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Indian Service Tax

Chartered Accountant

Effective Date: 16/10/1998

Authority: Notification No. 53/98-ST, dt. 7/10/1998 (for full text of Notification see under'Architect').

Rate of Service Tax: 8% from 14-5-2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definition

"practising chartered accountant" means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act, 1949 (38 of 1949) and includes any concern engaged in rendering services in the field of chartered accountancy; [Section 65 (83)].

Taxable Service: Chartered Accountant providing service to a client in his professional capacity, in any manner.

Value of taxable service: The gross amount charged by such accountant from the client for services rendered in professional capacity in any manner.

Exemptions

See Chapter on "General Exemptions"
Specific exemptions
Employees
Services relating to manpower recruitment

Person liable to pay : Practising Chartered Accountant.

Head of Account

SI. Code

SCCD

Minor –head

004400124

Chartered AccountantServices

00440091

Sub-head

00440012401

Tax Collection

00440092

111

Sub-head

00440012402

Other Receipts

00440093

110

Sub-head

00440012403

Deduct Refunds

00440094

119

Questions & Answers

Q. Who is practicing Chartered Accountant?

Ans: “Practicing Chartered Accountants” is a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act,

1949 and includes any concern engaged in rendering services in the field of chartered accountancy.

Q. What is the taxable service in case of practicing Chartered Accountant?

Ans: Taxable service means any service provided to a client, by a practicing chartered accountant in his professional capacity, in any manner.

Q. What is the value of the taxable service in case of practicing Chartered Accountant?

Ans: Value of the taxable service in relation to the service provided by a practicing chartered accountant to a client, is the gross amount charged by such accountant from the client for services rendered in professional capacity in any manner.

The nature and scope of the services rendered by the chartered accountants are delineated under the respective enactments and the rules and regulations made there under. The services rendered by such professionals are of a specified nature and are provided by virtue of their professional experience and specialized education.

Q. Who is a practicing Cost Accountant?

Ans. A "practicing Cost Accountant" is a person, who is a member of the Institute of Cost and Works Accountants of India and is holding a certificate of practice granted under the provisions of the Cost and Works Accountant Act, 1959 and includes any concern engaged in rendering services in the field of cost accountancy.

Main text of Departmental Circular/TN

[TN No. 116/98-ST, Dated 15-10-1998 of Hyderabad Commissionerate]

12.1 *Section 65(31) of the Finance (No.2) Act, 1998 defines a "practicing chartered accountant" to mean a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act, 1949 and includes any concern engaged in rendering services in the field of accountancy. Section 65(32) of the Finance (No.2) Act, 1998 defines a "practising cost accountant" to mean a person who is a member of the Institute of Cost and Works Accountant of India and is holding certificate of practice granted under the provisions of the Cost and Works Accountants Act, 1959 and includes any concern engaged in rendering services in the field of cost accountancy. As per Section 65(33), "practising company secretary" means a person who is a member of the Institute of company Secretaries of India and is holding a certificate of practice granted under the provisions of the Company Secretaries Act, 1980 and includes any concern engaged in rendering services in the field of company secretaryship.

12.2 The nature and scope of the services rendered by the chartered accountants, cost accountants and company secretaries are delineated under the respective enactments and the rules and regulations made thereunder. The services rendered by these professions are of a specialised nature and is provided by virtue of their professional experience and specialised education.

12.3 One of the issues raised is whether the service tax is leviable on services rendered by chartered accountants on services which are not exclusively performed by them, but also by others such as advocates etc. It has been decided that service tax is to be paid only on services of auditing and accounting rendered by practising chartered accountants in their professional capacity. The services rendered by chartered accountants which shall attract service tax, include audit/ certification services required to be rendered in terms of various statutes and/or under any specific notification/requirements issued by Government or other authorities and, inter alia, include the following services:

Statutory audit of companies under the Companies Act, 1956, both in respect of private sector and the public sector.
Audit of Companies carrying on General Insurance business under the Insurance Act, 1938.
Audit of Life Insurance Corporation.
Audit of Banking Sector including Reserve Bank of India, State Bank of India, Banking Companies, Foreign Banks, Regional Rural Banks and Cooperative Banks.
Audit of Statutory Corporations established under special enactments.
Audit of Financial Institutions established under special enactments.
Audit of Cooperative Societies under the Central Cooperatives Act.
Audit of accounts of Members of Stock Exchanges under the Securities Contracts (Regulation) Act, 1956.
Audit of financial information given in the offer document including accounting ratios pursuant to the clarifications XIII and XIV of the Guidelines for Disclosure and Investor Protection issued by SEBI.
Audit/Inspection of various Mutual Funds, Financial Institutions andother entities under SEBI Regulations.
Audit under Sales Tax Act of different States.
Tax audit under Section 44AB of the Income-tax Act, 1961.
Audit/Clarification under Sections 80HH, 80HHA, 80HHB, 80HHBA, 80HHC, 80HHD, 80HHE, 80-1 and 80-IA of the Income-tax Act, 1961.
Audit of Accounts of Political parties under Section 13A of the Incometax Act, 1961.
Audit under Section 142(2A) of the Income-tax Act, 1961.
Audit under Section 35D and 35E of the Income-tax Act, 1961. (q) Audit under Section 33AB (Tea Development Account) of the Income tax Act, 1961.
Audit under Section 33ABA (Site Restoration Fund) of the Income tax Act, 1961.

12.4 The above audit/accounting services rendered by practising chartered accountants are only illustrative and not exhaustive. Service tax on other than accounting and auditing services rendered by practising chartered accountants has been exempted (Noti. No. 57/98-ST, dt. 7/10/1998 refers).