Dear Members,
As I pen this message, the curtain has come down on the 2016 Olympics in Rio in a grand and spectacular closing ceremony. Around ten thousand sports people competed aggressively for 2,488 gold, silver and bronze medals. Amidst the outstanding victories and whisker-close defeats, one message comes out very strongly – “Good is the enemy of best”. India has to learn this lesson well if it is going to score in the 2020 Tokyo Olympics. The Indian contingent will have to be truly world-class – wellhoned physically and mentally to win. Clearly, mediocrity, inconsistency, and half measures won’t take us anywhere near the victory stand!
With India’s encouraging six medals in the London Olympics in 2012, and its large Olympic contingent, which exceeded 100 participants for the very first time, expectations were running high. With just two medals, the “Make in India’ lion has returned to India to lick its wounds and do some serious introspection…and maybe some passing the buck too!
The silver lining in the dismal performance is that the women of India have clearly demonstrated where the ‘Citius, Altius and Fortius’ lie. Undoubtedly, the sportswomen have proven their prowess and their power to win in spite of all odds that sports persons have to face in our country. It is the time that the women in India, especially in the smaller towns and villages are empowered to live their dream and go on to achieve…not just in the Olympics but in the everyday journey called life!
Sindhu and Sakshi have returned to a hero’s welcome with people lining streets to applaud their grit, determination, and success. The central government, state governments, sports federations, companies, and individuals have been falling over themselves to shower them with cash, cars, land, jobs. Several companies also are lining up to sign them up as brand ambassadors. One wonders if all these resources and facilities were provided earlier, wouldn’t it have changed our medal tally?
GST – Ultimately
Let us leap to another very significant happening in the last month, the passing of the Goods and Services Tax (GST) Bill. It took sixteen long years in the making and was finally cleared in both houses in the first week of August. The Prime Minister, Shri Narendra Modi promptly tweeted: “GST will give strength to our economy and all parties are to be thanked for its passage.”
GST is now at our doorstep and is set to be the biggest game changer in the Indian economy by creating a common Indian market and cutting out the cascading effect of tax. Its implementation demands a complete overhaul of the current indirect tax system, right from tax structure, incidence, computation, payment and compliance to credit utilization and reporting. The impact of GST will be far reaching and require a revamping of pricing, supply chains, IT, accounting, and tax compliance. There’s huge opportunity staring us in the face!
Being a major tax reform, the GST will stoke several conflicts: between political parties; the union and state governments; and between producing and consuming states. The Centre is keen on rolling out GST by April 2017, but there are several challenges that need sorting out to ensure its smooth implementation. Replacing several taxes and harmonizing them across the union and state governments is a giant challenge. The IT platform for implementing GST will need to be all encompassing to accommodate state, central and integrated GST provisions.
All these daunting challenges have rallied the captains of industry to request the government to defer the switchover to GST for another six months. Over 40,000 suggestions have poured in, offering a wide range of comments and feedback. Whatever happens, let’s get GST ready! BCAS has planned full day workshops on GST Model Law this month, and the response has been tremendous.
The CBEC invited the BCAS for an interactive meeting with the policy makers on GST at the North Block. From the BCAS, Mr. Govind Goyal and Mr. Sunil Gabhawalla attended the meeting and made a detailed representation of the draft model GST Law. The authorities found some of the representations unique and practical to implement. A copy of the representation is available on the website.
Income Declaration Scheme
Let us now shift our focus to the government’s Income Declaration Scheme (IDS) that has been in the daily news. Stung by repeated criticism about its inaction in tackling the herculean black money problem, the government hurriedly launched a one-time compliance window to attract black money squirreled abroad. The scheme predictably bombed. Now we have an India avatar of the scheme to draw undeclared income and assets into the tax net. Tax evaders are being urged to declare their unaccounted assets voluntarily, pay the applicable tax, cess, and penalty aggregating 45% of the undisclosed income; and enjoy total immunity from any further penalty or prosecution under the Income Tax Act or Wealth Tax Act.
The government has taken pains to reiterate that the IDS is not an amnesty scheme to reward dishonest tax evaders by giving them an escape window. The ten amnesty schemes that were launched at regular intervals between 1951 and 1997 were largely misused. Tax evaders escaped stringent action and on the contrary paid lower than normal taxes, yet got blanket immunity. Assets declared under many of the schemes were grossly undervalued for tax purposes, and so the corresponding tax collection was much lower.
The IDS in its current form must, therefore, appear very harsh, and as of now, the response seems to be lukewarm. There are many reasons that may have deterred tax evaders from coming clean but importantly immunity is currently granted only from Income Tax and Wealth Tax, leaving the evader open to prosecution from Service Tax, Sales Tax, and other authorities.
BCAS, along with three other associations, made a detailed representation pointing out the anomalies, most of which were taken care in the latest FA Qs issued by the CBDT. Additionally, BCAS has brought out an excellent publication on IDS to help professionals understand the contours of the scheme and make their filings accordingly.
Meeting of revenue targets – is this the way?
There was a small article in the corner of the newspaper which I thought I should draw your attention to. It pertained to the unfair and deceitful means adopted by IT officials to ensure tax targets were met. Colluding with SBI officials, IT officials quietly collected Rs. 10,000 crore on 30th March and promptly refunded it on 1st April. This modus operandi including altogether stopping from issuing refunds in the first quarter of each year was being employed with several corporate entities, and it ensured robust figures that made the books look good. On investigating the massive refunds in the first week of April, the scam came to light, and officials got transferred. The Finance Ministry has taken a tough stand, warning officials that engage in ‘taxtortion’ that they will be dealt with sternly. As CAs we are all aware of such modus operandi and now it is the time not to take things lying in case our clients also suffer such unjust.
International Tax Conference
The International Tax and Finance conference (ITF) a popular event of the Society crossed borders for the first time, it was successfully held in Sri Lanka. The participants included participants from all across the country as well as some international participants There was a balanced combination of learning with fun. The day used to be full of brainstorming sessions and discussion with enlightenment from elite speakers, whereas the evenings used to be full of interaction and amusement. The highlight of the conference was the one to one interaction with the Minister of Finance of Sri Lanka who was very candid and appreciative of India and its prowess.
Ganapati Bappa Morya! Micchami Dukkadam!
