REASONS & JUSTIFICATIONS–WHY TO INCLUDE COST ACCOUNTANT IN ACCOUNTANT DEFINITION OF THE INCOME TAX ACT/BILL
1. Introduction
Before delving into the article, I would like to express my gratitude to God, my parents and all my gurus. As per my understanding, I would like to share a few thoughts on why Cost Accountant have not been included in the definition of ‘Accountant’ under the New Income Tax Bill 2025 and present my views on the reasons for inclusion of Cost Accountant.
2. Introduction to Cost Accountant and Their Regulatory Framework
The Institute of Cost Accountants of India (erstwhile The Institute of Cost and Works Accountants of India) (hereinafter referred to as “Institute”)a statutory professional body established by a special act of Parliament, namely, the Cost and Works Accountants Act, 1959 (hereinafter referred to as “Cost Accountants Act”). Profession of Cost Accountant(CMA) is governed by the Code of Conduct of the Institute.
To become a Cost Accountant(CMA), one must complete the Cost Accountancy course, which includes in-depth knowledge of Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and related subjects. This rigorous curriculum ensures that Cost Accountant develop specialised expertise in taxation, finance, accounting and other areas. Notably, taxation is a key part of the academic syllabus, covered at the Intermediate Level (Group1 Paper7, Section A: Direct Taxation) and the Final Level (Group3-Paper15:Direct Tax Laws and International Taxation), among others.
Cost Accountant play a crucial role in the areas includes management, cost, financial, tax-related matters, authorized professional under various regulatory statutes and legislations including the Reserve Bank of India, Securities and Exchange Board of India, Companies Act, 2013, Customs Act, 1962, Central Excise Act, 1944, Central Goods and Services Tax Act, 2017, etc. The professional qualification of Cost Accountant is achieved through a rigorous process that includes mandatory coaching, examinations, extensive training, continuous professional education(CPE), etc. all governed by the Institute’s Code of Conduct.
3. Overview of the Modified New Income Tax Bill 2025
Hon’ble Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman Garu (hereinafter referred to as ‘FM’) while presenting the Union Budget 2025-26 in one of the presentations stated that the Government commitment on income tax is to “trust first, scrutinize later”, accordingly, implemented several reforms or initiatives for convenience of tax payers such as self-assessment returns, faceless assessment, tax payers charter, faster returns Vivad se Vishwas scheme, etc. and also stated that would propose the New Income Tax Bill.
Subsequently, as part of reforms in the Direct taxes, the Hon’ble FM proposed to introduce the new Income Tax Bill 2025 (Bill No.24 of 2025) introduced in the Lok Sabha, Parliament in the 76th Year of the Republic of India(hereinafter referred to as “Income Tax Bill” or “IT Bill” or “Bill”), while proposing the Bill stated like the Income Tax Bill proposed to reduce the compliance burden, minimise litigation, eliminate ambiguities, simplify language, streamline provisions by reducing the number of sections and so on. With respect to the proposed IT Bill, this article focuses solely on the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025, where Cost Accountant have not been included in the said section and definition of the Bill.
4. Rationale for Including Cost Accountant in ‘Accountant’ Definition of the IT Bill 2025
As per my understanding, in terms of the Viksit Bharat@2047 inclusive development, this article highlights the need for the government to include Cost Accountant under Section 515(3)(b) in the definition of ‘accountant’ of the proposed Income Tax Bill 2025.
Cost Accountants play a vital role in bridging the gap between the government and businesses by raising awareness and encouraging complying with statutory requirements. However, considering these efforts, the government should have included the Cost Accountant(as defined under Section 2(1)(b) of the Cost Accountants Act) in the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025. Therefore, it is hereby requested and suggested that, since Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and other subjects fall within the domain area. Hence, the term “Cost Accountant” as defined under Section 2(1)(b) and Section 2(2) of the Cost and Works Accountants Act, 1959 be required to be incorporated in the definition of “Accountant” as proposed under section 515(3)(b) of the proposed Income Tax Bill 2025.
