Business Standard

Palkhivala would have been pleased

- HARSH ROONGTA The writer heads Fee-only Investment Advisors LLP, a Sebi-registered investment advisor

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.

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