CMA Body Slams Narrowed ‘Accountant’ Definition in Income Tax Act
The focus keyphrase Accountant definition Income Tax has triggered a fresh controversy in the professional community. The All India Cost Management Accountants Association has strongly objected to the Centre’s move to narrow the definition of “Accountant” under the proposed New Income Tax Act, excluding Cost and Management Accountants (CMAs) from key certifying roles.
This change has serious implications for compliance, certification authority, and inter-professional equity.
What Changed in the Accountant Definition?
As per the existing Income-tax Act, 1961, the term Accountant is defined under Explanation to Section 288(2). It includes:
“A chartered accountant within the meaning of the Chartered Accountants Act, 1949 who holds a valid certificate of practice.”
However, specific sections (like Section 92E, Section 80JJAA, etc.) allow for the inclusion of CMAs in certain reporting or certification capacities.
But under the Draft New Income Tax Act, the proposed definition of Accountant appears to exclude Cost Accountants, limiting it solely to Chartered Accountants (CAs).
This has led to sharp criticism from CMA bodies and practitioners across India.
Why CMAs Are Objecting
The All India CMA Association argues that:
- CMAs are statutory professionals under the ICWAI Act, 1959, recognized by Parliament.
- CMAs already perform compliance and audit-related work in GST, Companies Act, Customs, and Cost Audit Regulations.
- Excluding them from tax certification roles violates the principles of equality and fair opportunity.
- The move appears to promote monopoly by one profession, which goes against the spirit of liberalized regulatory architecture.
Legal Context and Relevant References
- Current Law: Section 288(2), Explanation (Income-tax Act, 1961)
- Proposed Draft: New Income Tax Act (published for public consultation)
- Other Recognitions of CMAs:
- Section 35(5) of CGST Act (Cost Audit)
- SEBI Regulations (Cost Audit & Compliance Reports)
- Companies Act, 2013 (Sections 148, 204)
While there’s no official gazette notification finalizing the new definition yet, the draft is under active review and feedback collection by the Ministry of Finance.
Expert View: Why This Matters for India’s Tax Ecosystem
India needs diversity in professional oversight, not concentration. Acknowledging multiple professional bodies ensures:
- Better taxpayer access to services, especially in Tier-2/3 cities
- Checks and balances in financial reporting
- Greater professional competition and innovation
Dr. M.S. Sharma, a senior cost accountant and faculty at IIM, notes:
“Restricting the accountant definition weakens India’s Make-in-India cost discipline goals. CMAs play a crucial role in pricing, costing, and supply chain finance — key for tax base expansion.”
How It Affects Taxpayers and Professionals
If passed as-is, the new definition would:
- Restrict CMAs from issuing tax audit reports, transfer pricing certifications, or representations under the Income Tax Act
- Force businesses and MSMEs to engage only CAs, often at higher costs
- Reduce choice and flexibility for taxpayers seeking advisory and representation
- Undermine cost-based auditing reforms under Make-in-India and Digital India
What’s Next: CMA Association Demands
The CMA Association has submitted a formal representation to:
- CBDT and MoF demanding restoration of parity
- Standing Committee on Finance for legislative reconsideration
- Public campaigns through press releases, webinars, and legal petitions if necessary
They have also hinted at legal recourse if the final law excludes them without valid rationale.
CMA Inclusion in Accountant Definition: A Taxpayer’s Perspective
| Aspect | With CMAs Allowed | With CMAs Excluded |
|---|---|---|
| Compliance Costs | Competitive, lower cost for small biz | Higher, CAs dominate pricing |
| Geographic Reach | Wider access across small towns | Limited to CA-dominated urban centres |
| Sectoral Expertise | Strong costing, pricing, manufacturing | General audit and tax focus |
| Tax Representation | Broader choice for taxpayers | Monopoly of representation |
Efiletax Insight: Balance is the Need of the Hour
Efiletax supports a level playing field for all tax professionals — CAs, CMAs, and CSs — wherever legally competent.
Professional diversity:
- Improves compliance outcomes
- Lowers taxpayer burden
- Enhances trust in regulatory institutions
As tax laws evolve, ensuring inclusive definitions — especially for roles like ‘Accountant’ — is critical.
FAQ: CMA and Accountant Definition Income Tax
Q1. Are CMAs recognised under current tax law?
Yes. Under certain sections, CMAs are allowed to certify reports or returns, but the broader ‘Accountant’ tag is usually CA-specific.
Q2. What is the concern with the new Income Tax Act?
The draft limits the ‘Accountant’ definition to only CAs, excluding CMAs and other professionals.
Q3. Can this be challenged?
Yes. Professional associations can file representations and even approach courts if exclusion is discriminatory.
Q4. Has the government responded?
As of now, the Ministry has sought public comments, but no final notification has been issued.
Summary
The proposed narrowing of the Accountant definition under the new Income Tax Act has sparked criticism from CMAs. Experts warn it may limit taxpayer choice, raise compliance costs, and undermine professional equity in India’s tax ecosystem.
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