What changed
RBI issued a circular on July 25, 2007, clarifying tax audit fee arrangements for PSBs. For 2007-08 onwards, tax audit at Head Office level must be assigned to one of the existing SCAs by rotation, with fee at 20% of basic audit fee. For branch/controlling office tax audit, banks can now decide auditor appointment and fees in consultation with ACB/Board. For 2006-07, fees remain at existing rates: 20% for SCAs at HO and 15% for branch auditors.
What it means for you
Banks gain flexibility to set branch-level tax audit fees and auditor appointments, subject to ACB/Board approval, promoting local decision-making. The rotation requirement for HO tax audit ensures fair distribution among SCAs. This standardizes tax audit remuneration while allowing banks to tailor branch-level arrangements, potentially reducing administrative burden.
What you must do
- Implement rotation-based allocation of HO tax audit work among SCAs for 2007-08 onwards.
- Ensure tax audit fee for SCAs at HO is paid at 20% of basic audit fee as prescribed.
- For branch/controlling office tax audit, decide auditor appointment and fees in consultation with ACB/Board.
- For 2006-07, pay tax audit fees at existing rates: 20% for SCAs at HO and 15% for branch auditors.
- Acknowledge receipt of the circular to RBI.
Who it affects
All nationalised banks, Associate banks of SBI, Statutory Central Auditors (SCAs), Branch auditors of public sector banks, Audit Committees of the Board (ACB)
What is the tax audit fee for SCAs at Head Office level for 2007-08?
The fee remains at 20% of the basic audit fee, as previously prescribed. The work must be assigned to one of the existing SCAs by rotation.
Can banks decide branch-level tax audit fees on their own?
Yes, for 2007-08 onwards, PSBs can decide the appointment of auditors and audit fees for branch/controlling office tax audit in consultation with the Audit Committee of the Board (ACB) or Board.
What are the tax audit fee rates for the year 2006-07?
For 2006-07, the fee payable for tax audit at HO/Controlling Office is 20% of basic audit fee for SCAs, and 15% for branch auditors, as per existing rates.