Finance Bill (Basics you need to know)

What is Finance Bill?

A Finance Bill is besically a “Money Bill” as defined in Article 110 of the our Constitution.

What Finance Bill actually does?  

  • The proposals of the government for levy of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted to Parliament through this bill.
  • The Finance Bill is accompanied by a Memorandum containing explanations of the provisions included in it.
  • The Finance Bill can only be introduced in Lok Sabha.

However, the Rajya Sabha can recommend amendments in the Bill. The bill has to be passed by the Parliament within 75 days of its introduction.

In simple words, Finance Bill proposes the amendments or the changes, in existing tax laws, tax structures to enhance the smoothness and to bring the transparency in our existing tax laws. It can only be introduced in Lok Sabha, however It is open to suggestions and recommendations from Raajya Sabha.

Finance-Bill

Finance Bill 2017 :- 

1 Feb 2017, Honorable Union Finance Minister Shri Arun Jately has presented the Budget 2017-18 and introduced Finance Bill in Lok Sabha.

On 22 March 2017, Finance Bill 2017 has been passed by Lok Sabha. 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.

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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.

But here are four Important Points you need to know about Finance Bill 2017 :-

  • Aadhaar is now mandatory for filing income tax returns and PAN :- Yes, You heard it correctly. To bring the transparency and to curb the menace of Tax evasion “Aadhar Card” has been made mandatory to link with your “Pan Card” to fill the Tax returns. If you fail to do so by “1 july 2017”, Your pan will be rendered invalid. 

 

  • 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 to disclose the source of contributions under Rs 20,000.

    As of now, a company or any organisation 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. It was already mentioned in Budget 2017-18 that any party can only receive cash donation upto 2000 rupees and other than that donation can only be possible via e-cash or cheques.

Electoral Bonds?

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Electoral Bond is a financial instrument for making donations to political parties. These are issued by scheduled commercial banks upon authorization from the Central Government to intending donors, but only against cheque and digital payments (it cannot be purchased by paying cash).

These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.

Earlier, the political parties need to disclose the details of non-governmental corporations and persons who donate more than Rs. 20,000 to it in a financial year. But with the introduction of “Electoral Bonds” no report needs to be prepared in respect of the contributions received by the way of these bonds.

Basically, the scheme of electoral bonds addresses the concerns of donors to remain anonymous to the general public or to rival political parties.

To clear the speculations as to how Electoral Bonds will work and ensure transparency, here is a snap :-

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  • Empowers I-T OFFICIALS  :- Finance Bill 2017 has empowered Govt Income Tax officials tremendously. The 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.

Earlier It was mandatory to have a court order and reasonable explanation to raid upon any particular.

  • Replacement of different tribunals :-

Tribunal is nothing but a kind of court, established to settle certain types of disputes. 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. For example, “Employee provident fund appellate tribunal” will be merged into “Industrial Tribunal.”

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Why is this happening?

According to Government, Operational Cost of regulating these small appellate tribunals are becoming burden on Government’s expanses and there is no such exceptional efficiency being noted with the operation of these small tribunals. By merging these all into existing prime tribunals will not only bring transparency and efficiency in system but also It will make lower the operational cost. 

Summary :-

Overall, Government of India is aiming to bring transparency in the whole financial system in order to curb the menaces of Black Money and Corruption. Bringing these amendments in existing laws will benefit the financial system and eventually will be able to fulfill the motto of Government Or not, It is remains to bee seen.

There may be some pros and cons (Which I’m not discussing here) of these amendments but It takes courage to let go of familiar and embrace the new. Also, these amendments are proposed for a certain duration, If not be useful, they can be change again.

Remember, Something does not get better by CHANCE, It gets better by CHANGE. 

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