Sunday, March 26, 2017

6 issues that should scare you in Arun Jaitley’s Finance Bill 2017.

Fresh Press Journal: New Delhi: Sunday, March 26, 2017.
Typically, during every Budget session, Parliament passes a Finance Bill which details the tax proposals of the Central government. Arun Jaitley’s Finance Bill 2017 has been passed by the Lok Sabha yesterday. The Money Bill’ will be sent to Rajya Sabha for discussion but only the recommendations can be rejected by Lok Sabha and then will be sent to the President of India for his ascent.
Finance Bill 2017, which was tabled in Lok Sabha by the Union finance Minister Arun Jaitley on 1st February, during the Union Budget 2017-18 has been deemed one of the most controversial and debated bulk legislation that has been passed in Parliament. Interestingly, the ‘money bill’ will not be required to be debated in Rajya Sabha where the ruling BJP does not does not have enough strength, has been widely criticised by the Opposition leaders. Opposition leaders, such as Sitaram Yechury of the CPIM, have observed that a number of non-finance and non-taxation related amendments, such as the issue of electoral bonds for political funding, have been given a “backdoor entry” through the Finance Bill 2017.
Here are the key issues which are at stake vis-a-vis Finance Bill 2017:
Aadhar Card will be mandatory for filing Income Tax returns and PAN
In addition to being linked to a number of public services and subsidies, Aadhaar card will be compulsory from 1 July to file one’s income tax returns and to obtain and retain PAN. Without enrolling for Aadhaar it won’t be possible to pay taxes and that would mean ordinary citizens without Aadhaar will end up committing a crime.
Political funding and electoral bonds
Finance Bill 2017 has made a major amendment to how private companies provide donations to political parties which are not under Right to Information Act (RTI) and need not to disclose the source of contributors’ under Rs 20,000.
As of now, a company can donate up to 7.5 per cent of the average of its net profits in the last three consecutive financial years to parties, and disclosure of the donations against the names of the political parties who have been the beneficiaries must be displayed in the company balance sheet. Once the amendments made in Finance Bill, 2017 come into effect, the cap of 7.5 per cent of the average of its net profits in the last three consecutive financial years will be removed.
Companies can contribute via cheque, bank draft or e-transfer, electoral bonds, which might be introduced as means to fund political parties to “maintain donor anonymity” would become the main route through which money goes into the coffers of political parties.
Tribunals and Appellate Tribunals
A number of tribunals, which oversee disputes related to taxation and company balance sheets, as well as company wars over items, will be replaced and taken over by existing tribunals under other Acts. Members of invalidated tribunals or those that have been merged, after the premature termination of their office terms, will go back to their parent ministry and department.
Terms of service
Currently, respective Acts specify the qualifications, remuneration package and other terms of service. However, Finance Bill 2017 will empower the central government to decide the terms of services, making up rules on the go which will directly impact the independence of the tribunals.
Curb on cash transaction
The Finance Bill 2017 also proposed that cash transaction would be limited to Rs 3 lakh per person per day event. The amendment on March 21 lowered the cap further to Rs 2 lakh per person per day event.
Penalty overdrive
According to the Finance Bill 2017, the adjudicating officer will continue to retain power under amended Securities Contracts (Regulation) Act and Depositories Act, 2004, to impose penalties on those failing to furnish information, documents or returns vis-a-vis their incomes. Essentially, this will lead to a penalty overdrive and a zeitgeist bureaucracy targeting anyone on the wrong side of the ruling regime at will.