Finance Bill 2017 was passed in Lok Sabha on March 22, 2017. This has been one of the most controversial legislative bills that have been proposed and cleared by the Narendra Modi-led Bhartiya Janata Party (BJP) government. There are various key highlights of the bill that made it a hot topic of debate in the parliamentary house. The seven-week-old finance bill presented by Finance Minister Arun Jaitley, has brought it more curbs for cash transactions and also made Adhaar Card mandatory for filing Income Tax Returns. One of the most remarkable reforms that have been accepted is the amendments made by the political party funding, which provides a huge market for the transaction of black money.
While Finance Minister Arun Jaitley had to make as many as 40 amendments to the original bill, there are still some major reforms that are gaining mixed opinions from the people. The changes brought about by the Income Tax Act which allows income tax raids without any explanation, has inflicted a fear in the mind of the common man. While there are various debates still on about the impact of these rules and regulations, Arun Jaitley has finally managed to pass this much-discussed bill in the Lok Sabha. Here are some of the key highlights of the Finance Bill 2017 passed by the Lok Sabha and how it can affect our day to day life.
1. Cash transaction capped at Rs 2 lakhs
The Union Budget 2017 had presented a cap on cash transactions at Rs 3 lakhs. However, Finance Minister Arun Jaitley made an amendment to this proposal and reduced the cash transaction even further to Rs 2 lakhs. This curb on cash transaction is proposed as another effort of the NDA government to push digital payments and make India a cashless economy. This rule restricts cash transaction at Rs 2 lakh per person per day per event, which will mainly affect all traders and businessmen who deal in cash.
2. Adhaar Card mandatory for filing IT returns
The BJP government has made Adhaar Card a mandatory document while filing Income Tax returns. Adhaar Card has also been made mandatory for obtaining or retaining PAN cards, forcing people to apply for their Adhaar Card. This step will help in easy monitoring of the various transactions that are made by every individual. Adhaar Card has already become mandatory in banks, and this rule will not allow people to pay their taxes without Adhaar Card. This simple rule has made not having an Adhaar Card a crime and will help the government to have one uniform ID that can give various details about the person. Aadhar Card made mandatory by Modi Government for filing Income Tax Returns, Twitter reacts with funny tweets
3. The funds for Political parties
In the Union Budget 2017, Arun Jaitley proposed to cap the cash transactions to political parties at Rs 2000. However, this ruling in the Finance Bill is extremely alarming and paradoxical. Currently, any contributions made to political parties which are below Rs 20000 do not need to be disclosed. The companies can donate up to 7.5 % of their profits from last three years and disclose it in their balance sheets. The funding received by the political parties cannot be questioned under the Right to Information Act. The latest additional rule under the finance bill removes the cap on the amount received by political parties. This helps the parties to receive a large sum of money from various companies, and no data of the funding needs to be maintained. While political parties never disclosed the sources of their funds, the new amendment removes the mandate of companies to display the donations made.
4. Electoral Bonds
As cash transaction for political funding has been capped at Rs 2000, the payments to the parties can mainly be made by Cheque, drafts, and other online mediums. Electoral Bonds are one such medium of donation that has been introduced. Small banks will be authorised by the Reserve Bank of India to issue electoral bonds which will be used to make political donations.
5. Tax reforms in Corporates
The corporate tax has been reduced from 30% to 25% for small firms with an annual turnover of up to Rs 50 crore. This step has been taken to boost investments and encourage start-ups and small forms. Real estate firms have also been offered tax exemptions if they finish their project within five years. The previous bill allowed tax exemptions for real estate builders who finish their construction in 3 years. Also, start-ups have the option of being exempted from income tax for any three years in their initial seven years in the industry.
6. Merger of Tribunals
The government plans to merge eight quasi-judicial tribunals. These tribunals cover various areas like cyber security, telecom, aviation, industrial disputes and copyright into one, cutting administrative flab. These tribunals oversee disputes related to taxations and company balance sheets.
7. Income Tax Raid reforms
The Finance Bill 2017 allows the Income Tax department to conduct raids of any place without giving any explanations. Under the IT Act, 1961, officials had to provide a logical explanation in order to conduct an IT raid. However, the NDA government has given the IT department the authority of conducting raids at their will. This has alerted people who fear the rise of tax terrorism as a rule gives immense power in the hands of the Income Tax officials.