Direct Taxes Code needs a fresh look, says Chidambaram
PTI New Delhi Last Updated: August 29, 2012 | 09:04 IST
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After a meeting with top officials of Central Board of Excise and Customs (CBEC), he also said the tax department has to be firm with tax evaders for whom non-compliance is a business.
"DTC has gone through various versions...I need time to look at DTC. I am only 28 days old... It requires a fresh look", Chidambaram said in reply to a question at a press conference.
The idea of DTC, which seeks to replace the Income Tax Act, 1961, was mooted by Chidambaram as Finance Minister in the UPA-1 government and lot of drafting was done when he was shifted to home ministry in 2008.
His successor Pranab Mukherjee introduced the DTC Bill in 2010 which also included a number of new provisions, followed by changes suggested by Parliament Committee on Finance. The controversial provisions relating to retrospective tax amendments and GAAR were enacted in the Finance Bill, 2012, which are under review.
To a question whether General Anti Avoidance Rules (GAAR) would get postponed again, Chidambaram said, he was awaiting the report of the Shome Committee, which is looking into the concerns expressed by foreign and domestic investors.
On the indirect tax collections, the minister said that he was hopeful that the target of Rs 5.05 lakh crore during the current fiscal would be met.
Chidambaram said the department would have to be firm with the small number of non-compliant businesses.
"Most people would like to be compliant with tax laws. It is only a very small number that wishes to be non-compliant. I have told the department that we have to be firm with the small number of those non-compliant people", he said.
Chidambaram said he has asked CBEC officers to focus more on top 100 tax payers to achieve the indirect tax collection target of Rs 5.05 lakh crore in the current fiscal.
"If you take customs and excise zone wise, top 100 tax payers of the customs, top 100 in excise and top 100 in service tax account for about 95 per cent of taxes collected.
"So really, each charge has to focus on top 100 ... All the others contribute only about 5 per cent. So if we maintain an interactive, friendly tax administration with them ... we will achieve our target," he said.
The Minister further said that April-July collection figures of indirect taxes do not reflect the trend, and added, "the numbers beyond August will be more encouraging".
Indirect tax collection during April-July showed an increase of 22 per cent against annual target of 27 per cent.
Chidambaram also made a case for de-centralisation of powers saying that tax administration of a large country like India cannot be run from Delhi.
"Most Chief Commissioners are naturally resentful of the fact that powers are getting centralised. I have assured that powers will be de-centralised. Tax administration of large country like India cannot be run by fiat from Delhi. So large number of powers will be de-centralised and that will attended to next week", he added.
The tax administration, he added, must be friendly as most people wants to comply with tax laws and get on with other activities.
"It's only a small number which makes its business to be non-complaint with tax laws. I have held this philosophy very long ... We should be friendly to the large number of tax payers who wish to be complaint with tax laws and we have to be firm with the small numbers (who do not comply) with tax laws", the Minister added.
With the decline of Parliament, political debate has moved to television studios, the Jantar Mantar premises and social media. Another front for political wrangling these days is courts. With the writ courts opening wide their doors to anyone claiming to have a grievance on behalf of the public, there are wild allegations thinly clothed as public interest litigations (PILs). Last month, the Supreme Court dismissed a petition, argued by top lawyers, because it smacked of politics. Earlier, the Andhra Pradesh High Court had also rejected this petition packed with political content. The Supreme Court said in its judgment in the case, Y S Vijaya vs Union of India: "The high court can and indeed ought to refuse exercise of jurisdiction in all such cases where it finds that the petitioner has not come to the court with clean hands or that the proceedings have been launched to achieve a political end or settle political scores. Suppression of material facts and political mileage [that a petitioner may attempt] to draw out of proceedings of the court are relevant factors that can and ought to weigh with the court while determining whether it should or should not exercise its jurisdiction. This is so especially when the writ jurisdiction is sought to be invoked by a person who is in active politics and who is ostensibly moved by political compulsions or vendetta rather than a genuine concern for maintaining purity in public life." Two years ago, there was an effort to "streamline" the PIL movement. The Supreme Court, in the case, State of Uttarakhand vs Balwant Singh, laid down eight rules to discourage those moved with oblique motives and to verify their credentials. It had asked the registry of each high court to send a report about the steps it has taken in following the above rules. But there has been little compliance of these orders. In the last few years, issues that should have been debated in Parliament have moved to the Supreme Court. The Hawala scam was the earliest example. The most recent one was the 2G spectrum scam, in which Cabinet ministers and politicians have been scalded by this legal weapon in the hands of its rivals. Former Cabinet ministers A Raja and Suresh Kalmadi received their comeuppance from the courts, not Parliament. A few days ago, Finance Minister P Chidambaram had a providential escape from what appeared to be a legal snare laid by his rival. Last year, former Maharashtra Chief Minister Manohar Joshi was