5. Incorporate Cost Accountant in the ‘Accountant’ Definition of the Bill–An Explanation
As per my understanding, the modified Income Tax Bill 2025 aims to widen the tax net by removing ambiguities and plugging loopholes in the existing Income Tax Act, 1961(hereinafter referred to as “IT Act” or “IT Act 1961”). Accordingly, the definition of ‘Accountant’ in the New Income Tax Bill, 2025 can also be expanded to include Cost Accountant.
5.1. As understood, the bill has introduced or expanded various definitions, some of which are provided below as examples –
5.1.1. Books or Books of Account – The definition of ‘Books’ or ‘Books of Account’ under Section 2(19) of the Bill has been expanded to include cloud-based storage and so on, which was not covered under Section 2(12A) of the IT Act, 1961.
5.1.2. Virtual Digital Asset–The definition of Virtual Digital Asset under Section 2(111)(d) of the IT Bill has been expanded to include any crypto-asset, which was not covered under Section 2(47A) of the IT Act, 1961.
5.1.3. Capital Asset–The definition of ‘Capital Asset’ under Section 2(22)(b) of the IT Bill now includes assets held by an investment fund specified in Section 224(10)(a), such as an Alternative Investment Fund, which was not referenced under Section 2(14)(b) of the IT Act, 1961.
5.1.4. Virtual Digital Space –The scope of search and seizure has been introduced under provisions of Section 247 of the Income Tax Bill, introducing provisions related to virtual digital space and personal data access. Under Section 247(1)(b)(iii), access can be gained by overriding the access code to any computer system or virtual digital space when the access code is not available. This provision, which involves potential personal data breaches, was not present in the IT Act, 1961.
5.2. Similarly, the definition of ‘Accountant’ can be expanded in line with the above approach to include ‘Cost Accountant’ as defined under Section 2(2) and Section 2(1)(b) of the Cost Accountants Act. Therefore, the definition of ‘Accountant’ under Section 515(3)(b) of the IT Bill can be broadened to explicitly include the term ‘Cost Accountant’.
6. Expert Opinions on the Inclusion of Cost Accountant
There are several reasons to include Cost Accountant in the definition of “Accountant” under Section 515(3)(b) of the New Income Tax Bill 2025. Experts often say, “Behind every successful business decision, there is always a CMA.” Cost Accountant contribute significantly to businesses, the economy and the nation. However, their behind-the-scenes role should not mean their contributions are overlooked or taken for granted when defining ‘Accountant’ in the IT Bill.
In my view, including Cost Accountant in the proposed IT Bill would provide Micro, Small, and Medium Enterprises (MSMEs) a broader and more cost-effective choice of professionals, helping to simplify tax compliance. Therefore, the government should reconsider expanding the definition of “Accountant” under Section 515(3)(b) of the IT Bill to include Cost Accountant.
7. Legislative Intent on Including Cost Accountant in Accountant Definition of IT Bill
The legislative intent to include Cost Accountant in the definition of the Income Tax Bill 2025 is evident from the government’s previously drafted Draft Direct Taxes Code 2013 and reports by the Parliamentary Standing Committee. A few instances are as follows:
7.1. Draft Direct Taxes Code 2013 (DTC 2013)– Definition of “Accountant” and Inclusion of Cost Accountant (Page 202) – The draft Direct Taxes Code, 2013 (DTC 2013), drafted during the Lok Sabha, Parliament, 64th Year of the Republic of India, includes the definition of “Accountant” in Part-i – Interpretations and Miscellaneous Provisions, Chapter XX – Interpretations and Constructions.
7.1.1. In Page No.202 of the draft DTC 2013, Cost Accountant was explicitly included in the definition of “Accountant” under Section 320(2), which states:
“Accountant means ……………. Include …… (ii) a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 ;…..”
7.1.2. Legislative Intent: Although the Draft Direct Taxes Code, 2013 (DTC 2013) was not presented in the Lok Sabha, Parliament, the legislative intent was evident in recognising Cost Accountant within the definition of “Accountant.”
