“You’re Left Over, Our Make Over” Chartered Accountants

Hello friends, as we knew that union budget was tabled in the parliament by Dear Pranab Babu yesterday. I am not competent enough to comment on the effects of Budget on Indian Economy because my own fundamentals of economics are quite shaky.

But here I am to highlight the few from the perspective of a “Practicing Chartered Accountant”.

I read a very interesting story published in “India Today” a year before regarding the increase in the sale of coffins in Pakistan. Usually coffins are quite lucrative and middle class people avoid using it.  But the  mercy less high intensity explosions in the crowded streets of Pakistan left the bodies of victims in so bad condition that their relatives left with no other option except to use coffins. You must also hear about teh news break out a year or two before regarding the massive increase in the sale of condoms in South Korea when North Korea alarmed them. Actually, the increased sale was considered as the insecured human behavior.  

In the same way, I suppose that the proposed legislature is really going to create a win- win situation for all “Practicing Chartered Accountants” and “Chartered Accountancy Firms”. Here are the few reasons to illustrate, why I suppose so:-

Reason 1: Tax @1 % on Transfer of Immovable Property

TDS (tax deducted at source) on transfer (e.g. sale) of immovable property other than agriculture land will attract tax @1%, if the consideration exceeds Rs. 50 Lacs and Rs. 25 Lacs for urban & rural area respectively. TDS is just like advance tax. The intention of law levying TDS is to avoid the delay in collection of revenue. It simply means, if you purchase any property in Delhi and want to get it registered and the consideration (on which stamp duty is levied) is worth Rs. 51 Lacs then besides stamp duty you also have to pay Rs. 51,000/- as TDS. Registrar babu will not entertain your sale deed unless TDS Challan is furnished along with the deed. 

My take: Big business ahead for CAs, one can expect more scrutiny cases on property dealers and builders. 

Reason 2: Levy of Service Tax on all Services Except 17

Previously, they were few countable (slighly more than hundred) services under the ambit of service tax. But now all except 17 are covered. The tax rate is also increased from 10 to 12%. It simply means if your kid is going to some private coaching centre or you are availing catering service for your sister marriage you have to pay 2% extra. It is the responsibility of service provider i.e. your tutor or caterer. They have to collect service tax from their customer and deposit it straight to the revenue.

My take: Again more CAs will be required to take care of the accounts as well as in ensuring the timely deposit of taxes and filing of returns.

Reason 3: Minimal Tax @18.5% on Adjusted Gross Receipts

Every person (as defined in Income Tax Act except local authority) is now under the regime of minimum tax. Companies under “Minimum Alternate Tax” (computation on the basis of book profit) and other assesses under “Alternate Minimum Tax” (computation on the basis of adjusted gross receipts). The intention of law is to discourage excessive tax planning. Now individuals, Hindu undivided family, AOP, BOI or any other form of artificial judicial person earning more than Rs. 20 Lacs have to shell out 18.5% of their total gross receipts without providing for any deduction under Chapter VI-A. It means if a man earning salary income before providing for any deduction  Rs. 21 Lacs have to pay at least  @18.5% i.e. Rs. 3,88,500/-. If the actual tax, after allowing all the deductions, is less than credit can be taken. For Partnership firms and LLPs (limited liability partnerships) there is no ceiling limit of Rs. 20 Lacs.

My take: CAs are going to charge fixed amount annually besides filing the return.

These are few of the highlights of Budget which i suppose will bring more work in the offices of Chartered Accountants. Myself, a Chartered Accountancy Final Student. All the views are based on the personal interpretation extracted from Union Budget 2012-13. 

My best wishes to all the Chartered Accountants.