrain yourself making such harsh comments.
Each Chartered Accountant can undertake 60 Tax Audit assignments, irrespective of Corporate & Non-Corporate Assesses. In case of Corporate, Chartered Accountants get fees in the range of LAKHS, but in Non-Corporate cases, they get fees in the range of THOUSANDS only. Hence, Chartered Accountants make permutation & combination to sign Tax Audit Report under Income-Tax Act to yield high revenue. Non-Corporate Assesses rejected by Chartered Accountants approach Non-CA Tax Professionals for giving compliance U/s 44AB of Income-Tax Act. Non-CA Tax Professionals have to roam around in search of empty slots of Chartered Accountants signature during due date for filing returns under Income-Tax Acts. Further, ICAI has mandated to obtain UDIN in their portal for every Audit Certification/attestation made by Chartered Accountants with effect from 1st April 2019. This process has further increased the complication in tax compliance and also scope to demand more fees from their clients, resulting in one more strict hurdle for voluntary compliance.
World over accounting funcations are classified depending on area of operation, application & usage. (1) Cost Accounts – Manufacturing/Processing Activity (2) Financial Accounts -Trading Activity and (3) Management Accounts – Management Accounts is nothing but application of Ratio Analysis and Cash Flow Statement on Cost and Financial Accounts, which are required for decision making at management level. In The Cost and Works Accountants (Amendment) Act, 2011, name has been changed to “The Institute of Cost Accountants of India” and the members got the power to work in the area of Management Accounts also and can re-designate themselves as ACMA/FCMA. Cost Accountants now possess wide power of working in the area of Cost Accounts, Financial Accounts & Management Accounts. Whereas, Chartered Accountants are restricted to work in the area of Financial Accounts only (Ie, Accounting of Trading Activity Only). Hence, ICAI (Cost & Management) should be called FULL ACCOUNTING BODY in INDIA. I do not understand why only Chartered Accountants are authorized to conduct Tax Audit U/s 44AB of Income-Tax Act & enjoy monopoly of authority, causing strict hurdle for voluntary compliance.
Any update on accountant definition changes
In the same line CA should be allowed to do Cost Audit, as CAs also possess all the expertise to do Cost audit….
This is what I would call a dumb argument because cost accountants are not asking for statutory audit rights; they are asking for tax audit rights, due to which, apart from all the money benefits, CAs get an unparalleled respect and reputation because they get the opportunity of connecting with the general public, and despite CMAs and CS working equally hard, they don’t get such respect and reputation.
Cost and Financial audits are statutory audit. Government has developed different profession and their regulatory bodies for this.
But Tax Audit is not statutory audit. there is no harm if CMA or CS include in the accountant definition. At least, the compliance cost will reduce further.