fiogf49gjkf0d
The audit season has come to a close and the tax season has got stretched in organically due to Income Declaration Scheme (IDS) into October. Hopefully, when you receive this journal you have enough time and mind space to go through all that which this Issue contains.
Income Declaration
Scheme (IDS)
IDS
window ended with declarations amounting to Rs. 65,250 crores (from 64,250
disclosures) which should result in tax revenues of Rs. 29,262 crores. We are
not sure whether this amount meets the estimated collection expectations or not.
I am using the word, expectation, unlike many who use the word ‘target’, which
I believe is inappropriate. It is now a trend
that targets are set for tax collection and then officials are made to work
towards it. Such verbiage results in application of methods that are
inconsistent with the fundamental features of Indian taxation system. In the
same breath I hope that this is a definitive beginning of an endeavour to end
the menace of black money and all the evils related to it. Let’s hope that we
will soon have some data in a b road form as to the nature of persons who have
declared and whether they include the usual suspects who generate, hoard and
circulate cash. Till this ‘target’ is not dealt with, we can be sure that cash
economy is here to stay.
Internal Financial
Controls (IFC)
On the accounting side we had the
first time reporting on Internal Financial Controls by auditors on the design
and operative effectiveness of IFC over financial reporting. While the concept
did have its origins in the same realm from where the company law was drafted, butthe
‘one size fits all’ applicability was a dampener. IFC was made a part of every auditor’s
report, be it of a newly started enterprise, to relatively small marketing
subsidiary of a foreign parent to listed
mega enterprises. . The ministry of corporate affairs did not bring out any
guidance, relief, or progressive application. Such progressive approach could
have allowed reporting to mature and given smaller enterprises some breathing
time.. The present reporting requirement seemed like asking for use of a water
hose to kill a mosquito . A ray of
relief came when the ICAI brought out the second technical publication on IFC
and covered reporting situations in a more practical, rational and realistic
way. This publication did bring sense by negating the effect of the overarching
reporting requirement of the law. It also enunciated situations where auditors
comments could be more relevant and serve the purpose of the reporting. While
many of us, whether in Industry or profession know that while the concept is
useful, it needs to be made more specifically relevant so that’s the benefits
can be tangibly felt by the company to which it applies. The Society on its part did bring out a small booklet that was published well in time.
GST
GST journey has been like the
story of a Bollywood blockbuster. A large part of the story was drama and suspense
for a long time. The story has taken a strong turn since the passage of the constitutional
amendment. Now the story is shaping to become a action packed thriller till the
end of this fiscal. I guess till the bill is finally drafted, all inputs are
taken and procedure laid out, it will remain that way since the producers and directors of GST seem to desperately want to meet the timeline of 1st
April 2017 which will be a fitting time for an interval. From then onwards, most
of us would wish that the story turns out to be all romance and not turn into a
tragedy or a horror show.
I will not go into the details of
the current stage of evolution of GST. However, For every practitioner, even at
the cost of repetition, emphasis, or inspiration I have to say that GST is
certainly the biggest show in the professional calendar of FY1617 and many
years beyond, .From its sheer impact, opportune timing, wide relevance and of
course the thrill of being an early mover, the GST story is definitely not to
be missed. Irrespective of how the story shapes post interval, you should know
that you can choose not to just watch it, play a part in it. Whatever you
choose, whether enter the cast or watch from the balcony, I wish us all a
pleasant experience.
Ease of doing
business (EoDB) –
The focus on ease of doing
business still remains on the agenda of the government. It is indeed heartening
that EoDB is very much on the implementation radar of this government. This
project, if one may call it so, is an important step towards transforming India
in to a investment destination of choice. I do not see it only from foreign
investment perspective, but also as a means to incentivise local entrepreneurial
talents and pursuit. . . As much as we are aware of, our laws – their
structure, applicability, procedures and interpretation by lower rungs of administrators
remains an issue of concern for entrepreneurs since decades. It’s major fall
out could be serious constraint on job creation and poverty elevation, which
are both part of stated policy and a need of the hour. It cannot be forgotten
that by 2020 we will have 1.35 billion people, amongst them; more than 900
million will be in the working age. All the noise of Make in India to EoDB is
not just a political gimmick but a wakeup call or even an alarm or a siren
sounding loudly.
The centre alone cannot be responsible
for EoDB, but states have to chip in and work towards a common goal. In this
context a 98 point action plan was formulated by the centre and states
together. The points included, single window clearances setting, monitoring
time lines for registrations, self certification instead of inspections amongst
other things. These points had to be adopted at state level to bring India out
of the dungeon of the ridiculous and roar into the 50th rank by 2017. The timeline
does remain to be stiff and ambitious, and rightly so, considering the urgency..
The good news is that 25 states have completed 75% of the 98 points action plan
goals.
Juxtapose a recent report by The National
Academies of Engineering, Sciences and Medicine, USA which reported that Indian
migrants to the US were the most entrepreneurial and contributed billions of
dollars to the economy. If we look at it from our national perspective, two
aspects stand out. The entrepreneurial capabilities of Indians and wonders that
right environment can do to actualise those capabilities. With deregulation and
further reduction in excessive and irrelevant reporting requirements which
place a burden on small and medium businesses, we can reach from the ridiculous
towards relevant.
Kashmir situation
As I write this I am spending
time with professor Meem Hai Zaffar, PhD from Srinagar. He is a thorough
Kashmiri – a pluralist, rooted in Local as well as national traditions of culture
and philosophy. He tells me that even today; the cultural traditions prevalent
in Kashmir have tremendous cultural unity with rest of India. This includes
inter religious connection rising way above borders of religions, in the words
of traditional songs to customs. The multi cultural ethos and expansive values
find expression in local songs, folklore, shrines, and so on. He tells me that
the deep cultural tradition of Kashmir, going back to Kashyap Rishi of the
yore, to Lal -Ded to Nund Rishi is alive. I wanted to share this conversation, as
we normally hear only political facet of things in media, whereas culture is
what binds people and nations.
Wishing you a happy Dussehra and a joyous Diwali!
Raman Jokhakar
Co-chairman
Journal Committee
