The Central Council of the Institute of Chartered Accountants of India (ICAI) has increased the ceiling on the number of tax audit assignments that a chartered accountant can accept in a financial year either as partner or proprietor.
"The ceiling on tax audit has been increased from 30 to 45 per chartered accountant/per partner. Each partner can undertake 45 tax audits," Mr Sunil Talati, President of ICAI said.
The move to increase the ceiling comes after a prolonged debate within the ICAI, with some council members even suggesting that there should be no ceiling on the number of tax audits.
Asked what prompted the ICAI to raise the ceiling, Mr Talati said there were many reasons behind the decision.
He pointed out that the ceiling of 30 tax audits was fixed in 1988, when the number of practising chartered accountants were lower than what it was today. The need to maintain quality and also provide opportunity for younger members of the profession had prompted the institute to maintain the ceiling at 30 for many years.
"Today, the number of auditable assessees have also gone up. With introduction of VAT, more number of assessees are qualifying for tax audit. There is more computerisation. All this has prompted us to increase the ceiling," Mr Talati said.
The ceiling revision has been a thorny issue for ICAI, with the institute even moving the Supreme Court on this issue.
The ICAI had in mid-2005 obtained a stay from the apex court on the operation of a Madras High Court order, which ruled that the institute's move to restrict the number of tax audits that a chartered accountant can accept was "arbitrary" and in violation of the Constitution.
Meanwhile, ICAI's fiscal laws committee Chairman, Mr G. Ramaswamy, said that the institute had submitted its suggestions for improving the eight new tax returns forms to the Finance Ministry. The Government is expected to notify these forms by May 14.
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