When the Lok Sabha passed the crucial Finance Bill, 2017 last week, there was plenty of angst about various new additions and amendments such as making an Aadhaar card compulsory to file tax returns or the Rs 2 lakh cap on cash transactions. But after digging deeper, experts and bloggers have discovered that those moves were just the tip of the iceberg.
Calling it the "Finance Bully, 2017"' bloggers pointed out the controversial fine print in the Bill, which they felt was draconian.
Here are some reasons why the Bill is being contested:
Random raids
The new Bill gives tax officers freedom to raid any organisation or individual's premises, if they have "reason to believe"' that they may be withholding unaccounted cash or jewellery or any other such articles. The reason need not be disclosed to anyone.
Anonymous political donations
While Finance Minister Arun Jaitley's Budget speech in February suggested that steps will be taken to make donations to political parties more transparent, there is a provision in the Bill that will do just the opposite.
The Bill introduces electoral bonds, which make it more convenient to donate without being noticed. Here is an excerpt from Jaitley addressing the media, explaining in his own words this debatable concept and revealing how easy it would be to give money anonymously:
"The system involves the following steps. The donor and the donee will get tax exemptions provided the returns are filed by the political party. Donations of four kinds are encouraged: Donate by cheque, digital mode, cash donation limited to Rs 2,000 per person, and lastly there is a provision of electoral bonds which requires an amendment to the RBI Act. A notified bank will be issuing those bonds. Any donor can buy those bonds using cheque or digital money. These bonds can be given to the political party. Every recognised political party will have to notify one bank account in advance to the Election Commission and these can be redeemed in only that account in a very short time. These bonds will be bearer in character to keep the donor anonymous."
The RBI and I-T Act will be amended so that no parties have to keep records of the donor in the case of electoral bonds. There will no longer be a cap on the amount of donations an individual can give as long as it is given by cheque or digitally.
Jaitley also rejected a suggestion for making PAN and Aadhaar mandatory for cash donations to make it more transparent, saying it was not feasible, particularly in rural areas.
Bringing down the cash donation limit to Rs 2,000 from Rs 20,000 will not change much as people will just get ten times the receipts they used to get earlier. Experts feel that cash donations be completely stopped.
Aadhaar for everything
While the fact that Aadhaar becomes compulsory to file returns is well-known, what's not is the fact that your PAN card will become invalid if you don't link it to your Aadhaar by July 1, 2017. So do we all stand to become tax evaders then?
The government has through other mediums also made Aadhaar mandatory for getting a new mobile connection and a driving license.
Merged tribunals
The Bill merges eight tribunals including the Competition Appellate Tribunal, Cyber Appellate Tribunal and the Copyright Board to other existing ones. An amendment is also mentioned, which lets the government elect the members of a tribunal and who heads it. Earlier, the judiciary and specially formed committees decided the members of a tribunal.
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