REASONS & JUSTIFICATIONS–WHY TO INCLUDE COST ACCOUNTANT IN ACCOUNTANT DEFINITION OF THE INCOME TAX ACT/BILL 

1. Introduction

Before delving into the article, I would like to express my gratitude to God, my parents and all my gurus. As per my understanding, I would like to share a few thoughts on why Cost Accountant have not been included in the definition of ‘Accountant’ under the New Income Tax Bill 2025 and present my views on the reasons for inclusion of Cost Accountant.

2. Introduction to Cost Accountant and Their Regulatory Framework

The Institute of Cost Accountants of India (erstwhile The Institute of Cost and Works Accountants of India) (hereinafter referred to as “Institute”)a statutory professional body established by a special act of Parliament, namely, the Cost and Works Accountants Act, 1959 (hereinafter referred to as “Cost Accountants Act”). Profession of Cost Accountant(CMA) is governed by the Code of Conduct of the Institute.

To become a Cost Accountant(CMA), one must complete the Cost Accountancy course, which includes in-depth knowledge of Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and related subjects. This rigorous curriculum ensures that Cost Accountant develop specialised expertise in taxation, finance, accounting and other areas. Notably, taxation is a key part of the academic syllabus, covered at the Intermediate Level (Group1 Paper7, Section A: Direct Taxation) and the Final Level (Group3-Paper15:Direct Tax Laws and International Taxation), among others.

Cost Accountant play a crucial role in the areas includes management, cost, financial, tax-related matters, authorized professional under various regulatory statutes and legislations including the Reserve Bank of India, Securities and Exchange Board of India, Companies Act, 2013, Customs Act, 1962, Central Excise Act, 1944, Central Goods and Services Tax Act, 2017, etc. The professional qualification of Cost Accountant is achieved through a rigorous process that includes mandatory coaching, examinations, extensive training, continuous professional education(CPE), etc. all governed by the Institute’s Code of Conduct.

3. Overview of the Modified New Income Tax Bill 2025

Hon’ble Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman Garu (hereinafter referred to as ‘FM’) while presenting the Union Budget 2025-26 in one of the presentations stated that the Government commitment on income tax is to “trust first, scrutinize later”, accordingly, implemented several reforms or initiatives for convenience of tax payers such as self-assessment returns, faceless assessment, tax payers charter, faster returns Vivad se Vishwas scheme, etc. and also stated that would propose the New Income Tax Bill.

Subsequently, as part of reforms in the Direct taxes, the Hon’ble FM proposed to introduce the new Income Tax Bill 2025 (Bill No.24 of 2025) introduced in the Lok Sabha, Parliament in the 76th Year of the Republic of India(hereinafter referred to as “Income Tax Bill” or “IT Bill” or “Bill”), while proposing the Bill stated like the Income Tax Bill proposed to reduce the compliance burden, minimise litigation, eliminate ambiguities, simplify language, streamline provisions by reducing the number of sections and so on. With respect to the proposed IT Bill, this article focuses solely on the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025, where Cost Accountant have not been included in the said section and definition of the Bill.

4. Rationale for Including Cost Accountant in ‘Accountant’ Definition of the IT Bill 2025

As per my understanding, in terms of the Viksit Bharat@2047 inclusive development, this article highlights the need for the government to include Cost Accountant under Section 515(3)(b) in the definition of ‘accountant’ of the proposed Income Tax Bill 2025.

Cost Accountants play a vital role in bridging the gap between the government and businesses by raising awareness and encouraging complying with statutory requirements. However, considering these efforts, the government should have included the Cost Accountant(as defined under Section 2(1)(b) of the Cost Accountants Act) in the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025. Therefore, it is hereby requested and suggested that, since Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and other subjects fall within the domain area. Hence, the term “Cost Accountant” as defined under Section 2(1)(b) and Section 2(2) of the Cost and Works Accountants Act, 1959 be required to be incorporated in the definition of “Accountant” as proposed under section 515(3)(b) of the proposed Income Tax Bill 2025.