7.2. 122nd Report–Department-Related Parliamentary Standing Committee on Commerce–Ease of Doing Business–Parliament of India, Rajya Sabha(Dated 21.12.2015) (hereinafter referred to as “122nd PSC Report”)
7.3. The report was based on the Ease of Doing Business Index prepared by the World Bank, which evaluates countries on specified parameters. To improve India’s ranking, a Sub-Committee on Ease of Doing Business was constituted on April 23, 2015, specifically to examine various issues and suggest necessary changes, with the goal of placing India within the top 50 countries by 2017. The Sub-Committee was later reconstituted on September 2, 2015. During the proceedings, the Department of Industrial Policy & Promotion (DIPP) informed the Committee about various initiatives undertaken to improve the business environment in India, including the shift from manual to online systems. After extensive discussions with stakeholders, the Committee/Sub-Committee proposed several recommendations.
7.4. Among the key recommendations made by the Committee/Sub-Committee was the expansion of the definition of ‘Accountant’ under the Income Tax Act to include Cost Accountant. Extracts from these recommendations were as follows:
7.4.1. Fact Sheet on Ease of Doing Business (Page 29, Para 8.3):
‘………It was informed to the Sub-Committee…..expanding the definition of ‘Accountant’ under the Income Tax Act to include………. Cost Accountants…….’
7.4.2. Minutes of the 2nd Meeting (Dated 16.09.2015, Page 80, Para 3.3):
‘……….desired to expand the definition of ‘Accountant’ under the Income Tax Act……….proposal……Cost Accountants……is under examination and may be decided……’
7.5. Legislative Intent: The 122nd PSC Report on Ease of Doing Business was discussed. However, a review of the relevant definitions, it’s evident that the legislative intent was to include Cost Accountant in ‘Accountant’ definition under Section515(3)(b) of the Bill.
8. Conclusion to Include Cost Accountant in the Definition of ‘Accountant’ in the IT Bill
8.1. The Income Tax Bill 2025 is a positive step towards reducing compliance burdens, minimizing litigation, eliminating ambiguities, simplifying tax provisions, etc. However, the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Bill has overlooked the inclusion of Cost Accountant, likely due to an oversight.
8.2. Cost Accountant, governed by the Institute of Cost Accountants of India—an organization established under an Act of Parliament and a founding member of international bodies like the International Federation of Accountants (IFAC)—specialise in Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and related areas. “Behind every successful business decision,there is always a CMA.” Given their expertise, it is essential that Cost Accountant be included in the definition of ‘Accountant’ to ensure their rightful recognition.
8.3. As per the Viksit Bharat@2047 the government’s vision focuses on inclusive growth; however, not including Cost Accountant in the definition of ‘Accountant’ in the Income Tax Bill would be unfair, especially considering their relevant syllabus, experience, key skills, qualifications and expertise in the domain. This aligns with legislative intent and recommendations from previously drafted DTC 2013, various reports, sub-committee findings. Further, inclusion would enable Cost Accountant to continue contributing effectively to taxation, cost management, financial and other compliances.
8.4. Thus, based on the Draft Direct Taxes Code, 2013, the 122nd PSC Report, inputs from stakeholders on Ease of Doing Business, various reports, recommendations from committees and sub-committees regarding definitions, it is evident that the legislative intent was to include Cost Accountant in the definition of ‘Accountant.’ Hence, the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025 should explicitly include Cost Accountant.
9. Therefore, it is strongly recommended that Cost Accountant, as defined under Section 2(1)(b) and Section 2(2) of the Cost and Works Accountants Act, 1959, be explicitly included in the definition of ‘Accountant’ under Section 515(3)(b) of the new Income Tax Bill 2025, as discussed above.
