The Union Budget for 2009-10 presented by hon’ble Finance Minister Shri Pranab Mukherjee has now been analysed, debated and discussed. Contrary to market expectations, it has turned out to be more a budget for the common man. The main focus of the Budget has been on continuing the efforts to bring the country back to the high GDP growth rate of 9% while aiming at all round inclusive growth. The thrust has been on accelerating growth in infrastructure and ensuring inclusive growth by increasing social spending on several employment generation schemes and giving a helping hand by way of some fiscal concessions to export-oriented sectors until the global economy picks up.
I think according top priority to the infrastructure sector and constituting a high level Cabinet Committee on infrastructure is a good move. The focus on infrastructure will hopefully expedite the implementation of various related projects. I firmly believe that completion of these projects is critical for progress. This fact has been corroborated in a new survey conducted by the research arm of Moody’s, which has said that India’s infrastructure development is likely to be one of the key drivers of industrial activity, which will see an upturn in a few months.
This Budget has continued to give importance to the agriculture sector, including the Accelerated Irrigation Benefit Program apart from ensuring debt relief to farmers by extending time by a further period of 6 months. This budget has put great emphasis on the social sector which is bound to pay rich dividends in the future. The announcements regarding introduction and effective implementation of GST from April 1, 2010 across the country is also a step in the right direction and a very important tax reform.
This budget offers a number of opportunities to our profession. I have always been emphasising the need for focusing on the agricultural sector which is largely unorganized and needs a lot of professional attention. Even though we are an agro-based economy, we have neglected this vast and important sector. This sector has abundant professional opportunities in store for us which can only grow in times to come as can be seen from the emphasis this Budget has put on the sector. Raising of loans for farmers, insuring their crops, increasing productivity or marketing their produce are just some of the areas which offer professional opportunities to our members. The other areas where I see professional opportunities emerging are in the introduction of GST, special audit u/s 14A for computing value of goods and u/s 14AA for verifying proper utilisation of credit under Central Excise Act & Rules.
ICAI Suggestions Find Place in Budget Proposals
Being a veritable partner in nation building, the Institute has always played a pivotal role in assisting the Government in policy making by giving impartial and balanced views on various issues. This year too, the Ministry of Finance has taken a serious view of our suggestions, many of which have found place in the budget proposals. This is indeed a great honour for our Institute. Some such suggestions were ‘to widen the scope of section 44AF to cover all small businesses’, ‘to have a common rate of TDS for contractors and sub-contractors’, ‘to remove the distinction between professional and non-professional firms’ and ‘to increase the completion time for power projects.’ Our other suggestions which were accepted by the Government include giving 80-IA benefit to cross country natural gas distribution network and other energy fuels, deduction u/s 80-IB to extend to profits arising from commercial production or refining of natural gas, reduction of TDS rate u/s 194-I in respect of rent for use of plant, equipment, etc. and exemption from TDS provisions for transport contractors and sub-contractors. Detailed comparative information about the accepted suggestions is available on the ICAI website.
ICAI Post-Budget Workshop
Recently, ICAI organised a Workshop on Union Budget 2009-10, which was attended by Shri S.S.N. Moorthy, Chairman, Shri Ashutosh Dixit, Joint Secretary (TPL–II), and Shri Anand Kedia, Director (TPL-III & IV) of the Central Board of Direct Taxes, and by Mr. Gautam Bhattacharya, Joint Secretary (TRU), Mr. Vivek Johari, Joint Secretary (TRU) and Mr. Sushil Solanki, Central Excise Commissioner from the Central Board of Excise and Customs.
Many important issues were discussed and placed before the officials of CBDT & CBEC for their consideration, some of which are that conversion of a firm, company or a sole proprietorship concern into an LLP should be revenue-neutral, make the Assessing Officer duty bound to allow deduction even if the same has not been claimed by the assessee, the benefit of expense incurred before commencement of specified business under section 35AD be allowed in the year of commencement of business and that a clarification should be issued for treatment of advance FBT paid by loss making assessees in June. We also mentioned that Section 56 would hit trading assets, which might not be the intention of the legislature and put across the point that the tax liability on ESOPs should be postponed to the year of actual sale, in line with the tax treatment for conversion of capital asset into stock-in-trade and that anonymous donations received by electoral trusts should be taxed. Issues relating to discrimination of the rate in works contract service vis-à-vis construction services were also discussed.
The CBDT Chairman appreciated us for doing in-depth study of the budget proposals and mentioned that the suggestions of the Institute would be considered appropriately. He informed that the new Direct Taxes Code would take care of many of the other issues raised by the Institute.
It was indeed very heartening to note that this kind of interaction reflected positively on the standing of the Institute in the eyes of the Government and the respect they attach to our unbiased suggestions and inputs.
Limited Liability Partnership (LLP)
The Ministry of Corporate Affairs has taken path-breaking initiative to ensure a Limited Liability Partnership law for the nation. The enactment of this law shall definitely prove to be an instrument for the empowerment of all professionals and the corporate fraternity at large. The Institute takes pride in being associated with this crucial venture of the Ministry since its inception.
