Change, but with a little more care

The most recent example is the
notification of the changes in accounting standards notified by the
Ministry of Corporate Affairs (MCA) on 30th March 2016. The notification
was to be effective on the date of its issue. Therefore, there was
confusion as to whether the said changes would apply to the accounting
year ended 31st March 2016 or accounting periods/year commencing after
the date of the notification. In terms of logic and rationale, the said
changes should have applied in regard to the accounting year 2016-17 as
they were notified on 30th March 2016, just a day before the end of
accounting year 2015-16. Many leaders in the accounting profession,
however, felt that it would apply to the year ended 31st March 2016 and
there was a mad rush for compliance, causing employees of companies and
their auditors to spend sleepless nights. Some sources feel that the MCA
was of the view that the changes would obviously apply to financial
year 2016-17. A single line in the notification stating that it would
apply to accounting periods commencing after the date of the
notification would have avoided the rigmarole. However, those in the
accounting profession were left to make their own interpretation.
Assuming that there was clarity in the minds of those in the ministry as
regards the effect of the notification, once it came to light that
there was confusion, an immediate response would have mitigated the
problem. This however did not happen, till the air was cleared a few
days ago.

While this was the case of a change in the accounting
standards, in the urge to reduce the reliance on paper, and make tax
compliances online, changes are being made which are causing substantial
problems to the users, both taxpayers and professionals. The new form
15CB, which is to be issued by Chartered Accountants for remittance to
non-residents with or without a withholding tax obligation is a case in
point. The forms have to be submitted online with effect from 1st April
2016. While structuring the form, the drop down boxes are devised in
such a way that it becomes extremely difficult for the proper category
of the remittance to be chosen. It must be appreciated that, whether the
remittance to the nonresident is chargeable to tax in India, requires a
proper analysis of the domestic law, the relevant double taxation
avoidance treaty (DTAA ), and after interpreting these, one forms his
opinion. While the online filing is certainly welcome, the form could
have been devised in a way enabling the issuing Chartered Accountant, to
disclose the basis of his opinion.

The online filing of Income
tax appeals is another example. The form is devised in a manner that it
requires drafting of the grounds of appeal and the statement of facts
with restriction on number of words. Further, the additional evidence if
any is to be disclosed at the stage of filing the appeal as well as the
details of the documents relied on is to be submitted. While there can
be no quarrel with the need for brevity and precision as well as a
reform in appellate procedures, it must be remembered that this is the
first appellate forum to which a litigant comes after having been
aggrieved by earlier assessment or other order. Therefore, it is
necessary to strike a right balance between the streamlining of online
process and the principles of justice, which not only must be done but
must be seen to be done.

In all the illustrations which I have
referred to in the foregoing paragraphs, the issues that have arisen
could have been avoided if there was a prior dialogue between the
authorities making the changes and those affected by it. If the
authorities had reached out to professionals, and placed the changes in
the public domain much of the problems could have been avoided. One
entirely appreciates that when changes are brought about there are bound
to be some problems and glitches and some resistance. But most of these
creases could have been ironed out. The hallmark of true leadership is
the ability to take everyone along. This is what both the politicians
and bureaucrats must do, and I am sure that the profession will respond.
On its part, the ICAI should keep open all the channels of
communications with the authorities. All of us who belong to the
profession must also do our mite to help our alma mater discharge this
responsibility.

At the time that this issue reaches you, the
Finance Bill will have been discussed in Parliament and in all
probability would have been passed. Let us hope that many of the
suggestions and representations made by our Society, and other bodies
are duly considered, and necessary amendments incorporated in the
Finance Bill. That will be a really welcome change!