For critics, Finance Bill 2017 leaves a lot to be answered even as it has been passed by the Parliament. However, its real effect cannot be assessed immediately.
Finance Bill 2017 leaves a lot to be answered even as it has been passed by the Parliament. Whether it will serve Prime Minister Narendra Modi’s pro-poor agenda of governance or prove the Opposition parties’ shocking claims against the Bill right?
In a first, the Rajya Sabha had amended five provisions of the Finance Bill on Wednesday. The Consitution of India empowers the Lok Sabha to have a final say in the matters of Money Bill. Finance Bill is also a Money Bill.
When Finance Minister Arun Jaitley moved the amended Bill in Lok Sabha on Thursday, the occasion demanded a debate. It did take place but not without some shocking claims and fears over the Bill raised by Opposition leaders. In the end, the Lok Sabha passed the Bill, rejecting all amendments carried out by the Rajya Sabha as NDA’s numerical superiority came into play in the Lower House.
Two of the most controversial provisions of the Finance Bill 2017 are: a) An amendment to section 132 of the Income Tax Act relating to search and seizure. The amended provision, as per the Bill, authorises an income tax authority to carry out search and seizure of a property if he has “reason to believe” on the basis of the information in his possession.
b)The second most controversial feature is a change in the clauses dealing with political funding. As of now, a company can contribute up to 7.5% of the average of its net profit in the last three financial years to political parties. But the company needs to disclose the amount it has contributed to political parties in its profit and loss account, along with the name of the political parties.
The Finance Bill 2017 removes the limit of 7.5% of net profit of the last three financial years which a company can contribute to political parties. Moreover, it also seeks to do away with the need for the company to disclose the name of political parties to which it has contributed. Opposition claim that this change will lead to the formation of several shell companies.
The Opposition leaders are also peeved by the government’s apparent bid to circumvent its numerical inferiority in the Rajya Sabha by amending 40 laws through the Finance Bill and introducing the amendments before the Parliament as Money Bill in which the Upper House cannot do much.
As far as the first controversial aspect of the Bill is concerned, the Opposition leaders have treated it with many scary phrases like ‘Tax Jihad’, ‘Financial Bill Terrorism’ and ‘political extortion’.
While speaking in the Rajya Sabha on Wednesday, Congress leader Jairam Ramesh said, “This is not a Finance Bill. This is more than a Finance Bill. This is an agenda for reducing Parliament to complete irrelevance. It is FBT..Finance Bill Terrorism.”
Ramesh recalled that Jaitley had termed the 2012 Vodafone tax evasion decision as tax terrorism. “But Section 132 is tax terrorism to the power of a ten. If Vodafone was a tax terrorism, then Section 132 is a Tax ‘Jihad’. You have removed the reason to believe, to suspect and given untrammelled power to the tax administration and bureaucracy,” Ramesh said.
Commenting on the changes in political donations by companies, Congress leader Bhupinder Hooda remarked in Lower House on Thursday that these measures would create “complete opacity” and benefit “shell companies”. He also termed the changes as “opening the doors for political extortion.”
Opposition concerns notwithstanding, the government claims that the provisions of the Finance Bill will bring transparency in the system. It will empower tax authorities to carry out raids against tax evaders and help fulfill PM Modi’s promise of not letting illegal money hoarders go free. On several occasions in the past, PM Modi has himself claimed that he will not spare those who have “looted the country for years.”
Regarding changes in provisions for political funding by companies, the government has justified it by introducing “electoral bonds” which private or anonymous contributors to political parties will be able to buy from banks. This way, the private money will be circulated via banks. Secondly, political parties can also receive donations by cheque and online which, according to Finance Minister Arun Jaitley, is “clean money”.
It has been an open secret in the country for years that private companies donate crores to political parties but they don’t do it openly. With the removal of restrictions, the companies may be encouraged to donate money to parties in a more formal way.
Regarding Opposition’s scary claims, it should also be understood that all laws are subject to abuse. Modi government will have to be on its toes to apply the changes in true spirit and not allow excesses.
(With agency inputs)