Structuring salary package for a ca
This query is : Resolved
06 December 2011
Can a CA who is not holding a certificate of practice structure the receipt from his employer as professional fees or retainership fees etc or will it amount to any violation of the chartered accountants act 1949 and schedules thereto?
07 December 2011
If you are employed with a company & the relation between you and the company is like employee-employer relationship, any fees, retainership etc, will be treated as salary.
07 December 2011
The employment is with a CA firm and it can be proved that its a professional engagement, my main question is whether showing it as professional income with holding a COP is an offense and whether provisions of sec 2(2) of the CA act which envisage deemed practice can be invoked in such a case.
25 July 2025
This is a nuanced issue involving both the **Chartered Accountants Act, 1949** and tax implications. Here's a clear explanation:
---
## 1. **Can a CA without a Certificate of Practice (COP) receive fees as “professional fees” or “retainership fees”?**
* **No.**
Under **Section 2(2) of the Chartered Accountants Act, 1949**, a person is deemed to be practicing the profession if they hold themselves out to the public as a CA providing professional services, such as audit, tax consultancy, advisory, etc.
* **Holding a valid COP is mandatory** to render professional services or receive fees as “professional fees” or “retainership fees.”
Receiving such fees **without COP amounts to “practicing without a license,” which is a violation** of the CA Act and can attract disciplinary action by the Institute of Chartered Accountants of India (ICAI).
---
## 2. **Employment with a company or CA firm:**
* If you are in an **employer-employee relationship**, the income received will be treated as **salary**, regardless of how it is labeled.
* Even if employed by a CA firm, if the relationship is that of employment (fixed salary, working hours, reporting), income should be treated as salary.
---
## 3. **What if the CA works on a contractual or consultancy basis with a CA firm?**
* If the engagement is genuinely professional (no employer-employee relationship), the person should have a **valid COP** to receive professional fees legally.
* Without a COP, receiving professional fees as an independent practitioner is **not allowed**.
* ICAI’s **Section 2(2)** envisages that rendering professional services without COP is “deemed practice” and is prohibited.
---
## 4. **Implications of violating Section 2(2):**
* Disciplinary proceedings by ICAI.
* Possible legal penalties under the CA Act.
* Income tax authorities may reclassify income and deny benefits.
---
## 5. **Practical advice:**
| Situation | Income Classification | Compliance Status |
| ---------------------------------------------- | --------------------- | ------------------- |
| Employed with company or CA firm (employee) | Salary | Correct & legal |
| Contractual services without COP (independent) | Professional Fees | Violation of CA Act |
| Contractual services with valid COP | Professional Fees | Allowed |
---
### **Summary:**
* Without a COP, you **cannot legally receive professional fees or retainership fees** for professional services.
* Income received from employer or CA firm as an employee **must be treated as salary**.
* Structuring receipt as professional fees without COP is a **violation of the CA Act** and ICAI regulations.
---
If you want, I can also help with related tax treatment or drafting an appropriate agreement based on your employment status.
---
## 1. **Can a CA without a Certificate of Practice (COP) receive fees as “professional fees” or “retainership fees”?**
* **No.**
Under **Section 2(2) of the Chartered Accountants Act, 1949**, a person is deemed to be practicing the profession if they hold themselves out to the public as a CA providing professional services, such as audit, tax consultancy, advisory, etc.
* **Holding a valid COP is mandatory** to render professional services or receive fees as “professional fees” or “retainership fees.”
Receiving such fees **without COP amounts to “practicing without a license,” which is a violation** of the CA Act and can attract disciplinary action by the Institute of Chartered Accountants of India (ICAI).
---
## 2. **Employment with a company or CA firm:**
* If you are in an **employer-employee relationship**, the income received will be treated as **salary**, regardless of how it is labeled.
* Even if employed by a CA firm, if the relationship is that of employment (fixed salary, working hours, reporting), income should be treated as salary.
---
## 3. **What if the CA works on a contractual or consultancy basis with a CA firm?**
* If the engagement is genuinely professional (no employer-employee relationship), the person should have a **valid COP** to receive professional fees legally.
* Without a COP, receiving professional fees as an independent practitioner is **not allowed**.
* ICAI’s **Section 2(2)** envisages that rendering professional services without COP is “deemed practice” and is prohibited.
---
## 4. **Implications of violating Section 2(2):**
* Disciplinary proceedings by ICAI.
* Possible legal penalties under the CA Act.
* Income tax authorities may reclassify income and deny benefits.
---
## 5. **Practical advice:**
| Situation | Income Classification | Compliance Status |
| ---------------------------------------------- | --------------------- | ------------------- |
| Employed with company or CA firm (employee) | Salary | Correct & legal |
| Contractual services without COP (independent) | Professional Fees | Violation of CA Act |
| Contractual services with valid COP | Professional Fees | Allowed |
---
### **Summary:**
* Without a COP, you **cannot legally receive professional fees or retainership fees** for professional services.
* Income received from employer or CA firm as an employee **must be treated as salary**.
* Structuring receipt as professional fees without COP is a **violation of the CA Act** and ICAI regulations.
---
If you want, I can also help with related tax treatment or drafting an appropriate agreement based on your employment status.
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