ICAI's Role in Promoting Financial Literacy and Tax Awareness in 2024

Dear Professional Colleagues,

Wish you All a very Happy New Year!!

"With every new beginning comes an opportunity to grow. Let this year mark strides in personal growth, India's success on the global stage, and a united effort towards uplifting humanity."

Looking at the broader horizon, the past 25 years have seen India's transformation into a global economic powerhouse. Over the years, India has made significant strides worldwide across various fields, setting a shining example for developing nations to rise and achieve progress. With persistent reforms and growth-oriented initiatives, India has secured its position as the world's fifth-largest economy and aspires to rank among the most economically stable nations. It is imperative for each of us to rise to the occasion, embrace responsibility, and actively contribute to turning this dream into a reality.With India's rise as a global economic powerhouse, the accounting profession stands at the cusp of a whole new realm of opportunities. It is time that 'We', as Chartered Accountants, take the resolution to establish India as the Global Hub for Accountancy and Financial Excellence. To bring this vision to fruition, the Institute, guided by tenets of TRUST- Technology, Research, Union Development, Sustainability, and Transparency-is committed to championing innovation, sustainability, and excellence. The objective resonates with the nation's overarching vision of Viksit Bharat-a prosperous and inclusive India-fuelled by innovation, transparency, and ethical governance.The profession of Chartered Accountancy shall act as the catalyst in fulfilling the dream of building our 'India - Global Hub for Accountancy Profession'. This involves the exploitation of India's potential to the fullest and focusing on key drivers of growth, both internally and externally by nurturing startups & MSMEs to become globally competitive, attracting foreign investments through policy reforms, and promoting the export of services through Global Capability Centres. The overarching vision is to play a pivotal role in driving innovation, creating jobs, and fuelling economic growth.

India's Global Aspirations: Leading with Innovation

"No power on earth can stop an idea whose time has come. The emergence of India as a major economic power is one such idea. India is now wide awake. We shall prevail."

Dr. Manmohan Singh, Budget Speech, 1991

As we mourn the passing of Dr. Manmohan Singh, the Architect of Indian Economic Reforms, I recall the words from his 1991 budget speech that have now proven to be truly prophetic.Today, India is aptly poised to lead the global economy. Our country holds the top position in the world in fintech adoption rates and stands as the top consumer of smartphone data. With the second-largest internet user base, nearly half of the world's real-time digital transactions occur in India. Our nation now boasts the world's third-largest start-up ecosystem and ranks fourth in renewable energy capacity. In the manufacturing sector, India is the second-largest producer of mobile phones and remains the leading producer of two-wheelers and tractors. With a youthful population, India also has the third-largest pool of scientists and technicians globally.India's startup economy, driven by the entrepreneurial spirit of its youth, is a key driver of the nation's economic growth. It is projected that by 2030, startups will contribute nearly $120 billion (1.6% of GDP), 3.5 times increase from $35 billion in 2023. By 2047, startups are expected to contribute $1.6 trillion, accounting for 5% of India's GDP as it aims to become a 'Viksit Bharat' with a $35 trillion economy. This startup revolution is fostering innovation and resilience, essential for India's future.In addition, India's gross foreign direct investment (FDI) has reached significant milestones, with inflows reaching $42.1 billion in the first half of the current fiscal year and cumulative FDI surpassing $1 trillion since April 2000. These achievements reflect enhanced global competitiveness, a thriving innovation ecosystem, and a business-friendly environment, supported by initiatives like Make in India, Digital India, sectoral liberalization, and recent policy reforms, including increased FDI limits.