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Disclaimer: This is as per my understanding, purely for informational and educational purpose only. It is a recommendation for the government to consider and should not be construed as legal or professional advice. I am not liable for any damages or losses arising from its use. Readers are advised to refer to the respective Acts, Rules, Notifications, Provisions, official documents, etc. for accurate and updated information
References –
https://www.icmai.in
https://eparlib.nic.in
https://www.mca.gov.in
https://incometaxindia.gov.in
https://easeofdoingbusiness.org/sites/default/files/resources/Rajya%20Sabha%27s%20Report%20on%20Ease%20of%20Doing%20Business.pdf
https://incometaxindia.gov.in/Documents/direct-taxes-code-2013-31032014.pdf
Author Bio
Tax audit, need and requirement to be revisit. The quality of tax audit always a concern from enterprises perspective. When tax audit is done and no qualification made by the auditors, despite of this, in Income tax assessment, number of disallowance made by the assessing officer and huge cost company incurred their after. Similar to GST, Tax audit to be done on voluntary basis by the company itself for self assurance. In case, it is require, it should be Under NAFRA oversight.
Mandatory Tax audit to be abolished, as it serve no purpose and only increasing the cost of compliances. Many organisation it is done by the same auditor, resulting in any error in financial statements impacting tax calculation/Transfer pricing not detected resulting in multiple scrutiny by the authority and tax evasion detected thereafter. hence, no worth of mandatory tax audit for enterprises . Policy maker should seriously think over.
My dear,
If you want to be an auditor / inclusion in accountant definition; it is very simple take ICAI membership.
Why you want a back door approach to do audit.
I am sure, All claimants to include CMA in accountant definition are CA fail batch.
Your PD committee are very active.
Your comment reeks of arrogance and insecurity rather than a logical argument. The profession of accounting is not the monopoly of any one institute. Cost Accountants are highly qualified professionals specializing in cost records, taxation, and financial management. Seeking rightful recognition under the Income Tax Act is about ensuring competence, not “backdoor entry.” If the only answer you have is “become a CA,” it only proves your fear of fair competition. Maybe it’s time to accept reality.
I’m not satisfied with your article for inclusion of cma I the definition of accountants. Further I want to clarify something which I know all the professional or people who are o the urge of becoming a professional, cma students don’t complete their internships in the manner ca articles used to they take dummy certificates form cma’s ( I’m not taking about every student but yes mostly do the same ) and complete their internships. So I will be satisfied by seeing
the real truth behind their practical knowledge on the other hand ca students put their best efforts to gain the knowledge. So now if I see who is more worthy to…plus the basic foundation of ca’s are audit yr. From the first day we were taught about audits and all.
you guys as CAs have been stopping the growth of CMAs for decades. and do you think that a few years of the articleship is everything and all others who have not be interns are fools? friend, CAs are very soon going to become redundant with AI taking over. you will be repenting having done CA. just come out of this mirage.
wait n watch
if you want to to be treated as accountant ,write C A exam and become eligible to be included as accountant. who prevented you. All Tom dick and harry can not be included as accountant
ICAI ALWAYS WORKS AGAINST TRANSPARENCY
With due respect, herewith, responding to your critical comments. You repeatedly criticizing CA, CMA or ICAI along with the accounting profession raising concerns about monopoly and voluntary compliance. But what about voluntary compliance in judicial efficiency? Every hour, new cases are filed but remain unresolved, further burdening the courts. Shouldn’t that be the first priority?
Sir, as an advocate, why are you unfairly targeting CAs, CMAs, or ICAI stating such as voluntary compliance, monopoly, etc? Instead of debating tax audits, why not focus on clearing the millions of pending cases in Hon’ble courts due to a shortage of advocates? The legal system is overburdened.
The government has acknowledged the need to expand tax-related roles limited to trained professionals in taxation and audit, not those from unrelated fields. While CMAs and its professionals are debating tax audit rights, advocates or others have entered the discussion to gain benefits. This is unfair and illogical since:
• CMAs and accounting professionals undergo specialised training in taxation, financial reporting, auditing, etc. with continuous professional education.
• Advocates specialise in litigation and advocacy, not accounting or tax audits.
• The legal profession already enjoys vast privileges in courts and tribunals—there is no justification for their entry into accounting-related work.
