Govt likely to decriminalise 14 provisions in Companies Act, IBC, Competition Act

Decriminalising will help the government to replace many offences that involve imprisonment with penalty.

The government is likely to decriminalise 14 provisions in three Acts under the Ministry of Corporate Affairs. They are The Companies Act, 2013, Competition Act, 2002, and Insolvency and Bankruptcy Code (IBC), 2016.

An announcement may be made in the Union Budget on July 23, an official said.

“The Companies Act, IBC, and CCI Act under the Ministry of Corporate Affairs are being considered for decriminalisation of some provisions. Eight  provisions have been identified at the department level, while six have been shortlisted by the inter-ministerial committee (IMC) for decriminalisation,” the official told Moneycontrol.

An IMC, chaired by the secretary to the Department for Promotion of Industry and Internal Trade (DPIIT), has been tasked with accelerating the identification of provisions that can be decriminalised in various laws. The IMC consists of senior officials from the finance ministry, NITI Aayog, DPIIT, etc.

Decriminalising these provisions will help the government to replace many offences that involve imprisonment with just a monetary penalty to boost its ease-of-doing-business initiatives.

The primary rationale behind these decriminalisation efforts is seen as a measure to enhance the business environment in India by reducing the compliance burden and the fear of criminal prosecution for minor or technical infractions. Overall, it is seen as a significant step towards improving the regulatory landscape for businesses in India.

The decriminalisation of these Acts is likely to be a part of Jan Vishwas Bill II. The next edition of the Jan Vishwas Bill is likely to decriminalise a total of over 100 provisions in various Acts, including Income-Tax (I-T) Act, Payment and Settlement Systems Act, the RBI Act, the FEMA Act, Banking Regulation Act, etc., he said.

The government is likely to look at decriminalising provisions in the Acts under the RBI and the I-T Act, for the first time, in Jan Vishwas Bill II.

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Under the I-T Act, the government is looking at decriminalising the provisions with compounding of offences, so that there is only a penalty for minor offences.

Under the Act, there is a mechanism where tax evaders can avoid a prison sentence by paying a penalty to the authorities to waive off the prosecution charges. This is referred to as compounding of offences.

The initial Jan Vishwas Bill was passed in Parliament during monsoon session 2023, which decriminalised 183 provisions in 42 different laws. It was introduced in the Lok Sabha in December 2022.