COST ACCOUNTANTS ARE THE EYES & EARS of Government of India

GST is big boon for the Cost Accountancy profession but on a limited scale compared to peer profession. GST will transform unorganized players into organized hence the number of SME will simply amplify over the coming few years.  Those who were not under proper service tax ambit and were scaling business will come under GST ambit. Their book keeping work will be regularized and once the PAN and Adhar are getting linked, will further block the loopholes of tax evasion. In continuation to my previous note on High time for COST Audit and Cost Record Applicability it’s being found that SME industry needs our assistance on a high level.  Now SME segment coming under compliance ambit will grow up in the long term to expand its growth and revenue and this is the place where the government might not be able to measure the type of benefits and support it needs. Since cost audit and cost record used to be the EYES & EARS of the government. Now with the mandate of below Rs 50cr turnover or Rs.100 cr turnover most of these segments will not come under the applicability of cost audit and cost record where as other professions will get tax audit and book keeping work which will be less importance for this industry to grow.

We need to believe that we have a new government in place which is very progressive and its reform policies have already shaped the Indian GDP growth 10 7% and its being envisaged that by 2019-2020 we will be near to 9% GDP growth riding on GST reforms.  Under the previous government it was well clear that policy logjams and inability to understand the bottle necks and place solutions accordingly slowed the GDP growth and investment climate and business climate within the economy. This government will hear out based on the current economic situation about the applicability of the Cost Audit and Cost record for the SME segment.  Its not like the previous government under which we lost many precious positions where the profession was ruling in its fields. One of this most important things we lost in 2009 as like Special Audit under Section 14A & 14AA of the Central Excise Act, 1944 (check the FM during that time).  The most important aspect of this government is that they are policy driven growth focused economy and have not kept any stone unturned for not getting growth. They will adopt and change any policy which is beneficial for the Indian economic growth. We are EARS and EYES of the Government.

Industry body FICCI's latest Economic Outlook Survey has pegged India's gross domestic product (GDP) growth at around 7.4 percent for the fiscal year 2017-18. The pick-up in overall GDP growth will also be supported by an improvement in industry and services sector growth.  This growth needs guidance which the profession can provide. The Government of India is focusing on Startup and Make in India. But Make in India and Startup India is not possible without contribution from SMEs of India.

Small and medium scale enterprises (SMEs) are understood in India as enterprises where the investment in plant and machinery or equipments is between Rs. 25 lakhs ( US $ 0.04 million) to Rs. 10  to Rs. 5 Crore (  US $ 0.8 million)  in case of a service sector enterprise. This definition is provided in Section 7 of Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) and was notified in September 2006. 

Now under the current cost audit and cost record applicability the current ruling of slabs creates scope of opportunity as most of the SME are below the turnover level of Rs 50cr or Rs.100cr. Overall, the MSME sector accounts for 45 percent of Indian industrial output and 40 percent of exports.

This itself is a big opportunity which will growth the business of practicing and employment once cost audit applicability and cost record maintenance is implemented. Now the profession already knows that we have lost the ground but the current economic imbalances and exploring new opportunities of growth they need the support of the cost record and cost audit applicability aspect since they needs revise prices and revised cost estimation polices which will guide them for exploring market share in these new markets. Rising international commodity prices make the sector under extensive demand for various type of benefits and concession.  Now cost audit and cost records could have helped the government to access the prevailing problems for the industry.

Hence having a progressive government in one place who envisages double digit growth for the Indian economy the cost accountant fraternity cannot be left alone without having access to the SME below Rs 50cr turnover or what so ever turnover level..