Hon’ble Supreme Court Judge, Justice Shri Mukeshkumar Rasikbhai Shah, emphasized that the unavailability of lawyers to argue cases is a significant issue affecting the Supreme Court. He has also advised young lawyers to work hard and not become “mentioning or adjournment lawyers.” During a hearing, he observed that the unavailability of lawyers is a major reason for case pendency, stating: “One of the reasons for the pendency of cases is frequent adjournment requests. Every day, 5 to 6 criminal matters are adjourned due to personal difficulty cited by lawyers.”
Further, the Hon’ble Justices, in various instances, have urged advocates to clear the backlog cases by reducing adjournments and fulfilling their professional responsibility. They emphasized that justice delayed is justice denied and called for greater accountability from the legal fraternity.
According to the National Judicial Data Grid (NJDG), approximately 65,67,969 cases are pending before district courts due to the non-availability of counsel. A significant number of cases remain unresolved due to a shortage of advocates and their failure to attend court proceedings.
News reports highlight that these figures bring attention to the legal profession, raising concerns about the role of lawyers in exacerbating the backlog of cases in the judiciary.
According to a study reported( Source ) by The Financial Express, “Pending Cases in Judiciary: 82% of Delays Due to Lawyers, Much Less the Judges,” the issue cannot be resolved unless lawyers also cooperate with the process and act fairly.”
As per the Times of India – Readers’ Blog, 20 Feb 2023–( Source).“Habit of taking adjournments by advocates… They often delay cases due to their propensity for earning higher professional fees…”
Global media has been criticizing our judicial system due to the long-pending cases caused by advocates. As reported in The New York Times on January 13, 2024( Source ) ‘A Lifelong Nightmare: Seeking Justice in India’s Overwhelmed Courts’, it stated that with 50 million criminal and civil cases pending, it would take 300 years to clear the country’s judicial backlog.
With due respect to your critical comments voluntary compliance to be followed by advocates. Advocates get special privileges:
• Only advocates can argue in court (monopoly in legal proceedings).
• Legal services are taxed under RCM, meaning the recipient pays GST instead of the advocate.
• Frequent adjournments cause massive delays in justice delivery.
If voluntary compliance is a concern, shouldn’t it start with ensuring lawyers take responsibility for clearing pending cases instead of burdening the judiciary. Is there transparency for advocates? Is there accountability for legal professionals?
Thank you.
TAX AUDIT IN INCOME-TAX ACT-MONOPOLY OF AUTHORITY CAUSING HURDLE FOR VOLUNTARY COMPLIANCE Expert Opinion World over functions of Accounting are classified depending on the area of operation, application and usage. They are as under:- Cost Accounts > Manufacturing/Processing Activity Financial Accounts> Trading Activity Management Accounts> Management Level/Decision Making Management Accounts is nothing but application of Ratio Analysis and Cash Flow Statement on Cost and Financial Accounts. By 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. Now, it is funny that both institutes passed by an Act of Parliament called by similar short name of ICAI. “ICMAI should have been the correct name of old ICWAI. I do not know on whose mischief its so happened. In view of the above amendment, 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 and 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. B.S.K.RAO, Auditor & Tax Advocate, BDKRAO, Beside SBI, Shimoga-577201, Karnataka – raoshimoga@gmail.com
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Talk about the point of my objection to monopoly. I am of the strong view IT base could not widened due to inserting 46 plus CA certificates in present IT Act since its inception
Purpose cost accounting is completely different, don’t know why they’re hellbent including them as Accountant defination. Including Cost and CS would going forward dilute the value and respect of CA degree in India. If they included ICAI have to shut down it’s business. It also deflate the value of Audit,as too much completions will kill all three professions and integrity will at stake. Job market also be impacted inversely.