5. Incorporate Cost Accountant in the ‘Accountant’ Definition of the Bill–An Explanation

As per my understanding, the modified Income Tax Bill 2025 aims to widen the tax net by removing ambiguities and plugging loopholes in the existing Income Tax Act, 1961(hereinafter referred to as “IT Act” or “IT Act 1961”). Accordingly, the definition of ‘Accountant’ in the New Income Tax Bill, 2025 can also be expanded to include Cost Accountant.

5.1. As understood, the bill has introduced or expanded various definitions, some of which are provided below as examples –

5.1.1. Books or Books of Account – The definition of ‘Books’ or ‘Books of Account’ under Section 2(19) of the Bill has been expanded to include cloud-based storage and so on, which was not covered under Section 2(12A) of the IT Act, 1961.

5.1.2. Virtual Digital Asset–The definition of Virtual Digital Asset under Section 2(111)(d) of the IT Bill has been expanded to include any crypto-asset, which was not covered under Section 2(47A) of the IT Act, 1961.

5.1.3. Capital Asset–The definition of ‘Capital Asset’ under Section 2(22)(b) of the IT Bill now includes assets held by an investment fund specified in Section 224(10)(a), such as an Alternative Investment Fund, which was not referenced under Section 2(14)(b) of the IT Act, 1961.
5.1.4. Virtual Digital Space –The scope of search and seizure has been introduced under provisions of Section 247 of the Income Tax Bill, introducing provisions related to virtual digital space and personal data access. Under Section 247(1)(b)(iii), access can be gained by overriding the access code to any computer system or virtual digital space when the access code is not available. This provision, which involves potential personal data breaches, was not present in the IT Act, 1961.

5.2. Similarly, the definition of ‘Accountant’ can be expanded in line with the above approach to include ‘Cost Accountant’ as defined under Section 2(2) and Section 2(1)(b) of the Cost Accountants Act. Therefore, the definition of ‘Accountant’ under Section 515(3)(b) of the IT Bill can be broadened to explicitly include the term ‘Cost Accountant’.

6. Expert Opinions on the Inclusion of Cost Accountant

There are several reasons to include Cost Accountant in the definition of “Accountant” under Section 515(3)(b) of the New Income Tax Bill 2025. Experts often say, “Behind every successful business decision, there is always a CMA.” Cost Accountant contribute significantly to businesses, the economy and the nation. However, their behind-the-scenes role should not mean their contributions are overlooked or taken for granted when defining ‘Accountant’ in the IT Bill.

In my view, including Cost Accountant in the proposed IT Bill would provide Micro, Small, and Medium Enterprises (MSMEs) a broader and more cost-effective choice of professionals, helping to simplify tax compliance. Therefore, the government should reconsider expanding the definition of “Accountant” under Section 515(3)(b) of the IT Bill to include Cost Accountant.

7. Legislative Intent on Including Cost Accountant in Accountant Definition of IT Bill

The legislative intent to include Cost Accountant in the definition of the Income Tax Bill 2025 is evident from the government’s previously drafted Draft Direct Taxes Code 2013 and reports by the Parliamentary Standing Committee. A few instances are as follows:

7.1. Draft Direct Taxes Code 2013 (DTC 2013)– Definition of “Accountant” and Inclusion of Cost Accountant (Page 202) – The draft Direct Taxes Code, 2013 (DTC 2013), drafted during the Lok Sabha, Parliament, 64th Year of the Republic of India, includes the definition of “Accountant” in Part-i – Interpretations and Miscellaneous Provisions, Chapter XX – Interpretations and Constructions.

7.1.1. In Page No.202 of the draft DTC 2013, Cost Accountant was explicitly included in the definition of “Accountant” under Section 320(2), which states:

“Accountant means ……………. Include …… (ii) a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 ;…..”

7.1.2. Legislative Intent: Although the Draft Direct Taxes Code, 2013 (DTC 2013) was not presented in the Lok Sabha, Parliament, the legislative intent was evident in recognising Cost Accountant within the definition of “Accountant.”