With the roadmap for taxation of LLP provided by the Finance Bill, 2009, it is clear that LLP form would enable entrepreneurs, professionals and enterprises providing services of any kind or engaged in scientific and technical disciplines, to form commercially efficient vehicles suited to their requirements. The professionals providing accounting, legal and other technical services to their clients across the globe require multi-disciplinary combinations that would offer a menu of solutions, for which the LLP structure is most ideally suited. This would also enable the chartered accountant firms to grow in size and scope and compete with their multinational counterparts. In light of the provisions of the LLP Act, 2008, the Institute has suggested to the Government consequential amendments to the provisions of the Chartered Accountants Act, 1949.
In order to provide a better understanding of this new form of business organisation to our members and to help them assume leading role in successful implementation of this concept in India, we have focused on various important aspects of LLP in this issue of the journal, which, I hope, will elucidate the intricacies of this new concept to your benefit.
International MoU/Declarations Signed
It has been my endeavour this year to give wings to our members by taking our profession beyond Indian shores. With this focus in mind, I, on behalf of the Institute, have signed MoU/Joint Declarations with three international organizations: The Institute of Chartered Accountants in Australia (ICAA), The Certified General Accountants Association of Canada (CGA-Canada) and Bahrain Institute of Banking and Finance (BIBF) during our recently-held Diamond Jubilee International Conference in Agra in the spirit of international cooperation, growth and support. ICAA Chief Executive Officer Mr. Graham Meyer, President of CGA Canada Mr. Tony Ducie and BIBF Director Mr. Gary Muriwai signed the documents on behalf of their organisations. A report on signing of these documents has been published elsewhere in this issue of the journal.
I am sure these MoUs/Declarations will help our members to compete and excel globally besides opening avenues for global collaborations in the field of research and accounting. These initiatives would also pave the way for further co-operation. Particularly, Bahrain being an important country in the Middle East, our Joint Declaration could form the basis for the Institute playing a major role in developing the accountancy profession in the Middle East region in future.
Agra International Conference
As part of our diamond jubilee celebrations and the drive to promote the Indian CA and accounting profession at world stage, we recently organised a mega 3-day international conference in Agra on the theme “Winds of Challenges- Global Strategies for Accounting Profession”, which was indeed an event to remember, with over 2500 delegates from 38 countries attending it.
The conference had many distinguished speakers such as Sir David Tweedie, Chairman, IASB, Prof. Arnold Schilder, Chairman, International Auditing and Assurance Standard Board of IFAC, Mr. Ernest A. Almonte, Chairman, American Institute of Certified Public Accountants, Mr. James Sylph, Executive Director, Professional Standards IFAC, to name a few. Besides the international accounting and auditing luminaries, doyens of Indian trade and industry, renowned allied professionals and experts also participated in the conference during which various cultural and social events including the “Go Green Run” were also organised. You will appreciate that about 7000 people from all walks of life, including social activist and actor Rahul Bose, took part in the Run, which was organised under our green initiative – Planet Alert. During the conference, an ICAI Overseas Chapters Chairmen’s meeting was also organised, which was attended by the leaders of as many as nine chapters. The meeting not only facilitated good interaction and understanding with the foreign chapters but also gave everyone a better understanding about the professional opportunities available abroad. I am sure this conference must have widened vision and horizons of our members. A report on the conference proceedings has been published elsewhere in this issue of the journal.
I strongly believe that we, as chartered accountants, are the heart and soul of business operations and, as such, need vast professional infrastructural back-up. Keeping this in mind, and in line with the vision of improving the infrastructure of our country as laid down in the recently announced Budget proposals, we have embarked on a mission to strengthen and expand ICAI infrastructure across the length and breadth of the country at a fast pace. As part of this mission, I, along with AICPA Chairman Mr. Ernest A. Almonte, inaugurated a massive state-of-the art ICAI Bhawan in Noida to mark the CA Day on 1st July. This new complex in combined covered area of 2.10 lakh sq. fts. Has four buildings comprising Auditorium, Research, Office and Hostel blocks. It will also house ICAI’s Research and Development Centre.
You will appreciate that whenever I visit other Institutes abroad and see their infrastructure, I come back with an earnest desire to create similar world-class facilities for our members and students too. I am pleased to inform you that in line with that desire and determination, we have come up with a world class Centre of Excellence at Hyderabad within a short span, thanks to tremendous efforts put in for this. This centre was recently launched by me, which will offer residential courses and programmes for members with a view to transforming them into the best, multi-skilled professionals in the country with enhanced competence, communication skills as well as professional and leadership abilities. I laud the efforts of my colleague in the Central Council, CA. Shanti Lal Daga, for working ceaselessly to bring this centre into existence.
More details about our Noida complex and Hyderabad Centre of Excellence have been published elsewhere in this issue of the journal.
You will also be happy to know that in continuation with ICAI efforts to give better service to members and students and create newer networking platforms, the Council is keen to set up more Branches of ICAI. As part of this approach, we have recently set up a new branch of WIRC of ICAI at Vapi, taking the total number of ICAI branches to 119.
