Role of Chartered Accountant in VAT
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Chartered Accountants have a key role to play in proper implementation of VAT.
(i) Record keeping : VAT requires proper record keeping and accounting. Systematic
records of input credit and its proper utilisation is necessary for the success of VAT. Chartered
Accountants are well equipped to perform such tasks
(ii) Tax planning : In order to establish an efficient plan for purchases and sales, a careful
study of VAT is required. A Chartered Accountant is competent to analyze the impact of
various alternatives and choose the most optimum method of purchases and sales in order to
minimize the tax impact.
(iii) Negotiations with suppliers to reduce price : VAT credit alters cost structure of goods
supplied as inputs. A Chartered Accountant will ensure that the benefit of such cost reduction
is passed on by the suppliers to his company. However, if the buyers of his company make the
similar demand, he must be ready with full data to resist the claims.
(iv) Handling the audit by departmental officers : There will be audit wing in department
and certain percentage of dealers will be taken up for audit every year on scientific basis.
Chartered Accountant can ensure proper record keeping so as to satisfy the departmental
auditors. The professional expertise of a Chartered Accountant will help him in effectively
replying audit queries and sorting out audit objections.
(v) External audit of VAT records : Under VAT system, trust has been reposed on tax
payers as there will be no regular assessment of all VAT returns but only few returns will be
scrutinized. In other cases, return filed by dealer will be accepted. Thus, a check on
compliance becomes necessary. Chartered Accountants can play a very vital role in ensuring
tax compliance by audit of VAT accounts.
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