Source: Revenue Department, Govt of India
The Department of Revenue in the Ministry of finance has had a two-pronged objective in the past one year – to create an enabling business environment to encourage investment and growth, and to create a robust and strong financial law enforcement framework. With these two objectives in mind, the Department has taken a host of initiatives, including the introduction of the GST Constitution Amendment Bill in Parliament, simplification of direct tax laws, rationalization of indirect taxes and duties, constitution of the Special Investigation Team (SIT), enactment of the Black Money law, as well as amendment of the PMLA and FEMA.
Introduction of the Constitution (122nd Amendment) Bill, 2014
In furtherance of the Department’s first objective, the most significant achievement has been the introduction of the Constitution (122nd Amendment) Bill, 2014, in Parliament. This bill seeks to amend the Constitution in order to enable the introduction of the Goods and Services Tax (GST) in the country.
GST will simplify and harmonise the indirect tax regime in the country. It will broaden the tax base and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. It is thus expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy.
Make in India
In order to encourage domestic manufacturing in pursuance of the goal of ‘Make in India’, measures have been taken to boost investment, manufacturing, growth and employment in the economy. Fresh tax incentives for investments (both foreign and domestic) have been announced. I
nvestment allowance of 15% has been announced for capital expenditures exceeding Rs. 25 crore undertaken by manufacturing units. 10 year tax holiday has been extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. Similarly, accelerated depreciation on wind power projects has been restored. As regards indirect taxes, customs and excise duties have been reduced on a range of inputs, components and raw materials to address the problem of duty inversion and to reduce the cost of manufacture. The number of levies have also been reduced in order simplify the tax structure.
Ease of Doing Business
For enhancing the ‘Ease of Doing Business’ in India, a non-adversarial and non-intrusive tax regime is being promoted through modernization of business processes of tax administration. Extensive use of information technology is being made for e-enablement of tax payer services. Filling of income tax returns, various forms, audit reports, statements of tax deduction at source have been made compatible with electronic filing and computerized processing. Many trade facilitation measures have also been introduced such as 24×7 customs clearance facilities in 17 airports and 18 seaports; Customs Single Window Clearance Project at Nhava Sheva Sea Port and ICD, Tughlakabad; reduction in the number of Customs documents required for export and import; permitting use of digital signatures in central excise, customs and service tax; simplification of central excise and service tax registration process (2 days), etc.
Tackling the problem of Black Money
In order to tackle the menace of black money, systemic measures have been taken to create a strong and transparent financial law enforcement mechanism.
(i) Constitution of SIT
The constitution of the Special Investigation Team (SIT) to deal with issues relating to black money stashed abroad was the first initiative in this regard.
(ii) Black Money Law
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 has been enacted and notified. The Act provides for a one-time opportunity to persons holding undisclosed foreign assets to declare them under a limited period compliance window and get immunity from prosecution. It also provides for stringent penalties and prosecutions.
Similarly, the Benami Transactions (Prohibition) (Amendment) Bill, 2015, has been introduced for curbing domestic black money. This law will enable confiscation of benami property and provide for prosecution, thus blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate.
(iii) Amendment of PMLA and FEMA
The Prevention of Money Laundering Act, 2002 (PMLA), and the Foreign Exchange Management Act, 1999 (FEMA) have been amended in order to make the two laws more effective in tackling black money. The offence of concealment of income or evasion of tax in relation to a foreign asset has been made a predicate offence under the Prevention of Money Laundering Act, 2002 (PMLA). The definition of ‘proceeds of crime’ under PMLA has been amended to enable attachment and confiscation of equivalent assets in India where the asset located abroad cannot be forfeited.
The FEMA has been amended to the effect that if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of the provisions of this Act, then action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India. These contraventions have also been made liable for levy of penalty and prosecution with punishment of imprisonment upto five years.
(iv) Exchange of Information
India has entered into an agreement on 09.07.2015 with the USA for Automatic Exchange of Information of financial accounts. Further, India has also signed the Multilateral Competent Authority Agreement for this purpose on 3rd June, 2015.
Having gathered significant momentum in the past one year, the Revenue Department shall continue to strive for impacting the lives of the people of India in a positive manner, by enabling the creation of a strong, secure, and productive business environment.