The parliamentary standing committee on finance has added to the woes of the UPA government. The committee headed by senior BJP leader and former finance minister Yashwant Sinha has delayed reports on many financial sector Bills considered key to second-generation reforms. The delay has slowed passing of Bills relating to direct & indirect taxes, banking and insurance among others. Crucial amendments can be moved by the government in Parliament only after the report is available.
Standing committees are given up to three months to submit recommendations; but in some cases, it is extended by a finite period. The standing committee on finance, however, has sat on many Bills for much longer. It is yet to submit its report on the Direct Taxes Code Bill, 2010, though it was referred to it in September 2010. Report on the Bill, which was proposed to overhaul the direct tax system in the country by replacing the archaic Income Tax Act, was due in December 2010.
The government wanted to implement direct tax reforms from April, 2012. However, with the report unlikely to be submitted in the ongoing winter session, DTC is likely to miss the date.
?The government cannot have one set of attitudes for the public accounts committee (where Congress members and the committee chief Murli Manohar Joshi clashed frequently), and expect cooperation in the standing committee on finance,? Sinha said.
Finance minister Pranab Mukherjee on Friday urged parliament members to let the House function smoothly. The winter session has been stalled over the government’s proposal to permit FDI in multi-brand retail.
?I am practically begging almost everybody that parliament is essentially meant for legislating and should be allowed to function. Unless parliament functions, it becomes very difficult (to pass bills),? Mukherjee said.
In the budget session, Mukherjee had introduced the constitutional amendment bill to facilitate introduction of goods and services tax (GST). GST is a critical reform that aims to subsume the plethora of indirect taxes such as central excise, service tax and states’ VAT and local levies.
Amending the Constitution is necessary since the Centre cannot impose excise duty beyond the manufacturing stage and the states cannot levy a tax on services. However, it has been around 9 months but the committee is yet to start concrete work on this important legislation.
Similarly, the report on the Insurance Laws (Amendment) Bill has been indefinitely deferred, as there is no consensus yet on the proposal to hike FDI cap from 26% to 49%.
The committee’s report is also pending on the Banking Laws (Amendment) Bill, 2011, which seeks to align voting rights of shareholders in banks in proportion with their equity holding. The Benami Transactions (Prohibition) Bill and the Narcotic Drugs and Psychotropic Substances (Amendment) Bill are lying with the standing committee.