Accordingly, the government has made Aadhaar mandatory for filing of income-tax returns and for obtaining and retaining the permanent account number (PAN) from 1 July and capped legal cash transactions at Rs2 lakh, ensuring a paper trail for all high-value transactions.
To improve the ease of doing business and ensuring faster disposal of cases by various tribunals, the government will also reduce the number of tribunals and bring parity in pay and service conditions of the officials. The merger of eight tribunals with existing ones and pay parity for judges will ensure that these quasi-judicial bodies are adequately staffed, ensuring faster disposal of cases.
On Tuesday, when the amendments were introduced in Parliament, the opposition objected, saying the government was trying to legislate non-budgetary policies through the finance bill. Finance minister Arun Jaitley denied this and the introduction of the amendments was allowed by the speaker.
The finance bill is a money bill and needs only to be cleared by the Lok Sabha, where the Bharatiya Janata Party-led NDA has a clear majority.
Under the new amendments, the Competition Appellate Tribunal will be merged with the National Company Law Appellate Tribunal (NCLAT).
Lalit Kumar, corporate partner at law firm J. Sagar Associates, said, “Having one forum always helps. It’s definitely a positive move done to avoid multiplicity of tribunals. Tribunals like the NCLAT are already important with a judge and a technical member at the helm dealing with commercial matters.”
The amendments and measures announced earlier in the budget, including one to clean up political funding, mean the government has managed to push through significant reforms in this year’s budget. The changes will come into effect once the finance bill receives the President’s nod.
Replying to the debate in Parliament, Jaitley defended the government’s decision to make Aadhaar mandatory for filing of tax returns and for obtaining and holding on to the PAN, calling it an “anti-evasion” measure.
Explaining the rationale, Jaitley said that linking PAN with Aadhaar would help in weeding out multiple PANs held by one individual. “One person has made five PAN cards. These are then used for tax evasion. That is why we have made Aadhaar mandatory. This reduces the possibility of this kind of tax fraud and evasion,” he said.
Jaitley also defended the government’s decision to modify provisions related to search operations by the income-tax department in the finance bill, stating that no arbitrary powers have been given to the tax department.
Explaining the changes in Section 132A of the income-tax Act, Jaitley said it was important to protect the sources of information of the taxmen.
As per proposed changes to the section, taxmen will not have to disclose the reason for which the search was conducted to any person, authority or appellate tribunal.
“The current situation was such that if anyone challenged the search, then the sources of information had to be disclosed by the tax official. The sources of information started drying up. For instance, an employee will not disclose tax evasion by the head of the company for fear of disclosure. The change has been that now only the court can look into the source of the information but not anyone else,” Jaitley said.
“Before any search, if a tax officer gets information about undisclosed income with a particular taxpayer, the reasons for such a move have to be written in the search order. There is no change in this. This still has to be recorded,” he said.
The finance minister also reiterated that agricultural income is not taxed and would not be taxed in the future.
Earlier in the debate, the government was criticized for its decision to make Aadhaar mandatory for tax purposes.
“Supreme Court still hasn’t decided (on making Aadhaar mandatory). You are giving subsidy through Aadhaar. That is fine. But in this case, the tax is being paid to the government. Why should Aadhaar be made mandatory?” questioned Bhartruhari Mahtab, a Biju Janata Dal MP from Odisha.
Shreeja Sen contributed to this story.
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