Building India into a Global Hub for Accountancy Profession

The nation's demographic dividend, vibrant startup ecosystem, and strategic initiatives provide a strong foundation to realize this vision. To achieve this vision, it's important to build a collaborative ecosystem that supports the development of enabling policies for the globalization of businesses, attracting investments, unlocking economic growth, digital transformation through the adoption of the latest technologies, forging strategic partnerships and collaborations for knowledge enrichment, and technology transfers strategy between institutions, regulators, and industry.India's rise as a global hub for the finance and accounting sector is a testament to its sturdy capabilities and progressive policies. Recognized as the 'World's Outsourcing Hub,' the nation is also witnessing the significant growth of Global Capability Centres (GCCs). By 2030, the GCC industry is expected to become a $100 billion sector, creating over 2.5 million jobs. This growth is driven by India's vast talent pool, cost advantages, and the shift of GCCs from service providers to strategic hubs. The roadmap for India to attain the highest position globally requires integrating education, innovation, sustainability, and governance. The adoption of advanced technologies like artificial intelligence will further enhance India's ability to deliver sophisticated financial services, reinforcing its status as a preferred destination for global companies seeking efficiency and innovation.Since its inception with the foresight that 'Knowledge is Power', the ICAI and the CA profession have fostered continuous learning and skill development to empower youth and drive national progress. Recognizing knowledge as the ultimate competitive edge, ICAI is continuously equipping the younger generation with advanced skills, shaping them into contributors to India's growth.The International Financial Services Centres (IFSCs), notably the Gujarat International Finance Tec-City (GIFT IFSC), are pivotal in positioning the nation as a strategic global financial services hub. For our profession, IFSCs present significant opportunities. The expansion of permissible activities, including bookkeeping, accounting, taxation and financial compliance services, within IFSCs has opened new avenues for CAs to offer specialized services to international clients. ICAI is actively collaborating with IFSCA to facilitate the seamless integration of Indian accounting standards with global practices.ICAI is actively working towards augmenting governance and reforms in Municipal and Panchayati Raj bodies across the country to strengthen India's economy from within promoting smart city infrastructure and engaging with youth in Tier-II and Tier-III cities to ensure inclusive growth and sustainable development. Together with O/o C&AG the Certificate Courses for Accountants of Panchayats and Municipal Bodies has been developed for capacity building of youth and empowering citizens at the grassroot level.As the nation progresses towards its economic goals, the Pradhan Mantri Internship Scheme (PMIS), announced in the 2024 budget, seeks to bridge this gap by offering structured internships to 1 crore youth in top companies over five years. The PM Internship Scheme stands as a testament to India's commitment to harnessing the potential of its youth. By investing in their development, we are not just shaping capable professionals; we are empowering future leaders who will drive innovation, fuel economic growth, and contribute to a prosperous society. The scheme aligns education with industry needs, fostering a skilled workforce to propel India into a new era of growth, where every youth can realize their potential and contribute meaningfully to India's growth story.ICAI firmly believes in the role of financial literacy and taxation in driving inclusive growth, essential for strengthening India's economy. ICAI has been at the forefront, promoting financial literacy through initiatives like Vittiya Gyan - ICAI Ka Abhiyaan and the Vittiya Gyan Mela 2024, held across 63 ICAI branches, aimed at spreading financial awareness and supporting India's economic advancement on a global scale.To empower economic development and working towards India@2047, the Institute took various measures to nurture entrepreneurship, MSMEs and Startups. The ICAI is undertaking initiatives like Startup Sphere, MSME Yatra along with collaborations with institutions and government entities to build an enabling ecosystem promoting entrepreneurship. ICAI is providing these entities with strategic advisory services, financial planning tools, and compliance support to enhance their competitiveness. Our specialized initiatives, such as startup mentorship programs and workshops on export readiness, are empowering entrepreneurs to scale their operations and thrive in a global marketplace.The Institute embraces cutting-edge technologies like artificial intelligence, blockchain, and data analytics, and enables Chartered Accountants to go beyond traditional roles and deliver strategic, forward-thinking solutions. This year ICAI incorporated and imbibed Artificial Intelligence (AI) as part of the CA curriculum and even launched a Certificate course in AI along with dedicated CA GPT modules transforming the accounting profession.The Institute of Chartered Accountants of India (ICAI) has demonstrated a strong commitment to sustainability and as a global hub for accountancy, establishing its Sustainability Reporting Standards Board (SRSB) in 2020, well ahead of the ISSB's formation in 2021. ICAI has contributed to the global discourse on sustainability and assurance standards. ICAI's contributions enhance India's status as a key player in the global accountancy profession, aligning education, regulation, and practice with international standards. Additionally, ICAI's efforts in promoting social audits and ethical practices further bolster India's reputation as a hub for accounting excellence, driving both economic growth and sustainable development.Aligning with ICAI's vision of strengthening India's presence in the global accountancy profession. The aggregation of CA firms in India is a strategic step towards making them globally ready. ICAI is working very effectively on how to frame guidelines for networking, multidisciplinary partnership, international networking, merger and demerger and advertisement. By promoting the formation of larger, multidisciplinary firms, ICAI is enabling Indian Chartered Accountants to compete effectively on an international scale. These large firms will be positioned to cater to the evolving demands of the global economy, enhancing India's reputation as a hub for quality financial services and expertise.The ICAI Center of Excellence (COE) is being developed as a premier hub for research, aiming to position India as a global leader in the accountancy profession. By fostering cutting-edge research in areas such as financial reporting, sustainability, artificial intelligence, and other emerging areas of economy, ICAI is ensuring that Indian Chartered Accountants are future-ready. Recently, ICAI has launched 1st Advanced Flagship Program- Empowering Trusted Advisors Unlocking the Potential of Family Enterprises. The program aims to equip Chartered Accountants (CAs) with specialized skills to address the unique challenges faced by family businesses and support their growth and success in the economic progress of the nation. Details are coning inside the journal.Considering the evolving global economy, the ICAI is organizing the World Forum of Accountants (WOFA) to showcase the emerging role of Indian accounting profession in navigating and leading the changes for betterment of the world. With the participation from Indian CA Firms and professionals, the WOFA is an endeavour to showcase the world at large India's thought leadership and rise as global leader in Accounting and Auditing. More than 6000 delegates will be participating in this grand event.

