On Wednesday, the Lok Sabha passed Arun Jaitley’s Finance Bill, 2017. 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.
On Tuesday, after Finance Minister Arun Jaitley introduced the Bill, N.K. Premachandran of the Revolutionary Socialist Party (RSP) objected to the Bill as he said many amendments in the Bill did not fall under the purview of taxation, which is what a money Bill was supposed to be about.
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
To ensure Aadhaar enrolment as the government expands the usage of the unique identification number. A failure to provide Aadhaar will result in the PAN becoming invalid. This rule is effective from July 1, and Aadhaar enrolment number in place of the unique identity card will also be acceptable.
Aadhaar might become the sole identity card in the future, finance minister Arun Jaitley said in Parliament on Wednesday, a move that could possibly replace PAN, voter and ration cards.
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.
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.
Limit on cash transactions at Rs 2 lakh
This cash transaction limit was part of the 40 amendments that the government moved to the finance bill. The amendment had to be introduced to lower the limit from the budget proposal of Rs 3 lakh. The cash transaction limit of Rs 3 lakh was in keeping with the recommendation of the Special Investigation Team on black money.
Possible Tax Terrorism
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 reign of “tax terrorism”.
Competition Act 2002 and Companies Act 2013 amended.
Competition Appellate Tribunal merged with National Company Law Appellate Tribunal. This is part of rationalizing the number of tribunals. The government has merged several powerful administrative tribunals and assumed powers to appoint and remove their chiefs, triggering fears the unprecedented move will undermine the authority and independence of these quasi-judicial institutions.
These are some of the reasons why the people of India are really freaking out. Also, let us not forget that this is not the first time government has taken the ‘money bill’ route to pass a law.