The Evolving Role of CA Services: Value or Profit?

 

  CAs were seen as trusted advisors—guardians of financial health and growth. 

Over the years, the role of Chartered Accountant (CA) services has undergone significant changes, leaving individuals and small-scale businesses questioning whether the focus has shifted from value-driven solutions to profit-centric practices. 

Today, however, many feel abandoned by a profession that once prioritized their needs.

The Issue: Profit Over Purpose

The CA profession, like many others, has not been immune to the pressures of commercialization. 

Unfortunately, this shift has led to practices that prioritize revenue over meaningful client relationships, resulting in several alarming trends:

1. Generic Solutions Lacking Relevance: Many firms now offer standardized services that fail to address the specific needs of individual clients or small businesses.

2. Minimal Engagement with Smaller Clients: A focus on high-revenue accounts often leaves smaller clients with inadequate support and limited interaction.

3. Reduced Emphasis on Strategic Guidance: Instead of acting as financial partners, many CAs restrict themselves to basic compliance, neglecting areas like growth strategies, financial optimization, and long-term planning.

4. Rising Costs, Declining Value: Escalating fees without a corresponding increase in value have left individuals and small businesses questioning the worth of these services.

The Consequence: A Growing Disconnect

The effects of this profit-driven mindset are felt most acutely by individuals and small-scale businesses who rely on professional guidance to navigate their financial landscapes. Without personalized support, many find themselves:

1. Overburdened with Compliance Challenges: Constantly grappling with regulatory requirements and frequent policy changes, small-scale businesses often fall behind on compliance, leading to penalties and additional stress.

2. Losing Out on Growth Opportunities: Without strategic financial advice, these businesses miss crucial opportunities to optimize costs, streamline operations, or expand sustainably.

3. Facing Increased Financial Vulnerability: Mismanaged taxation and unoptimized financial structures make individuals and businesses alike more susceptible to financial instability.

4. Experiencing Erosion of Trust: Repeated experiences with generic and overpriced services lead to skepticism about the profession’s ability to deliver meaningful value.

These challenges collectively widen the gap between clients’ expectations and the services they receive, leaving many feeling isolated and unsupported in critical financial decisions.

Taxellence Consultants: Bridging the Gap

At Taxellence Consultants India (TCIPL), 

We are redefining the relationship between CAs and their clients. 

Our mission is to restore trust and provide services that genuinely empower individuals and small businesses.

 Here’s how we do it:

1. Customized Solutions for Unique Needs

2. Affordable Expertise for All

3. Beyond Compliance: Real Value Creation

4. Empathy and Long-Term Partnership

Recognizing the financial constraints of smaller clients, we ensure:
Transparent and fair pricing structures.
Accessible advice and support, regardless of the client’s size or budget.
Identify opportunities for cost reduction and efficiency improvements.
Provide strategic insights that drive sustainable growth.
Empower clients to make informed decisions.

Support their growth, every step of the way.

We believe in the power of personalization. By understanding each client’s specific challenges and goals, we deliver: Tailored financial strategies that align with individual and business objectives and Practical solutions designed to address real-world challenges.

Our role extends far beyond filing taxes and ensuring compliance. We aim to offer proactive tax planning to maximize savings. 

At Taxellence, we see ourselves as partners in our clients’ journeys. By fostering relationships built on trust, empathy, and mutual respect, we aim to simplify complex financial matters.

Making a Difference: Empowering the Underserved

Taxellence Consultants takes pride in addressing the critical gaps left by traditional CA services. We focus on empowering individuals and small-scale businesses through:

1. Innovative Financial Roadmaps: By designing tailored strategies, we enable our clients to achieve clarity and direction in their financial goals.
2. Expert Compliance Management: Our meticulous approach ensures that our clients remain compliant with all regulatory requirements, reducing stress and risk.
3. Proactive Opportunity Identification: We actively identify opportunities for growth and optimization, ensuring our clients capitalize on every advantage.
4. Strengthened Financial Resilience: Through thorough analysis and planning, we help our clients build robust financial structures that stand the test of time.

