Lok Sabha passes Finance Bill, 2017 - this is why we need to freak out
A bulk bill of 40 amendments to different laws, it will affect political funding, use of Aadhaar, income tax returns and raids, caps in cash transaction, etc.
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Arun Jaitley’s Finance Bill, 2017 has been passed in Lok Sabha today. A “money bill”, it will not be sent to Rajya Sabha for discussion, but only for recommendation which can be rejected by Lok Sabha, and then will be sent to the President of India for his ascent.
A bulk bill of 40 amendments to different laws, Finance Bill, 2017 has a string of legislations that will impact a variety of existing taxation (and other) laws involving funding of political parties, use of Aadhaar, income tax returns and raids, caps in cash transaction, and a host of other issues.
The Finance Bill, 2017, which was tabled in Lok Sabha by Union finance minister Arun Jaitley on February 1, during the Union Budget 2017-18, has been deemed one of the most controversial and debated bulk legislation that has been passed in Parliament.
Importantly, the “money bill” route, which will not require it to be debated in Rajya Sabha, where the ruling BJP does not have enough strength, has been widely criticised by Opposition leaders and by commentators on social media. 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.
So what are the main impacts and the key issues at stake vis-a-vis Finance Bill 2017? They are as follows:
Aadhaar is now mandatory for filing income tax returns and PAN
In addition to being linked to a number of public services and subsidies, as per Finance Bill, 2017, Aadhaar will now be compulsory from July 1, 2017 to file one’s income tax returns and to obtain and retain PAN, or permanent account number.
Repeat after me: Aadhaar is surveillance technology masquerading as secure authentication technology. https://t.co/NkveDsTM6y— Nikhil Pahwa (@nixxin) March 22, 2017
Without possessing, or at least 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, that of tax evasion and non-compliance of Income Tax Act, 2016.
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 and need not disclose the source of contributions 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. Additionally, companies will not be required to name the beneficiary political party.
Though 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.
Mahtab: Any money a political party gets should be made public. Why keep it anonymous? Big cos are giving the max donations to parties.— Meghnad (@Memeghnad) March 22, 2017
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 such as telecom spectrum, etc, will be replaced and taken over by existing tribunals under other Acts.
There’s no clear rationale behind this replacement, and seems to be rather arbitrary.
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.
Airports Authority of India Act, National Highways Act, TRAI Act, Information Technology Act 3/n— Raman Chima (@tame_wildcard) March 21, 2017
Airports Economic Regulatory Authority of India Act, Competition Act, and Companies Act 4/4 *draws a long, ragged breath of air*— Raman Chima (@tame_wildcard) March 21, 2017
Oh missed that also plans to amend the appellate tribunal under the Cinematograph Act. Because film censorship is finance issue apparently— Raman Chima (@tame_wildcard) March 21, 2017
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. This will directly impact the independence of the tribunals as the executive will have enormous and undue influence in deciding the outcomes of these tribunals and appellate tribunals.Photo: DailyO
More curbs on cash transaction
Finance Bill, 2017, as tabled by Union finance minister Arun Jaitley on February 1, proposed that cash transaction would be limited to Rs 3 lakh per person per day per event. Amendment moved on March 21 lowered the cap further to Rs 2 lakh per person per day per event.
B Mahtab asks the Finance Minister to reveal how much black money has been deposited under voluntary disclosure schemes in the past 1 year.— Meghnad (@Memeghnad) March 22, 2017
This is in sync with the government’s cashless push, and is supposedly in the interest of curbing black money and tax evasion.
Possible Inspector Raj
The Finance Bill, 2017, which is pushing through changes to Income Tax Act, 2016, allows income tax raids to take place without furnishing a reasonable explanation (as was required under IT Act, 1961) for doing it, and without needing a court order.
This effectively puts enormous powers in the hands of IT officers and can bring about a new “Inspector Raj” and reign of “tax terrorism”. A possible fallout could be raids on dissenters, journalists, whistleblowers, activists, human rights lawyers, among others who ritually call out the government on incompetence, authoritarian streaks and governmental overreach bordering on police state.
Yes. Cannot accept.Foreign funding to pol parties, lobbying legal & opaque, giving superpowers to IT officers to raid is... all cool though https://t.co/MUS3Oh5SFb— Meghnad (@Memeghnad) March 22, 2017
As per 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.