You will appreciate that our Institute has been constantly adopting futuristic technologies for the benefit of members and students. Our first webcast in April was one such step in that direction. The tremendous response to this webcast has spurred us to reach greater technological heights and, as such, we have now officially launched the Institute’s own Webcast Channel. It was my dream that members and students have access to lectures and events from the comfort of their homes and offices and this webcast channel has turned that dream into reality. The ICAI Webcast Channel is a 24 x 7 Channel being offered at http://webcast.icai.org. The webcasts currently accessible on this channel are speeches and interviews given by guest speakers at the International Conference and thorough analysis of the Budget by leading tax experts. You can even join webcasts on important issues facing the profession and on events hosted by the Institute from time to time. While thousands of our members have already benefited from this initiative, I request all other members and students to also take advantage of this new and path-breaking initiative. The Institute regularly conducts events, seminars and conferences to update members on emerging challenges and opportunities. This unique initiative will bring the best of these events right to your door step. I must compliment the efforts taken by CA. K. Raghu, Chairman, Committee on Information Technology for making this a reality.
Further, you will be glad to know that we are constantly making headway in our ambitious project of e-learning. We have recently launched ICAI’s e-learning portal and e-learning course on IFRS, which, I am sure, will immensely benefit our members.
The dates for the elections for the Central and Regional Councils have been finalised as 4th and 5th December, 2009. It will be that time again when all of you have to make a conscious decision to vote for the right candidates by verifying their past performance and their abilities. I would like to caution various potential candidates, who are seeking to submit their candidature, to refrain from seeking publicity through negative criticism or making demeaning statements against other individual council members or against the functioning of the Institute as it not only belittles the image of the Institute but also the individuals who adopt such practices. The Institute has reached such heights due to the joint endeavour of all our past and present members who, by being at the helm of affairs, have constantly strived to put the Institute before self by devoting their time and energy to take the Institute to greater heights of glory. If one can positively contribute to this cause, one should come forward and stand for elections and win the hearts of our members by working selflessly rather than seeking publicity through such negative remarks.
We are examining the possibility of going hi-tech by introducing Electronic Voting Machines (EVM) this time for these elections.
As you are aware, I have been constantly advising our students through various communications and forums to take their articleship training seriously as it prepares them to offer distinguished services. I urge all of you to ensure strict and unequivocal adherence to Regulation 65 by your articled assistants. The regulation clearly states that students pursuing their articleship cannot undertake any other course which conflicts with their articleship time as it leads to avoidable delay in either noting the completion of articles or enrolling for the membership of the Institute. Students who breach this regulation will attract penal action. To avoid this kind of unpleasant and avoidable situation, you should advise your articled assistants to seek prior permission of the Council by submitting the prescribed form 112 before undertaking any other course.
Articleship training lies at the core of the Chartered Accountancy course. This training prepares our students for the challenges that we face in our profession. The training also helps them prepare for exams by giving a clear understanding of concepts and how they are applied practically. By connecting practical applications to academic concepts they gain a rich insight into the actual workings of a chartered accountant firm. They will have a good opportunity for this practical knowledge in the month of September when firms start the preparation for half year closing. Please urge your articled assistants to take this practical opportunity seriously and make most of it. Further, I call upon you to impress upon your articled assistants not to take transfers lightly and definitely not take multiple or unnecessary transfers. I also wish to inform you that to help students take their training seriously we have decided to put restrictions on transfers.
We have been constantly taking a number of IT initiatives so as to keep our members abreast with the latest technology and help them offer exemplary services. In order to bring the Institute and its members closer and provide a better brand equity to our members, we had started the facility of providing an e-mail ID in the format ‘email@example.com’ under the icai.org domain for members and final year students. By creating your personal e-mail ID on the icai.org domain you instantly show your affiliation with the Institute on a professional level. While many members and students have availed of this facility, there are still many others who are yet to do it. I request all such members to also benefit from this IT initiative. I also call upon you to update your professional and residential address or your profile by using the online facility provided on ICAI website.
ICAI Motto Song
ICAI motto song instills a sense of pride amongst us and expresses our solidarity with our Institute. To enable our members to have access to the motto song we have uploaded it on our website. Its unique composition is also being used as a ring tone which gives one an instant distinct identity of belonging to a great profession. It is indeed heartening to know that many members have already downloaded the song. Since ours is a community that is growing by leaps and bounds, there are many new members who are not aware of our beautiful and inspiring motto song, I request you to encourage such members to download the motto song and share the pride of the profession.
You can be a proud owner of the Institute Membership Card and flash it around and gain instant recognition as a member of one of the premier accounting institutes in the world. Those who have applied and have already got their cards are reaping benefits from its possession. However, many of you have still not even applied for the same prompting me to once again remind you to do so immediately.
The professional deadlines are fast approaching for completing audits and filing of returns. Many of our members would be working assiduously to meet the deadlines. Our members are the most hardworking and diligent professionals and I convey my best wishes to all of you to meet the deadlines with great care and competence that is expected from our profession. In the words of Zig Ziglar, “Success is the maximum utilisation of the ability that you have.”
Our Independence Day is also approaching. Let’s take some time out to join the celebrations on August 15 and bask in the glory of being a citizen of a great nation. I wish you a happy Independence Day in advance.
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