Our commitment goes beyond providing services—we aim to instill confidence, foster trust, and equip our clients with the tools and insights they need to thrive in an increasingly complex financial landscape.

The Way Forward

The time has come to demand more from CA services. Individuals and small-scale businesses deserve advisors who prioritize their success, not just their billing. Taxellence Consultants is committed to this vision, offering services that truly make a difference.

If you’re ready to experience financial services that deliver value and trust, connect with Taxellence today. Together, we’ll build a brighter financial future.

Inheritance Tax or Capital Gains Tax in India 2024: A Detailed Guide

By Anurag (Director, Taxellence Consultants India Private Limited )

India’s taxation system is ever-evolving, and when it comes to inherited wealth and capital gains, there are some important aspects you need to be aware of.

This blog aims to provide a comprehensive overview of the current laws related to inheritance or capital gains taxation in India for 2024, referencing the Income Tax Act, 1961.

We’ll dive into the tax implications of inheritance or capital gains in 2024

Inheritance Tax in India: What You Need to Know in 2024 

India no longer imposes an inheritance tax. The Estate Duty Act, which taxed the transfer of wealth upon a person’s death, was abolished in 1985. This means when you inherit property, shares, or other assets in India, you do not have to pay any direct tax on the inheritance itself.

This is not the end of the story.

Capital Gains Tax on Inherited Assets:

 Even though there’s no inheritance tax, you may still face a significant tax burden when you decide to sell the inherited assets.The Income Tax Act, 1961, imposes capital gains tax on the profits earned from selling property, shares, or other inherited assets.

Types of Capital Gains

1. Long-Term Capital Gains (LTCG): If the inherited asset is held for more than 36 months before selling (for immovable property), the gains are considered long-term and taxed at 20% with indexation benefits. Indexation allows you to adjust the acquisition price of the asset for inflation, which can significantly reduce your tax liability.

2. Short-Term Capital Gains (STCG): If you sell an inherited property or asset within 36 months of acquiring it (for immovable property), the gains are considered short-term and taxed at your applicable income tax slab rate.

3. For financial assets like shares and mutual funds:

• The holding period to qualify for long-term capital gains is 12 months. 
• Long-term capital gains on equity shares are taxed at 10% if they exceed ₹1 lakh in a financial year.

How Capital Gains Tax Applies to Inherited Assets

While inheriting assets itself is not taxable, selling them is. Here’s how capital gains tax applies to different categories of inherited assets:

1. Inherited Property (Land, House, etc.)

   If you inherit a property and later sell it, capital gains tax will be applicable based on the sale price minus the indexed cost of acquisition.

   • Cost of Acquisition: Inherited assets are considered to be acquired at the cost the original owner (deceased person) paid. If the property was acquired before April 1, 2001, the fair market value (FMV) as of April 1, 2001, can be considered.

   • Indexation: For long-term capital gains, the purchase price is indexed to account for inflation. The Cost Inflation Index (CII), updated annually by the government, is used to compute the indexed acquisition cost, which helps reduce tax liability.

Example: If your parents purchased a property in 1990 for ₹10 lakh, and you sold it in 2024 for ₹1 crore, capital gains will be calculated by indexing the ₹10 lakh using the CII.

     2. Inherited Shares and Securities

          For shares, mutual funds, or other financial securities, capital gains tax is calculated similarly, the holding period for listed securities to qualify as long-term is 12 months.

• Long-Term Capital Gains (LTCG) on equity shares or equity-oriented mutual funds are taxed at 10% if gains exceed ₹1 lakh in a financial year.
• For debt-oriented funds, LTCG beyond 36 months is taxed at 20% with indexation benefits.

How to Calculate Capital Gains Tax on Inherited Assets in 2024

The formula to calculate capital gains for inherited property is:

Capital Gains=Sale Price−Indexed Cost of Acquisition−Expenses on Transfer (if any)

Steps to Calculate Capital Gains:

1. Determine the Cost of Acquisition: If the asset was bought by the deceased after 2001, use the actual purchase price. If bought before April 1, 2001, use the FMV on April 1, 2001.

2. Apply Indexation: Multiply the original purchase price by the ratio of the CII in the year of sale to the CII in the year of acquisition. The Cost Inflation Index for FY 2023-24 is 348.