seared by a PIL. He was accused of changing the rules to give land allotted for gardens and schools in Pune for the construction of residential buildings. The developer was none other than his son-in-law. On these grounds, a PIL was moved in the Bombay High Court. It ordered the government to initiate criminal investigation against the chief minister, the minister for urban development and the municipal commissioner. It also ordered the demolition of the structure. Joshi and others appealed to the Supreme Court, but it affirmed the finding of the high court with even more force. "This is a case," said the judgment, "where the personal relationship of the developer with the chief minister was apparently used to obtain permission for construction without following the process of law... It was clearly a case of showing favouritism by going out of the way and circumventing the law...It is nothing short of fraud on one's power and also on the statute." Another PIL involving political corruption was decided in Akhil Bhartiya Upbhokta Congress vs State of MP. Former Chief Minister of Madhya Pradesh Uma Bharti was excoriated for bestowing land for a favoured organisation. The judgment read: "The distribution of largesse by the state and its agencies should always be done in a fair and equitable manner and the element of favouritism or nepotism shall not influence the exercise of discretion." It is such increasing political venality and a dysfunctional Parliament that have led to a situation in which public grievances are straightaway taken to the court. As a result, judges are perceived to be ruling the country, as Chief Justice S H Kapadia hinted last week. Activists might respond that when everything fails, the judges must do their constitutional duty. |
| Sebi to penalise audit firms for erroneous certification |
| Press Trust Of India / New Delhi Aug 29, 2012, 00:50 IST |
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Capital market regulator Sebi is looking to bar audit firms from certifying accounts of listed companies for a certain period if accounts of books, certified by them earlier, are found to have been manipulated.
The decision by the Securities and Exchange Board of India (Sebi) follows a recommendation to this effect by its primary market advisory committee (PMAC) to improve disclosure norms for companies coming out with public offer of shares.
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The role of audit firms came under the scanner following the country's biggest accounting scam at the erstwhile Satyam Computer over three years ago. Along with the company's then top management team, auditors were also accused for their lack of oversight in certifying its books of accounts.
Earlier this month, Sebi asked all listed companies to submit separate filings with adverse audit observations made against them, in a move aimed at tightening the noose around companies trying to hide issues raised by auditors in their voluminous annual reports.
In a circular issued on August 13, it also asked the bourses to conduct immediate scrutiny of issues highlighted in these documents and seek necessary clarifications from the companies concerned about the observations made by auditors.
If the auditors' observations are found to be serious, Sebi can ask the companies to restate financial accounts and to inform shareholders about it.
All listed companies are required to submit copies of annual reports containing audited financial statements to the stock exchanges.
However, many serious issues about the companies' accounts, including possible cases of fraud, can go unnoticed even if these have been flagged by auditors, because such observations are generally buried deep inside bulky documents like annual reports.
The new guidelines would be applicable to all annual audited financial results submitted by the companies for the period ending on or after December 31, 2012.
Sebi has decided to accept the fresh recommendation regarding its penalty on audit firms, along with various other suggestions made by the PMAC.
Other recommendations include mandating the companies to make full disclosure of related party transactions with the book-running lead managers (BRLMs) of the public issue, "certifying the extent to which profits from these transactions constitute legitimate business profits".
The Committee also recommended that in order to access the primary market through an IPO, a company should have been profitable for at least three out of the preceding five years, with a minimal average pre-tax operating profit of Rs 15 crore during the three most profitable years.
Also, the companies' profitability would be computed on a restated, consolidated basis and the divisional profits would be permitted to be carried forward in cases of situations like de-mergers, as per another recommendation by the PMAC.
All these recommendations have been accepted by Sebi.
The regulator has, however, disagreed with another PMAC suggestion to discontinue compulsory book-building mechanism for the issuers not eligible under profitability track record.
The compulsory book-building mechanism aims to provide flexibility to the issuers setting up green field projects and the newer and smaller issuers, so that rigid eligibility criteria do not hamper their fund raising plans.
The Securities and Exchange Board of India (Sebi) is considering a proposal for setting up a dedicated exchange for corporate bonds and fixed income derivatives, which will cater exclusively to large institutional investors. The exchange is proposed to be set up by ICAP India, a subsidiary of the world's largest inter-dealer broker ICAP Plc, and its application is currently being processed by the market regulator.
"We can confirm we made an application and we are in that process right now. Our plans are still in development, not set in stone," the spokesperson said in an emailed reply. | ||||||||||||||||||||||||||||||||||||||||||||||
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