A spate of income tax notices served on farmers not declaring their non-farm income this fiscal has opened new frontiers for chartered accountants (CAs) in the rural areas.
“IT notices have been issued to farmers who have little idea that their non-farm income is also taxable under the Income Tax Act 1961”, Chairman of Institute of Chartered Accountants of India (ICAI), Lucknow Chapter Raj Kapoor told Hindustan Times.
He said it was only during the past one year many farmers had realised that they needed accounting of their non-farm income to escape penal action by the Income Tax Department. “The rural economy is growing with ever rising spending power in the hands of villagers and a “rural retail boom” taking shape in UP,” he said.
The ICAI, Lucknow Chapter is planning to hold a series of awareness campaigns for the farmers residing in the predominantly rural and semi-urban areas to file their tax returns or at least urge them to apply for the Permanent Account Number (PAN), Kapoor said.
The Panchayati Raj system in UP had already opened avenues for the accountancy firms to carry out elaborate audit practices of the account books of the panchayat institutions. However, for the average farmers there is still need for awareness regarding filing of returns of their non-farm income.
A large numbers of CAs are now travelling to rural areas for servicing the accounting needs of their clients than ever before.
Moreover, with the banks offering an entire gamut of services in the rural areas from retail lending to educating farmers on the new methods of farming, the rural retail sector is growing at a much faster rate than the urban set-ups, stated a senior Punjab National Bank (PNB) official.
The CAs have more reason to fan out to the rural areas with the launch of the Income Tax Preparers scheme under the Finance Act 2006 which allows employed and unemployed graduates to work as income tax preparers in the country, he said.
A spate of rural branches being opened by banks had also led to accountancy firms heading to rural branches for auditing work sometimes with an entire team of professionals, the official added.