Dear members,
It is indeed a great honour and aproud privilege to be bestowed with the responsibility to be the 65th President of an outstanding organisation that the Bombay Chartered Accountants’ Society (BCAS) is. The task of walking on the path carved out by the stalwarts who have led this august institution in the past and reach new milestones is formidable. In this journey, one has the unstinted support of seniors, colleagues and other members. Your warm messages of welcome and support enthuse me. The roadmap for the BCAS for the new and coming few years takes into consideration continuity from the past and expectations of various stakeholders. My acceptance address, delivered at the AGM and reproduced in this issue of journal, highlights this…
The new BCAS year began with Shri Dastur presenting his annual budget speech for a record 26th time. A packed audience of more than 2,000 listened to his comprehensive analysis of the direct tax provisions of the Finance (No.2) Bill, 2014 with rapt attention and admiration. The BCAS has started live webcast of the annual budget meeting since 2009. This year’s live webcast was viewed by over 1,500 logins simultaneously. In many offices, the live webcast was projected on a screen and watched by large groups making it difficult to estimate the total number of viewers. The feedback from the viewers is very encouraging. We will continue to adapt to changes in the technology and ensure that the BCAS continues to reach out to a larger number of the members and shrinks the geographical distances.
The Indian economy has been going through challenging times. This has culminated in lower than 5% GDP growth for two consecutive years, 2012-13 and 2013-14. Sub-5% GDP growth for two years in succession was last witnessed a quarter of a century ago in 1986-87 and 1987-88. The manufacturing sector suffered the most with the growth plummeting from 8.5% in 2011-12 to 1.2% in 2012-13 and 0.5% in 2012-13. With hope to see Achche Din, India gave a decisive mandate in favour of Modi Government and the expectations from the new Government are sky high.
In the budget speech, the Finance Minister Mr. Arun Jaitley referred to aspirational Indians and the neomiddle class demanding better living standards. Also described as an aspirational volcano, the rising India is now assertively demanding improvement in quality of governance that includes better infrastructure, more opportunities, greater choices, and enhanced safety and security. In the past, there have been always gaps in promises made by the ruling combine and the deliveries on ground. The Finance Minister has used to the word “growth” 31 times in one of the longest budget speech in history. It is important that the new Government pursues an all-inclusive growth agenda relentlessly and aggressively to channelise energy of young and rising India in the right direction.
The tax proposals in the Finance Bill carry a significant imprint of the bureaucracy. The tax compliance and dispute resolution remain painful and attempts to address these concerns seem to be inadequate. Aware that the budget will be required to be approved in a very short time, the team BCAS worked very diligently to submit its post-budget memorandum on direct tax and indirect tax proposals. Once again, the Parliamentarians have rushed in approving the Finance Bill without critical and detailed examination of various provisions, some of which appear to have not been thought through entirely. Until and unless the legislative process becomes truly participative and collaborative, the confusion created through continuous tinkering of the laws and bureaucratic red tape will remain a challenge and ease of doing business in India, a mirage!
Several finance ministers have stressed on the need for friendly and conducive tax administration. However, in reality this remains a distant goal. The report of the Committee for Reforming the Regulatory Environment for Doing Business in India chaired by Mr. M. Damodaran submitted last year states: “Despite protestations of an improvement in mind-set, the needless adversary relationship between assessing authorities and the taxpayers continues to be a fact of life. This is further compounded by a perverse incentivisation system in which gross tax collections are treated as a major indicator of good performance.”
The following statistics in this year’s budget documents perhaps quantify the scale of this challenge. The statement of Revenue Forgone states that the Incometax Department received 6,18,806 corporate returns electronically up to 31-03-2014 for the financial year 2012-13, i.e., assessment year 2013-14. These companies reported total corporate tax payable of Rs. 2.64 lakh crore inclusive of dividend distribution tax. In comparison, the receipts budget states the collection of corporation tax at Rs. 3.56 lakh crore during FY 2012-13. Does it mean probably Rs. 1 lakh crore of tax, i.e., nearly 28% of gross corporate tax receipts, is excess collected allegedly through coercion which the government is required to refund subsequently with interest? It is pertinent to note that the tax refunds excluding interest have been increasing over last several years. It amounted to Rs. 83,766 crores during financial year 2012-13 as stated in Report No. 10 of 2014 pertaining to direct taxes by the CAG.
The Tax Administration Reforms Commission (TAR C) in its nearly 600 paged First Report has detailed several actions to enhance effectiveness and efficiency of the tax administration including steps required to contain and obviate the disease of corruption. There is no dearth of ideas, suggestions and plans. The current disturbing state of affairs has resulted from lack of commitment, sincerity and determined efforts. There is a greater need to start the cleansing process from higher echelons.
Our Prime Minister Narendra Modi inspired the cadre of his party with the slogan “Congress mukt Bharat” and achieved a historic win. The citizens of India now hope the Modi Government and the elected representatives will push for “Corruption mukt Bharat” with greater vigour that will herald truly happy celebrations of the Independence Day for the country.
Wishing you a very happy Independence Day in advance!
With warm regards,
Nitin Shingala
