Overdose of Laws and Regulations?
[Need of the Hour: Less Government, More Governance]
An interesting statistic is found in Wikipedia1 about the number of Acts in India. Apart from the Finance Acts, there are 891 Central Acts which are still in force as of 15th October, 2024, of which 108 Acts are of the 19th Century (1836–1900), 571 Acts are of the 20th Century (1901–2000), and 212 Acts are of the 21st Century (2001–2024). Apart from the above, there are a number of Acts passed by each State Government, Municipal Corporation and other Government bodies. The oldest Act in force is the Bengal Indigo Contracts Act, 1836, and the latest being the Public Examination (Prevention of Unfair Means) Act, 2024. It is heartening to note that 1,486 obsolete and redundant laws have been repealed by the Government of India since 2014 till date2.
1 https://en.wikipedia.org/wiki/List_of_acts_of_the_Parliament_of_India and https://cdnbbsr.s3waas.gov.in/s380537a945c7aaa788ccfcdf1b99b5d8f uploads/2023/10/202408221608906963.pdf
2 Refer the Editorial of June 2024 for more details
Many countries have far more Laws as compared to India, and as such, the number of Laws in a country depends upon its needs, complexities and various other factors; hence not comparable. What is important is to see that the law is an enabler and not a roadblock in progress.
Laws should not be made for exceptions, as often happens in India. There will always be some people who find ways to circumvent well-intended provisions of law. For a few deceitful people, the majority of law-abiding citizens should not be punished. A number of amendments in the tax laws and their complexity, relating to the provisions concerning Charitable Trusts, is a case in point. To quote Geoffrey de Q. Walker3, “the people (including, one should add, the government) should be ruled by the law and obey it, and that the law should be such that people will be able (and, one should add, willing) to be guided by it4.”
3 The Rule of Law: foundation of constitutional democracy (1st Ed., 1988)
4 https://www.ruleoflaw.org.au/principles/
Over-regulation gives a feeling of suffocation, and one would like to escape to freedom. Operational freedom is a must for businesses to flourish. For example, we had a stringent law called the Foreign Exchange Regulation Act, 1973 (FERA), which strictly regulated foreign exchange transactions. This resulted in the throttling of Indian entrepreneurship and arresting the growth of the Indian economy. With the results, we found people leaving India and settling in business friendly jurisdictions like UAE, Singapore, etc. With the enactment of the Foreign Exchange Management Act, 1999, (FEMA) with a focus on facilitating external trade and payments and management of foreign exchange rather than controlling it, we find Indian businesses and the economy flourishing. Liberalisation of various laws, removal of the “licence – permit – quota” regime and controls, along with the enactment of FEMA, resulted in an increase in India’s Foreign Exchange Reserves from USD 5.8 billion in 1991 to USD 688 billion as of 18th October 20245. Thus, we find that Indians can do wonders if there are fewer controls and more freedom.
5 https://tradingeconomics.com/india/foreign-exchange-reserves
Interestingly, the Ministry of Personnel, Public Grievances & Pensions issued a Print Release on 13th August, 2024 on “Less Government More Governance”6. Recognising the need for a citizen friendly and accountable administration, a series of steps have been initiated by the Government. These include simplification of procedures, identification and deletion of archaic laws / rules, identification and shortening of various forms, leveraging technology to bring transparency to the public interface and a robust public grievance redress system. Promotion of Self-Certification in place of affidavits and attestation by Gazetted Officers will greatly reduce the time and effort on the part of both the citizen as well as the Government officials. The Government has launched a website titled mygov@nic.in to provide a citizen-centric platform to empower people to connect with the Government and contribute towards good governance. Suggestions are also invited on the PMO website, which also seeks expert advice from the people, thoughts and ideas on various topics that concern India. We all should participate in this nation building activity by giving constructive suggestions.
6 https://pib.gov.in/newsite/PrintRelease.aspx?relid=108623#:~:text=13%3A48%20IST ,Less%20Government%20More%20Governance,this%20goal%20have%20been%20initiated.
The rule of law is the hallmark of a civilised society, and therefore, laws cannot be done away with. We need to enact laws which are equal for all, fair and simple to understand, and without the presumption of “mens rea” (guilty mind), meaning thereby that one is presumed to be innocent until proven otherwise. Compliances and filings under various laws should be a bare minimum. Today, a practising CA has to comply with almost 25 to 30 different laws and a host of compliances for his own firm. This puts enormous pressure on him, as he also has to help his clients comply with a plethora of regulations of different Regulators and Government agencies. It is observed that the Government is placing more and more burden on the public for compliances and reporting, for example, compliances under GST, TDS, TCS, etc.
To streamline the Direct Tax Laws, the Central Board of Direct Taxes (CBDT) has formed an internal committee to conduct a comprehensive review of the Income Tax Act, 1961.
This initiative aims to make the Act concise, clear, and easy to understand, fostering reduced disputes, litigation, and increasing tax certainty for taxpayers.
The committee has invited public inputs and suggestions in four categories:
1. Simplification of Language – Making the legal language more user-friendly.
2. Litigation Reduction – Identifying areas to reduce disputes and conflicts.
3. Compliance Reduction – Easing procedural complexities for taxpayers.
4. Redundant / Obsolete Provisions – Eliminating outdated provisions.
Suggestions can be submitted on a dedicated webpage created on the e-filing portal of the Income-tax Department.
Additionally, a task force from the Direct and International Taxation Committees of the BCAS is actively compiling recommendations. Readers can send their suggestions by 10th November, 2024 to vp@bcasonline.org or editor@bcasonline.org.
Excessive regulations are counterproductive and kill creativity and entrepreneurial spirit. On the other hand, lack of or insufficient regulations can lead to anarchy and disorder in society. So, we need to strike a balance.
Many qualified CAs are not taking up ICAI Membership, may be for the fear of being regulated. Generation Z (born between 1997 to 2012) and Alpha (born between 2013 and present) value their freedom more than anything else. They refuse to get regulated or controlled. In 2018, the two-member bench of the Supreme Court held that “action can be taken against CAs if their conduct brought ‘disrepute’ to the profession — even if such an action was not related to his / her professional work.” For example, if a CA drinks and drives or creates a scene in a public space that can bring disrepute to the profession, action may be taken against him, whether it was in his professional capacity or not.” While reporting this news item, The Economic Times7 gave a catchy title: “Donning CA’s hat means being an accountant & be accountable 24×7”. Thus, CAs are regulated 24×7. Should such a code of conduct not be expected from all professionals / degree holders all the time?
7 Dated 27th November, 2018
Friends, ICAI elections are around the corner, and we must vote without fail. Let’s vote for the pragmatic 26th Central Council and 25th Regional Councils, which can lead the profession from the front and take it to new heights. In this era of turmoil and turbulence, members look up to their Alma Mater for guidance, leadership, protection and growth.
I wish you all a happy Diwali and a Prosperous New Year – Vikram Samvat 2081.
