Wednesday, March 29, 2023

Union Budget 2023-24: Government reduces more than 39,000 compliances, decriminalises 3,400 legal provisions

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Union Finance Minister Nirmala Sitharaman on Wednesday presented the first Budget of Amril Kaal, enhancing the ease of doing business in India by reducing more than 39,000 compliances and decriminalising more than 3,400 legal provisions.

Presenting the Union Budget 2023-24, the Union Minister proposed to decriminalise Section 276A of the Income Tax Act, which had a provision for prosecution with rigorous imprisonment up to two years. 

The provision said a liquidator, who failed to give notice in accordance with subsection (1) of Section 178, or failed to set aside the amount as required by sub- section (3) of the said Section or parts with any of the assets of the company or the properties in contravention of the provisions of the Section, was liable for prosecution for non-compliance with Section 178. 

The Section further imposed personal liability on such liquidators for the same non-compliance.

Sitharaman took in view the fact that with the operationalisation of the Insolvency and Bankruptcy Code, 2016 (IBC), waterfall mechanism for payment of dues were now in place for companies under liquidation. 

She noted that sub-section (6) of Section 178 (the parent section) provided that this Section shall not have effect when provisions of IBC were contrary. Moreover, the liquidator was now working under the oversight of this specific law.

The Minister said decriminalising minor offences would prove to be a step towards improving the ease of business. The provisions of the Income Tax Act have been examined.

She said the government has proposed to amend Section 276A by providing a sunset clause on the Section with effect from March 31 this year. Hence, it was proposed that no fresh prosecution shall be launched on or after April 1, 2023. The earlier prosecutions, however, would continue, she added.

The amendment would take effect from April 1, 2023. For business establishments required to have a Permanent Account Number (PAN), the PAN would be used as a common identifier for all digital systems of specified government agencies. This would bring ease of doing business and would be facilitated through a legal mandate, said the Finance Minister.

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