Ernst & Young (EY India) executive director Amit Bhagat joined PricewaterhouseCoopers (PwC) as a partner in the indirect tax practice since September with his team of 12 indirect tax professionals – including two associate directors, a director and managers.
Bhagat said that though each of the “Big Four” (KPMG, EY, PwC and Deloitte) already had indirect tax practices, he would aim would be to build PwC’s practice at the pan-India level, hire the best talent, increase visibility in the market and offer the highest quality services.
“The market is opening up. There is a lot of traction. Indirect tax is gaining greater significance and attention in business transactions and operations,” he commented. “There is a lot of expectation with the major tax regime change with the goods and services tax [that] there would be a lot of activity.”
“It’s more of a competition among the Big Four,” he added when asked about whether law firms’ efforts at building tax practices were giving the accountants a run for their money, noting that law firms were not at a level yet to be major competitors to the Big Four.
Bhagat started his career as a lawyer in 1998 at litigation firm JB Dadachandji, which he said was a “legendary law firm” at the time. He moved to EY as a senior executive in 2003.
An EY spokesperson did not respond to a message seeking comment.
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Wary, you meant?
I have personally worked with Lakshmi Kumaran Sridharan in VAT and Customs and Excise litigations but my point is, litigation is just a sub-part of tax practice. An evolved tax practice will involve opinions on complex tax matters, tax restructuring, opinions on varying tax routes, opinions on customs and excise and mode of entry of imported goods, opinions on SEZ matters and transacting with SEZs and EOU units, indirect tax compliance and many other service offerings. The main money lies in the advisory part. I am not disputing that Lakshmi Kumaran Sridharan is one of the giants in indirect tax litigation but compared to the engagement fees earned by Big 4 in advisory through out their tax practices, the engagement fees of LKS is not that great.
Having said that, Big 4s are excellent when it comes to structuring business models or optimizing tax costs. This is one area where they are way ahead of law firms. Sadly though, thats the only area where Big 4s score over law firms.
Hmm.. considering his considerable experience in expanding practices, he looks to have a good vision.. hopefully this expansion will work out otherwise there could be troubled times ahead.. PwC is not as penetrative as his old employer was nor as compassionate..
In my opinion,the tax practice of a big four is much more detailed, comprehensive and holistic. The primary reason for this is the nature of resource in possession. A big four firm has the advantage of working in collaboration with its transactional advisory and other super specialized finance teams.Naturally, the service rendered to the client is solution driven and industry oriented, this is particularly true of the diligence and health check reports prepared by the big four firms which are the collaborative efforts of different departments (transfer pricing, direct tax, indirect tax, financial advisory, etc). Being a tax lawyer I can assure you that for tax advisory, compliance and even litigation, atleast a rudimentary knowledge of reading and interpreting financial statements is a must, a skill often lacking in lawyers.
A law firm's tax practice is more litigation oriented with sparse advisory engagements and hardy any compliance. Indirect tax compliance involves scrutinizing invoices, previous returns, cenvat registers, etc, that are greek to most lawyers without a big four (and to an extent lks) experience. But, ironically, this litigation heavy practice model, acts as a blessing in disguise for law firms. Big ticket clients with a comprehensive in house taxation teams engage law firms. Their in house teams conduct compliance while external consultancy is asked for primarily litigating matters. These clients are capable of paying heavily and they do.
Whereas, a majority of the big four's clients are small to mid level organisations with negligible to absent in house teams. Hence, they engage the firms for recurring compliance and advisory assignments. Very rarely, do these clients' matters end up even at tribunals let alone the higher courts. A big four employee primarily spends his time at the Assessment level offices rather than judicial or quasi judicial forums.
So, the choice between a big four and a law firm depends on the size and specific needs of the clients. The bigger ones looking primarily at litigation services opt for the legal firms while the mid level firms looking at one stop comprehensive tax solutions prefer the big fours.
No disrepect to Bhagat, but he is harly a match for either Muralidharan or Saloni.
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