Because of monoply the word voluntary compliance could not be enforced properly to get more compliance since inception of IT Act. Due to 46 plus CA certifucates in IT Act, resulted in restricred growth of voluntarty compliace which is directly proportional output of practicing CA’s. Now a days every house owns CAR but all such CAR owners are not filing the return😃
TAX AUDIT IN INCOME-TAX ACT-MONOPOLY OF AUTHORITY CAUSING HURDLE FOR VOLUNTARY COMPLIANCE
Expert Opinion
World over functions of Accounting are classified depending on the area of operation, application and usage. They are as under:-
Cost Accounts > Manufacturing/Processing Activity
Financial Accounts> Trading Activity Management Accounts> Management Level/Decision Making
Management Accounts is nothing but application of Ratio Analysis and Cash Flow Statement on Cost and Financial Accounts.
By 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. Now, it is funny that both institutes passed by an Act of Parliament called by similar short name of ICAI. “ICMAI should have been the correct name of old ICWAI. I do not know on whose mischief its so happened.
In view of the above amendment, 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 and 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.
B.S.K.RAO, Auditor & Tax Advocate,
BDKRAO, Beside SBI, Shimoga-577201, Karnataka – raoshimoga@gmail.com
Cost accountants better to clear CA course and can do tax Audit..
Excellent explanation with ample statutory examples. Yes, Cost Accountants deserve to be included in Accountant definition.
it is myth that Cost Accountancy course is focusing only in Costing. The course Imparts I’m depth knowledge in Financial accounting, Direct & Indirect taxation. If one can compare the syllabus of both CA & CMA course , one can understand that 95% syllabus is common. Also all practicing cost accountants are involved in preparation of Financial statements. In corporate side, especially PSUs,the accounting function is dominantly performed by Cost Accountants and CAs just visit these offices as auditors. Therefore Cost Accountants are basically “Accountants ” who have more expertise in costing aspects and hence to be included in the definition of “Accountants ” as per new DTC.
Hello Shrikant, like many others your reasoning also looks logical and rational. But then don’t know why and how logical and rational thinking of law makers is different as they keep on depriving the most intellectual community of Cost Accountants from their due rights.
Hi PRASHANT C DAHIVALKAR! As understood, this may be a drafting error. As per Viksit Bharat@2047, the government’s vision focuses on inclusive growth, the government’s intent appears clear in recognising the role of Cost Accountants in taxation and financial matters.
While several representations may have been made, a well-structured and properly presented representation can further help address this issue effectively and ensure that Cost Accountants are rightly included in the definition of ‘Accountant’.
We should make our best efforts within our scope and capabilities, while the final decision rests with the policymakers.
As Sri Krishna stated in the Bhagavad Gita in Chapter 2, Verse 47:
कर्मण्येवाधिकारस्ते मा फलेषु कदाचन।
मा कर्मफलहेतुर्भूर्मा ते सङ्गोऽस्त्वकर्मणि॥
You have a right to perform your prescribed duties, but you are not entitled to the fruits of your actions. You should focus on performing your duties with sincerity and dedication, without being attached to the outcome or expecting rewards.
Thank you.
No The cost accountant is an expert in cost accounting. They have been empowered by the Incometax Department in valuation of inventory. This is not objected to by the Institute of Chartered Accountants. Then why should they ask for tax audit work?
cost Accountant not only expert of COST but also Accounting, Taxation, Laws etc.
A B.COM pass out students know Accounts & Taxation.
You are absoulutely Right Shyamla Gosh!!! B.com Pass out knows Accounts & Taxation as much as CMA knows. B.Com Pass out along with CMA must protest to include theire names in defination of accountant in new income tax bill.