7.2. 122nd Report–Department-Related Parliamentary Standing Committee on Commerce–Ease of Doing Business–Parliament of India, Rajya Sabha(Dated 21.12.2015) (hereinafter referred to as “122nd PSC Report”)

7.3. The report was based on the Ease of Doing Business Index prepared by the World Bank, which evaluates countries on specified parameters. To improve India’s ranking, a Sub-Committee on Ease of Doing Business was constituted on April 23, 2015, specifically to examine various issues and suggest necessary changes, with the goal of placing India within the top 50 countries by 2017. The Sub-Committee was later reconstituted on September 2, 2015. During the proceedings, the Department of Industrial Policy & Promotion (DIPP) informed the Committee about various initiatives undertaken to improve the business environment in India, including the shift from manual to online systems. After extensive discussions with stakeholders, the Committee/Sub-Committee proposed several recommendations.

7.4. Among the key recommendations made by the Committee/Sub-Committee was the expansion of the definition of ‘Accountant’ under the Income Tax Act to include Cost Accountant. Extracts from these recommendations were as follows:

7.4.1. Fact Sheet on Ease of Doing Business (Page 29, Para 8.3):

‘………It was informed to the Sub-Committee…..expanding the definition of ‘Accountant’ under the Income Tax Act to include………. Cost Accountants…….’

7.4.2. Minutes of the 2nd Meeting (Dated 16.09.2015, Page 80, Para 3.3):

‘……….desired to expand the definition of ‘Accountant’ under the Income Tax Act……….proposal……Cost Accountants……is under examination and may be decided……’

7.5. Legislative Intent: The 122nd PSC Report on Ease of Doing Business was discussed. However, a review of the relevant definitions, it’s evident that the legislative intent was to include Cost Accountant in ‘Accountant’ definition under Section515(3)(b) of the Bill.

8. Conclusion to Include Cost Accountant in the Definition of ‘Accountant’ in the IT Bill

8.1. The Income Tax Bill 2025 is a positive step towards reducing compliance burdens, minimizing litigation, eliminating ambiguities, simplifying tax provisions, etc. However, the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Bill has overlooked the inclusion of Cost Accountant, likely due to an oversight.

8.2. Cost Accountant, governed by the Institute of Cost Accountants of India—an organization established under an Act of Parliament and a founding member of international bodies like the International Federation of Accountants (IFAC)—specialise in Direct Taxation, Financial Accounting, Cost Accounting, Indirect Taxation and related areas. “Behind every successful business decision,there is always a CMA.” Given their expertise, it is essential that Cost Accountant be included in the definition of ‘Accountant’ to ensure their rightful recognition.

8.3. As per the Viksit Bharat@2047 the government’s vision focuses on inclusive growth; however, not including Cost Accountant in the definition of ‘Accountant’ in the Income Tax Bill would be unfair, especially considering their relevant syllabus, experience, key skills, qualifications and expertise in the domain. This aligns with legislative intent and recommendations from previously drafted DTC 2013, various reports, sub-committee findings. Further, inclusion would enable Cost Accountant to continue contributing effectively to taxation, cost management, financial and other compliances.

8.4. Thus, based on the Draft Direct Taxes Code, 2013, the 122nd PSC Report, inputs from stakeholders on Ease of Doing Business, various reports, recommendations from committees and sub-committees regarding definitions, it is evident that the legislative intent was to include Cost Accountant in the definition of ‘Accountant.’ Hence, the definition of ‘Accountant’ under Section 515(3)(b) of the proposed Income Tax Bill 2025 should explicitly include Cost Accountant.

9. Therefore, it is strongly recommended that Cost Accountant, as defined under Section 2(1)(b) and Section 2(2) of the Cost and Works Accountants Act, 1959, be explicitly included in the definition of ‘Accountant’ under Section 515(3)(b) of the new Income Tax Bill 2025, as discussed above.

*****

Disclaimer: This is as per my understanding, purely for informational and educational purpose only. It is a recommendation for the government to consider and should not be construed as legal or professional advice. I am not liable for any damages or losses arising from its use. Readers are advised to refer to the respective Acts, Rules, Notifications, Provisions, official documents, etc. for accurate and updated information

References –
https://www.icmai.in
https://eparlib.nic.in
https://www.mca.gov.in
https://incometaxindia.gov.in

https://easeofdoingbusiness.org/sites/default/files/resources/Rajya%20Sabha%27s%20Report%20on%20Ease%20of%20Doing%20Business.pdf
https://incometaxindia.gov.in/Documents/direct-taxes-code-2013-31032014.pdf