The Hindu Business Line : Networking of CA firms

The suggestion of many that larger firms of chartered accountants be formed by net-working and the like is impractical since the additional work-load will not augment remuneration. The same amount of remuneration will be shared by more persons, but the firm's tax will increase sharply.

The government should take note of one of the reasons why the present position of small firms of professionals is "pathetic". It is the taxation of income from small firms' after allowing pathetic amounts as remuneration.

Partnership of chartered accountants can be only among practising members and there is no reason or justification to restrict remuneration by law.

The remuneration of professional firms should at least be related to the number of partners in a firm and not as a fixed percentage of the entire income.

The latest blow is the fringe benefit tax payable by all firms whether or not the expenses have any relationship or benefit to the few staff engaged by the firms. The proposed limited liability partnerships will also be of no use to firms of chartered accountants as they are not in need of borrowed capital for machinery, stock-in-trade, working funds, etc., as a small-scale industry.

The best option appears to be to dissolve the existing small firms and the partners take up independent practice taking into account the non-taxable slab of Rs 1 lakh. This is what the big firms would welcome.

S. Venkatasubbu

Coimbatore