TAX AUDIT IN INCOME-TAX ACT-MONOPOLY OF AUTHORITY
CAUSING HURDLE FOR VOLUNTARY COMPLIANCE
Expert Opinion
Certificate from only Chartered Accountants U/s 44AB introduced in Income-Tax Act in 1984, since then CA certificates started entering Income-Tax Act. On date there are 46 Plus Mandatory CA certificates in Income-Tax Act. These certificates barricade support for voluntary compliance from Non-CA Tax Professionals & new Non-CA Tax Professionals are not entering tax practice. CA certificates are causing strict hurdle for voluntary compliance not only in Income-Tax Act, but also in other Central and State Govt. tax laws (Ex:- In Finance Act, 2012 negative list introduced in Service Tax requiring assistance of more tax professionals, but number of tax professionals are stand still on date). As per the information provided by Directorate of Income-Tax (Systems), New Delhi on 17.12.2013, it is evident that only 65,570 CAs are practicing Income-Tax law, who are unevenly spread throughout India. Further, there is ceiling on number of tax audit assignment to be undertaken by each CA, irrespective of Corporates or Non-Corporates. In the latest e-filing website of Income-Tax Deptt. only CAs are treated as Tax Professionals, now existing Non-CA Tax Professionals will also dropout from tax profession and Govt. has to rely on only 65,570 CAs for seeking voluntary compliance U/s 139 of Income-Tax Act.
World over functions of Accounting are classified depending on the area of operation, application and usage. They are as under:-
Cost Accounts > Manufacturing/Processing Activity
Financial Accounts > Trading Activity
Management Accounts > Management Level/Decision Making
Management Accounts is nothing but application of Ratio Analysis and Cash Flow Statement on Cost and Financial Accounts.
By 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. Now, it is funny that both institutes passed by an Act of Parliament called by similar short name of ICAI. “ICMAI should have been the correct name of old ICWAI. I do not know on whose mischief its so happened.
In view of the above amendment, 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 and 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.
Author : B.S.K.RAO, Auditor & Tax Advocate,
BDKRAO, Beside SBI, Shimoga-577201, Karnataka
MO : 0-9035089036, E-Mail : raoshimoga@gmail.com
Hi Shyamal Ghosh Your comment may not be fully understood, but it is well-framed as reply/question/comment. Yu have compared a B.Com degree to the professional qualification of Cost Accountants (CMAs). Yes, B.Com students study subjects like costing, taxation, finance, and audit at an academic level. However, what differentiates CMAs is their specialized professional training, practical experience, continuous professional education, industry demand, etc.
Your point will be addressed once the following is clarified:
In academics, one may study topics related to the human body such as the nervous system, cerebellum, heart, lungs, etc. But does simply studying these topics make someone a doctor? Can they start treating ailments without in-depth subject knowledge and practical training? To become a doctor, one must undergo extensive study, specialized training, hands-on experience, etc.
Similarly, if school children study topics related to the lungs, heart, brain, etc., does that qualify them as doctors? If this reasoning were correct, then equating a B.Com degree, which covers subjects like costing, taxation, accounting, with a Cost Accountant (CMA) qualification would also be justified.
Thank you
Then all inventory audits including stock audit in banks should be conducted by cost accountants only. Will your ICAI agree to that proposition. Definitely NO.
By 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. Now, it is funny that both institutes passed by an Act of Parliament called by similar short name of ICAI. “ICMAI should have been the correct name of old ICWAI. I do not know on whose mischief its so happened.
In view of the above amendment, 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 and 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.
Dear Rajamanickkam,
With due respect to the institutes, yourself and others, you have skillfully raised a well-thought-out and debatable question, seeking my response. As per my understanding:
1. Cost Accountants are experts not only in costing but also in various other domains including Cost Accounting, Direct Taxation, Financial Accounting, Indirect Taxation, Management and related areas.
2. The core domain of costing and inventory valuation has historically been the exclusive area of Cost Accountants, as recognised in multiple laws and regulations including the Companies Act, 2013; GST Act, 2017; Customs Act, 1962; Income Tax Act, 1961; Central Excise Act, 1944; various regulatory and industry practices.
3. Further, inventory valuation and tax audit are distinct functions. Inventory valuation is not limited to tax audits but serves multiple purposes such as decision-making, cost control and pricing, accuracy in financial reporting (including tax compliance), loan assessments, investment evaluations, etc.
4. The discussion here is focused on broadening the definition of ‘Accountant’ in the new Income Tax Bill to allow Cost Accountants to contribute in areas such as tax compliance, financial reporting, audit-related services, etc. where they possess the necessary skills and qualifications.
Thank you