G Ramaswamy President of ICAI for the year 2011-12, a member of ICAI with more than 25 years of standing and is known for his administrative and organizational skills apart from his professional excellence, speaks exclusively to Daijiworld.com to tell us more about proposed bills, career opportunities in CA and efforts of ICAI to rope in more youngsters towards the profession in Mangalore and other parts of the country.
1. In what way Direct Tax Code is it different from the present tax system?
GST will subsume central taxes such as excise duty, service tax, central sales tax and State taxes like octroi, VAT, stamp duty, purchase tax etc. to eliminate the cascading effects of multiple layer of taxation. GST is proposed to facilitate seamless credit across the entire supply chain and across all states under a common tax. Uniformity in tax regime with only one or two tax rates across the supply chain would make the tax structure simple & transparent. It is expected to give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set off and service tax set off besides providing a level playing field to domestic producers by removing tax distortions and tax competitions.
2. There seems to be an opposition from states to the GST? Is it because states are going to lose on the revenues?
Principally, all States agree to the concepts of Goods and Service Tax. However, there are apprehensions on account of probable revenue loss. The issue is being discussed by the State Governments as also at the Empowered Committee of State Finance Ministers. Central Government has assured States that revenue loss would be compensated.
3. What is the impact of GST on business community?
GST would be beneficial to the larger interest of business community by providing a more comprehensive and wider coverage of input tax credits and by subsuming majority of the indirect taxes within its ambit. Consequent to elimination or reduction in the cascading effect of taxes, the cost of doing businesses would be reduced and the system would also become more transparent.
4. Is it going to give a fillip to the economy which is going through a bad phase?
Yes. GST will give a boost to the economy. It is expected that the implementation of goods and services tax (GST) could increase the country's GDP by about 2 per cent annually.
5. Will GST prove to be a panacea for all the ills?
The GST at the Central and at the State level will give relief to industry, trade, agriculture and consumers through a more comprehensive and wider coverage of input tax set-off, subsuming of several taxes in the GST and phasing out of CST. With the GST being properly formulated by appropriate calibration of rates and adequate compensation where necessary, there may also be revenue/ resource gain for both the Centre and the States primarily through widening of tax base and possibility of a significant improvement in tax compliance. In other words, the GST may usher in the possibility of a collective gain for the industry, trade, agriculture and common consumers as well as for the Central Government and the State Governments. The GST may lead to the possibility of collectively positive-sum game.
6. Coming to the aspect of career opportunities in the field of CA it is said globalization has opened new vistas of career for CA students. How far is it true?
With most of the global economies suffering from economic downturn, the boom in India has increased the opportunities available to Chartered Accountants manifold in the last 5-10 years. Now the Chartered Accountants have the option of either moving into professional practice or join an industry or service sector or have their own company for provision of management services to diverse sectors spread across the economy. Institutes are making all efforts to equip not only the newly qualified Chartered Accountants but also senior members of the profession with the latest technology and knowledge to enable them to exploit the available opportunities across the world
7. There is a general feeling that passing CA exam is more challenging than civil service exams.
This general feeling is not true because the objective of the Civil Service Examination and CA Examinations are quite divergent. In fact, in our opinion the success rate in the civil examination is linked to the exact number of vacancies available in the Central Government in each cadre. However, as far as CA Examination is concerned there is no such limiting factor as far as the declaration of results is concerned. At the same time, there is absolutely no doubt that the Chartered Accountancy Examination is quite challenging since it happens to be a professional examination.
8. Is it true that ICAI has decided to do away with common proficiency test (CPT) for B Com graduates to enable them directly appear for CA as CPT is the first hurdle which many students fail to clear?
The Council of the Institute has taken a decision to exempt Commerce Graduates/Post Graduates with minimum 55% or its equivalent grade having studied any three full papers of 100 marks each out of Accounting, Auditing, Law including Business Laws, Mercantile Laws, Corporate Laws etc., Economics, Management including Financial Management, Personnel Management etc., Taxation including Direct Tax Laws, Indirect Tax Laws etc., Costing, Business Studies, Business Administration and Management Accounting. Other Graduates/ Post Graduates (not falling above) with 60% marks are also eligible to appear for CA exam directly. Students who have passed Intermediate level examination of the ICWAI/ ICSI are only exempted from appearing from the CPT and can commence their articled training on passing Group I of IPCC.
9. It is said that there is shortage of almost 1 lakh CAs in our country. Considering this, what is ICAI doing to encourage more and more students opt for CA exam?
The Chartered Accountancy is a highly prestigious course which provides ample opportunities to students coming from any stream. It is a well-known fact that CA is the most economical course and requires a reasonable sum of money vis--vis any other professional course. Therefore a large number of students have been registering for this course with the Institute since its inception. However, the ICAI has initiated steps to create awareness and explain the different aspects of the course amongst the potential students across the country through various measures. Information is provided to potential students through literature, seminars, counseling (both parents and students through our 5 Regional Councils and 126 branches of the institute.
10. An increasing number of CAs are opting for joining firms rather than practicing. Is it a good trend?
The Chartered Accountants in India are authorized to conduct audit of financial statements under the Companies Act, 1956, Income Tax Act, 1961 and various other statutes in India. However, not all Chartered Accountants work in audit. Firms of accountants provide varied business services - their areas of expertise include financial reporting, auditing and assurance, arbitration, risk management, economics, corporate finance, management accounting, information systems audit, corporate law, direct tax, indirect tax and valuation of businesses etc.
The role of CAs is changing. They are no longer mere tax advisers who attest financial statements as auditors. More and more assignments are coming seeking business advices. CAs are now involved right from business planning to restructuring M&As, cost optimization, funding and capital advisory services for a greater value addition to the resources. As a result of the varied professional opportunities coming up in the recent years, the practitioners are also growing in numbers.
11. Where do Indian CA firms stand vis--vis International CA firms?
The importance of Indian CA Firms has grown in the recent years. The CA profession has the potential to emerge as a global powerhouse in terms of strengthening its capacity. The Institute is taking lot of initiatives in this regard to enhance their capacity in competing with International CA Firms.