   Indexed Cost=CII in the year of acquisition CII in the year of sale​×Cost of Acquisition

3. Subtract Indexed Cost from Sale Price: The difference is the capital gain, and if it’s long-term, a 20% tax will apply on this amount.

Example of Capital Gains Tax on Inherited Property:

Let’s say you inherit a property that was bought by your parents in 1995 for ₹10 lakh. You sell this property in 2024 for ₹1.5 crore.

• Fair Market Value on April 1, 2001: Assume ₹30 lakh.
• Indexed Cost of Acquisition: CII in 2024 (348)/CII in 2001 (100)×₹30lakh=₹1.04crore

Capital Gains: ₹1.5 crore (Sale Price) - ₹1.04 crore (Indexed Cost) = ₹46 lakh

The capital gains tax at 20% on ₹46 lakh would be ₹9.2 lakh.

Special Provisions and Exemptions for Capital Gains Tax in India (2024)

India offers certain exemptions to reduce the burden of capital gains tax under Sections 54, 54F, and 54EC of the Income Tax Act:

Section 54: Exemption on Sale of Residential Property

• If you sell an inherited residential property and reinvest the gains in another residential property within a stipulated period (2 years from sale, or 3 years if under construction), you can claim a tax exemption.

Section 54F: Exemption for Non-Residential Property

• For the sale of non-residential assets, if the capital gains are reinvested in a residential property, the entire capital gains or the proportional investment in the new property can be exempted from tax.

Section 54EC: Exemption on Investment in Bonds

• You can invest the gains in specific government bonds (like NHAI or REC bonds) within 6 months of sale and claim an exemption on the capital gains up to ₹50 lakh.

Section 54B: Exemption on capital gains from transfer of land used for agricultural purposes

• The land sold must have been used for agricultural purposes for at least two years. 

• Individual and HUF against Capital Gain Arising from Transfer of Agricultural Land by investment of Capital Gain amount in another land or in Capital Gains Deposit Account Scheme.

Section 54D: Capital gains on the transfer of land and building used for the industrial undertaking

• Capital Gain arising from the transfer, by way of compulsory acquisition under any law, of land or buildings forming part of an industrial undertaking belonging to the assesses are Exempt,

Capital Gains Accounts Scheme (CGAS), 1988

For those taxpayers who are unable to re-invest the capital gains in modes as specified in the Act before the filing of return of income or before the expiry of time to invest the gains. 

To address this, to enable the taxpayer to park his funds till they are invested for the prescribed purpose, the concept of Capital Gains Account Scheme(CGAS) was introduced.

so in Budget 2024, For the FY 2024-25, the budget has been proposed as follows:

• The holding period for classifying the assets will be 12 months and 24 months for short-term and long-term capital assets. Holding  36 months has been removed.

• The holding period for all listed securities is 12 months. All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months. Thus, land held for more than 24 months is considered long-term. 

• The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%. While on the other hand, the indexation benefit that previously was available on sale of long-term assets, has now been done away with. So, any sale of land made from 23rd July 2024 will attract a tax rate of 12.5% only without indexation benefit. 

• Short-term capital gain on sale of land shall continue to attract tax at slab rates.

While India has no inheritance tax, the sale of inherited assets brings capital gains tax into the picture, the capital gains tax system is designed to tax profits made from selling inherited assets.
 As the laws evolve, it’s important to stay updated on changes in the Income Tax Act, 1961, and seek professional guidance when dealing with complex tax situations involving inherited property or assets. 
Understanding how these taxes work and taking advantage of exemptions can help you significantly reduce your tax liability.
 By planning well, you can significantly reduce your tax liabilities and make the most of your inherited wealth.

With Taxellence Consultants by your side, you can rest assured that your financial future—and that of your heirs—is in expert hands., Taxellence Consultants India is here to guide you every step of the way

Visit: https://www.taxellence.co.in  or email us  info@taxellence.co.in

Tax Strategies for a High-Net-Worth Individual: A Success Story

 Optimizing Tax Strategies for a High-Net-Worth Individual: