The Hindu Business Line : CAs may be roped in for excise audits

DEEP IN THOUGHTS: The Revenue Secretary, Mr K.M. Chandrasekhar (left), with the President of the Institute of Chartered Accountants of India, Mr Kamlesh S. Vikamsey, at the international conference on `Accountancy profession: Adding value to new horizons of economic growth' in the Capital on Friday. - Kamal Narang

New Delhi , Sept. 2

THE 65,000-odd practicing chartered accountants may soon get more professional opportunities coming their way, with the Finance Ministry looking to leverage their expertise for excise duty reviews or audits.

Faced with a sluggish growth in excise duty revenues so far in the current fiscal, the Finance Ministry is keen to put in place a strong audit system to curb the leakage or evasion of excise duty.

The revenue department has begun consultations with the Institute of Chartered Accountants of India (ICAI) as to how the institute's members could take a lead role in the audit/review system being mulled by the Finance Ministry.

"We are in talks with ICAI on having some form of audit on excise (assessees) so that there is no evasion. Currently, we rely on the self-declaration of the assessees. There has to be some form of audit to ensure that cenvat credit (modvat) is not wrongly taken," Mr K.M. Chandrasekhar, Revenue Secretary, Ministry of Finance, told Business Line, on the sidelines of an international conference on accountancy profession, organised by the ICAI.

The ICAI President, Mr Kamlesh Vikamsey, however, said that discussions with the Finance Ministry are at a preliminary stage.

As against the budgeted growth rate of about 20 per cent in gross excise duty collections for 2005-06, the Centre's excise duty collections have grown by a mere four per cent in the first quarter of the current fiscal.

Gross excise duty collections of the Centre for the period April-June 2005 stood at Rs 14,264 crore against Rs 13,711 crore in the corresponding period last year.

For the year 2005-06, the Centre has budgeted excise duty collections at Rs 1,21,533 crore against a revised estimate of Rs 1,00,720 crore in 2004-05.

Earlier, in his address at the international conference, Mr Chandrasekhar underscored the need to put in place an audit system although the overall leaning has been towards having a liberalised and simplified tax regime.

"As we liberalise, we also need to put in place a system of audit," Mr Chandrasekhar said.

He added that the ICAI could play a crucial role in assisting the tax administration in its task of revenue mobilisation and further simplification and rationalisation of tax laws.

The Revenue Secretary also asked ICAI to consider setting up of tax clinics around the country.

Stating that low tax-GDP ratio has been a central feature of India's tax problems, Mr Chandrasekhar highlighted that the composition of taxes has not kept pace with the changing structure of the economy.

He pointed out that the share of excise duty in tax revenues continues to far exceed the share of manufacturing in the GDP of the country. On the other hand, the share of service tax in tax revenues is below 0.5 per cent even though services account for more than 50 per cent of GDP.

On service tax legislation, Mr Chandrasekhar said that the Finance Ministry is in touch with the State governments and that zonal level meetings are to be held soon to seek convergence of views between the States and the Centre, on the issue of service tax.

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