Important Developments

• ICAI's Suggestions on Comprehensive Review of the Income-tax Act, 1961The Union Budget 2024-25 announced a review of the Income-tax Act, 1961, to simplify language, reduce litigation, and ease compliance. In response, ICAI has provided key suggestions to enhance tax efficiency, transparency, and economic growth. These include simplifying tax laws, removing obsolete provisions, and introducing dispute mitigation measures. ICAI advocates a special tax regime for firms, streamlining taxation for charitable trusts, simplifying residential status provisions, and eliminating separate forms for opting into special regimes. To reduce litigation, it proposes aligning TDS/TCS rates with audit trail objectives, limiting section 143(1)(a) adjustments, and setting timelines for appeals. Compliance improvements include a year-wise E-Ledger for TDS/TCS, extended deadlines for belated returns, simplifying return forms, and resolving faceless assessment concerns.
• ICAI's representative on the Consultative Group on Tax Policy constituted at NITI AayogA consultative group on Tax Policy has been constituted at NITI Aayog to support the goal of improving tax policies, tax administration, and tax compliance while simplifying processes and reducing litigation. As part of the consultative group, the ICAI has submitted its suggestions on mitigating litigation and reducing the pendency of appeals, which include the need for an effective Grievance Redressal Mechanism in respect of faceless appeals before Joint Commissioner (Appeals)/ Commissioner (Appeals), obtaining feedback from the taxpayers on the significant issues/concerns which are prone to litigation, and addressing the same through issuance of circulars/FAQs, expanding the scope of Dispute Resolution Scheme, non-levy of penalty on debatable matters involving substantial question of law and addressing the issues involved in certain specific provisions of tax laws which result in extensive litigation.
• Pre-Budget Memorandum 2025Like every year, this year too, the ICAI has submitted its Prebudget Memorandum 2025 highlighting prudent tax reforms to drive economic growth and sustainability. Important recommendations include tax benefits for climate change mitigation to align with India's climate goals and boost sustainable business practices. To encourage women's property ownership, the memorandum proposes removing restrictive provisions under sections 27 and 64(1)(iv)/(vi). Simplification of tax laws is advocated through a new income head for shares and securities, depreciation alignment with the Companies Act, 2013, rationalization of capital gains provisions, and a 10% tolerance band for valuations under section 50C(2). Additionally, ICAI has suggested rationalizing tax rates under section 115BBE for cash credits, improving e-filing by revising conditions for defective returns, and providing opportunities for taxpayers to rectify returns before invalidation.
• Presentation of Accrual Based Financial Statements of Indian Railways FY 2022-23Indian Railways, the world's fourth-largest network, after the United States, Russia, and China, has been undertaking Accounting Reforms aligned with Generally Accepted Accounting Principles (GAAP). Since 2014, the Institute of Chartered Accountants of India (ICAI) and its Accounting Research Foundation (ICAI ARF) have been playing a pivotal role in supporting the transition to accrual-based financial statements, enhancing transparency and accountability. ICAI ARF has successfully facilitated the preparation of accrual-based financial statements in Indian Railways for all Zonal Railways and Production Units from 2015-16 to 2022-23, contributing significantly to strengthening India's self-reliant infrastructure and financial governance.

Meeting with Governor Maharashtra

I along with the ICAI delegation, accompanied by the Vice President, Past Presidents and Central Council Members, met Shri C. P. Radhakrishnan, the Hon'ble Governor of Maharashtra. The discussion encompassed a wide range of important topics, including matters related to trusts, cooperatives, municipalities, universities, colleges, and various other professional concerns. The meeting was a significant step in fostering collaboration and addressing key areas of governance and professional development, reflecting ICAI's commitment to contributing to societal progress.

CA Exam Results

The results of the Final level examinations held in November 2024 have been declared. In Group I, out of 66,987 candidates appeared, 11,253 students successfully passed, resulting in a pass percentage of 16.8%. For Group II, out of 49,459 candidates, 10,566 students cleared the exam, achieving a pass percentage of 21.36%. Additionally, 30,763 candidates appeared for both groups, with 4,134 students qualifying, marking a pass percentage of 13.44%. My heartfelt congratulations to all the students who have successfully cleared these exams and welcome them to the prestigious fraternity of Chartered Accountants. To those who couldn't qualify this time, view this as a valuable learning experience and a step closer to your goal. Keep striving with determination and confidence.

Conclusion

We are on our journey to build the Bharat we envision, the Bharat that is developed, thriving, and filled with opportunities; we must remain committed to our efforts and aspirations. A Bharat of happy, progressive people, continually evolving, and showcasing their excellence at every stage is within our grasp. As we pull out all the stops to achieve this dream, let us remind ourselves of the vital role each individual plays. We are the very backbone of a growing economy. Together, with dedication, perseverance, and a commitment to growth, we can shape a future where Bharat stands as a beacon of success and inspiration for the world.Once Again, A Very Happy New Year to All of You!!Jai Hind! Jai ICAI!

CA. Ranjeet Kumar Agarwal
President, ICAI