Dear Members,
It has
been just a month since I communicated with you, but the events that have
unfolded in the last 30 days make it appear as if a long period of time has
elapsed. There have been some major developments (both positive and negative)
in the socio-economic and political landscape of our country that would have a
significant impact on our future. Beginning with the successful launch of the
Chandrayaan 2 mission to the moon, the scrapping of Article 370 of the
Constitution which provides a special status to the state of Jammu and Kashmir,
the passing of the Triple Talaq – Muslim Women (Protection of Rights on
Marriage) Bill, 2019, the floods situation across many states, the enactment of
the Companies (Amendment) Act, 2019, re-emergence of the Direct Tax Code and,
above all, the Prime Minister’s meetings with the Finance Minister and the
industry leaders on the state of the economy.
I was
recently reading a report which points out that the just-concluded budget
session of Parliament was the most productive in decades. It was one of the
busiest sessions in the past 20 years, both the houses spent nearly half their
time on legislative business, passing 30 bills and working more than 70 hours
extra. As citizens of the country we feel proud of this but, at the same time,
also hope that a healthy debate has taken place before any enactment and that
the Government has taken all the stakeholders on board.
Is it
fair?
The
Companies (Amendment) Act, 2019 received the assent of the President on 31st
July, 2019; this has made a U-turn on certain provisions relating to Corporate
Social Responsibility (CSR) spending by companies. Initially, when CSR was
introduced in the Companies Act, 2013 it was purely voluntary and without any
penal provisions. However, the said Amendment Act introduces provisions like
deposition of funds for mandatory CSR expenditure for a given fiscal in an
escrow account in case of certain ongoing projects and transfer of unspent
funds (within three years) to the National CSR Fund. Further, if a company does
not have an ongoing project that requires funding in stages, then such a
company will be required to transfer unused CSR funds to the National CSR Fund.
For the first time, non-compliance would attract a fine and imprisonment for
the officer in default. We need to ask the question: ‘Is it fair to all
concerned? Are such provisions aiding in the Government’s efforts of “Ease of
doing business in India”?’
It
gives me immense pleasure to inform you that we had made a joint representation
to the Hon’ble Union Minister of State for Finance and Corporate Affairs who
gave us a personal hearing; a number of major points causing difficulties to
tax payers and professionals were explained to the Minister. Both direct and
indirect tax issues were brought to the table and explained in detail. He was
appreciative of the various issues raised by us and we hope that, as in the
past, many of our suggestions would be accepted and concrete corrective action
would be taken in time.
The
Consumer Confidence Survey of the Reserve Bank of India indicates that not only
was the sentiment negative for three of the five parameters in the month of
July, but it was expected to deteriorate further compared to two months ago. We
are witnessing a weak consumer sentiment which is also reflecting in the
business sentiment, with businesses being less upbeat about production, order
books and capacity utilisation. The good news is that the Government is aware
of the overall slowdown in the economy and might take corrective action very soon.
This, coupled with the upcoming festival season following a healthy monsoon, is
expected to bring cheer to the stressed sectors of the economy in the second
half of the fiscal.
Fortunately,
soon after I penned the above thoughts, the Finance Minister announced a
recovery package to provide immediate succour to some of the worst pain points
of the economy in the hope of effecting a turnaround – including a rollback of
CSR violations being treated as a criminal offence!
Wishing
all of you all the best for the upcoming busy September tax audit season.
With
Best Regards,
CA
Manish Sampat
President
