Palkhivala would have been pleased
Nani Palkhivala, the eminent jurist and lawyer, was famous for his annual take on the Union Budget.
The tradition unfortunately stopped in 1994 due to his advancing years.
His constant lament was that he longed for a budget which would make zero changes in the Income -Tax (I-T) Act .
He would have been pleased with the Interim Budget 2024, which met this exacting requirement (even though there are a few taxpayer-friendly amendments that we will discuss separately).
The only notable change in the I-T Act was a reversal of the ill-advised omnibus increase in Tax Collected at Source (TCS) introduced by the Finance Act 2023 on foreign remittances made by Indian residents under the Liberalised Remittance Scheme (LRS).
The Finance Ministry fortunately relented and came out with a circular dated June 28, 2023, making significant concessions in the stiff TCS rules.
The Finance Bill 2024 formalises these concessions with retrospective effect.
However, quite a few interesting aspects can be gleaned from the statement on the Implementation of the Budget
Announcement of 2023-24 (last year’s budget announcements). Let me highlight a few.
The Finance Minister had announced that a Centralised KYC (CKYC) process will become operational wherein the citizens will need to do their KYC in one place and all regulated entities required to do KYC could access and depend on this CKYC.
Similarly, she had announced that the citizen needs to update any changes in identity or address details in a centralised place from where these changes would be automatically populated by all concerned regulated entities. Both these changes are transformative and can ease the day-today lives of Indian citizens substantially.
Unfortunately, the implementation status seems to suggest that it is still caught in a bureaucratic warp, and it will be some time before this becomes a reality.
The government will need to use its famous political will that has been demonstrated on so many occasions in the past to get these transformational changes implemented on the ground within a defined time frame.
The Finance Minister also announced the use of PAN as a Common Business Identifier for business entities to bring ease of doing business.
It would also facilitate a Unified Filing Process to obviate the need for separate submission of the same information to different government agencies.
Besides, an Entity Digilocker will be set up for use by MSMES to ease the process of storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks, and other business entities.
This does seem to have gained some traction in the past year but is still some distance away from implementation.
Once implemented, this will have a considerable influence on the ease of doing business which is a pre-requisite for an economy that wants to grow at doubledigit percentages.
The Finance Minister had also announced a comprehensive integrated IT portal through which investors could reclaim their unclaimed shares and unpaid dividends from the Investor Education & Protection Fund (IEPF) authority with ease.
Progress seems to have been made on this with the search functionality becoming live on the IEPF website a few months ago.
The implementation status report promises that “the rules, processes, and procedure for claiming a refund from IEPF is under review and the integrated portal is under development”.
Given that the search functionality is already operational it is to be hoped that a simplified regime for claiming back the unclaimed shares or dividends through an integrated portal will soon be a reality.
There are many such transformative announcements that when implemented will have a substantial positive impact.
The government would do well to ensure that the groundwork for these reforms is done thoroughly so that they can be implemented once the new dispensation comes to power.