MC Exclusive | Union Budget may decriminalise over 100 provisions to boost ease of doing business

The Union Budget on July 23 is likely to focus on the ease of doing business by decriminalising over 100 provisions across multiple laws, including the Income Tax Act, in the second edition of the Jan Vishwas Bill, according to a government official.

“The Jan Vishwas Bill II is almost finalised. A total of 580 provisions were analysed across various laws for decriminalisation. Out of these, 310 provisions have been retained as they are, and the remaining are under review for decriminalisation. It may be announced in the Union Budget,” the official said, requesting anonymity.

The Bill seeks to put an end to criminal proceedings and imprisonment for minor offences, replacing them with monetary penalties. The changes aim to boost investor confidence and offer relief to courts overburdened with cases for minor offences, such as delayed payment of tax deducted at source. India Inc had suggested that the penalty should be a deterrent and TDS payment delays should be treated as a civil liability, according to an industry source.

For the first time, the Bill aims to decriminalise certain provisions of the Income Tax Act. The Central Excise Act and Central Goods and Services Tax Act are also under review. He added that 130-180 provisions may become part of the Jan Vishwas Bill II for decriminalisation.

Process of shortlisting

Out of the 270 provisions under consideration, 160 are being reviewed internally by various departments, including the Department of Revenue, in the finance ministry. An additional 110 provisions from eight laws are being reviewed by an inter-ministerial committee (IMC) chaired by the secretary to the Department for Promotion of Industry and Internal Trade (DPIIT).

“The IMC meetings happened frequently starting from April,” he said.

Several other laws were reviewed for decriminalising certain provisions, including the Securities and Exchange Board of India Act, Securities Contracts (Regulation) Act, Depositories Act, National Bank for Agriculture and Rural Development Act, National Housing Bank Act, Deposit Insurance and Credit Guarantee Corporation Act, Banking Regulation Act, Payment and Settlement System Act, RBI Act, Credit Information Companies (Regulation) Act, State financial corporations Act, Insurance Act, Life Insurance Companies Act, The Competition Act, Insolvency and Bankruptcy Code (Amendment) Act, Limited Liability Partnership Act, Companies Act, and the Environment (Protection) Act.

In 2023, an inter-ministerial working group, comprising officials of the finance ministry, NITI Aayog, the labour ministry, the Department for Promotion of Industry and Internal Trade (DPIIT), and the Ministry of Skill Development and Entrepreneurship, was tasked to accelerate the identification of provisions that can be decriminalised in various laws. The working group consisted of 22 members divided into sub-groups from various ministries to study the provisions under these laws.

Later, the working group was turned into an inter-ministerial committee with senior officials from the ministries.

Pallav Pradhyuman, partner at accounting firm CK, had told Moneycontrol, “Prosecution provisions in the I-T Act, 1961, have to be rationalised. At this moment, one can be prosecuted under various Sections of the Act and be imprisoned for periods ranging from 3 months, all the way up to seven years. These provisions do not help build an environment of trust between the taxpayer and the authorities. Doing away from them would certainly be a welcome step.”