Hiring a CA for overall tax advice can cost ₹10,000 to ₹30,000 for salaried individuals.
It is that time of the year which most of us dread. The deadline to submit investment proofs to our respective employers is nearing. And, as it happens every year, many of us scramble to make tax-saving investments and file returns at the last minute and then vow to do it better next year—explore all possible ways to save tax, and file returns early on to avoid last-minute errors.
But then another year goes by and it’s only when employers ask for submission of investment proofs that we wish we had planned our taxes better. That said, it is still a good time to start thinking about what to do differently in the coming financial year. And that merits a big decision: should you engage a chartered accountant (CA) for tax advice, or take the DIY (do-it-yourself) route.
Mint spoke to experts, and also with some salaried individuals who file their own tax returns, to get their perspective on this matter.
Do you need professional help?
This depends to a great extent on your understanding and awareness of the tax laws, the complexity of your tax return, and your comfort with filing it. Here are a few factors worth evaluating: Are you a salaried individual or do you have income from other sources? Do you invest in say, only bank deposits and mutual funds, or do you hold a portfolio of multiple assets? Do you plan to acquire or dispose of any assets?
Take for example, Lalita Tiwari, a communication specialist who has been filing returns for herself and her family since 2007-08 after one of her colleagues taught her how to do it. “With the government having simplified tax filing for the salaried over the years, I find it easy to do this. I keep myself updated on any changes in tax slabs every year.” The only instance when she engaged a CA for 2-3 years was when she had to deal with a property purchase and sale transaction.
Shantala Kumble, senior vice president at International Money Matters, a Sebi registered investment advisor, has some tips to offer. “If everything is showing up in your Form 16—your salary income, interest income from bank savings and fixed deposit accounts, and you are aware of the deductions available to gain maximum tax benefits, then you can file the I-T returns yourself. But the moment you have other taxable categories of income like capital gains from sale of properties, or frequent buying and selling of mutual funds and stocks (with capital gains/ loss implications), or a change in jobs where you have Form 16s from two employers, for example, then it’s good to go to a CA unless you are a tax expert yourself.”
Prakash Hegde, a Bengaluru-based CA, adds to that, “There will be changes in tax laws every year in the budget. Also, one needs to take cognizance of the many court judgments on tax laws.”
Nitesh Buddhadev, a CA and founder of Nimit Consultancy, says many salaried individuals may not be aware of all the tax provisions. “Many are not familiar with advance tax as they are used to getting tax deducted at source (TDS) on salaries. As a result, when it comes to capital gains tax, they mostly pay it (including penal interest) only at the time of filing their returns in July, instead of on the due date immediately after the asset sale.” Advance tax falls due four times in a financial year–June 15, September 15, December 15, and March 15.
Archana Parthasarathy, a PR professional who has been filing her own ITR for two years now, had consulted a CA five years ago for advice on tax-saving investments. Today, with the simplified ITR-1 form, she doesn’t feel the need for one. “When my salary goes up further, I may consult someone again.”
But, how does one find the right person for tax consultations?
Finding the right CA
People we spoke with said they would choose a CA based on recommendations from family and friends, rather than online searches. Most CAs that we spoke with, too, reiterated that they got a majority of their clients by word of mouth. Kumble had a few other suggestions. One option is to ask your financial advisor to recommend a CA. Another could be to read articles written by CAs in newspapers and magazines, and based on that figure out their areas of expertise. But it is ideal to have a conversation with them on your requirements before you sign up.
According to Karan Batra, a CA and founder of charteredclub.com, one must find out if the CA has any experience advising clients in the relevant industry. “Some may have retail shop owners or manufacturers as their clientele, while others may have salaried people. So go for someone who has experience in the right domain.”
It is necessary to weigh in all factors, including the fees to be paid, before you decide on the CA. Chirag Mahawar, global business manager at a UK-based fintech, says his background in commerce and interest in taxation has held him in good stead. “But I find the fees charged by online tax websites to be very high.” At the same time, based on his experience, he feels CAs tend to be very conservative on ways to save taxes because they could be held accountable later.
You get what you pay for
For filing tax returns, the charges could range from ₹1,500 to ₹ 4,000 per person for a simple tax return, depending on where you are based (small town or a major city) and the scale of operation of the firm that you have contracted.
If you decide to hire a CA for overall tax advice (including ITR filing), the annual fees could range from ₹ 10,000 to ₹30,000 for salaried individuals, depending on the complexity of their case. It’s also worth enquiring whether the charges cover tax advice for only one person or the family (say, a couple with kids). This would generally include providing answers to a client’s tax queries, advice on ways to save tax, and an annual review. It’s also best to approach an expert right at the start of the financial year, or before you undertake any complex transactions.
Online versus offline
For those interested in seeking tax advice online, there are options such as Clear, IndiaFilings, Vakilsearch, to name a few, to choose from. Take for example Clear, which is a registered e-return intermediary (ERI) —it provides a simplified online tax filing interface that someone can access by logging into the Clear portal. “We also offer live filing assistance. This entails a charge,” says Archit Gupta, founder and CEO. Depending on the kind of tax queries you have, you can choose from the different subscription plans that are available.
There are others who, however, feel that online resources may not always be the best option unless it is for filing a simple ITR. According to one CA, his clients have had mixed experience with online portals in the past. “Sometimes, they got experienced experts, and at other times they were assigned people who were of not much help” he says.
At the end of the day, what matters – whether offline or online—is that you pick someone who comes with good recommendations. Tax advice is very personalised and your experience can depend on who you sign up with.
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