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Business News/ Politics / Policy/  Govt intensifies focus on ease of doing business
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Govt intensifies focus on ease of doing business

One of the major steps outlined in budget was an amendment to Companies Act to enable a firm's registration in one day

Photo: Ramesh Pathania/MintPremium
Photo: Ramesh Pathania/Mint

New Delhi: Budget 2016, presented by finance minister Arun Jaitley on Monday, put governance and ease of doing business at the top of the government’s list of priorities.

The budget is a boost for Prime Minister Narendra Modi’s ambition to take India into the top 50 in the World Bank’s Doing Business rankings in five years. India moved up four spots in the global rankings to 130 in October 2015, an acknowledgement of the government’s efforts to make it easier for entrepreneurs and companies to do business in the country.

The country also jumped 16 places in the World Economic Forum’s global competitiveness rankings, released in September—to 55 out of 140 countries, from 71 out of 144 the previous year.

Among the major steps outlined in the budget were plans to introduce a bill to amend the Companies Act, 2013, in the current session of Parliament. The bill would, among other things, enable companies to complete their registration in just a day’s time.

Earlier this month, a government-appointed panel had suggested nearly 100 amendments to the Companies Act to make it easier to do business in India, including simpler laws for incorporating a company and for raising funds, as also for insider trading and dealings with top executives, according to a Press Trust of India report.

The ministry of corporate affairs had initiated a public consultation process on the suggested changes and had invited comments from all concerned stakeholders till 15 February in this regard.

The ministry had constituted the Companies Law Committee in June 2015 for examining and making recommendations on the issues arising out of implementation of the Companies Act.

The committee, chaired by the corporate affairs secretary, submitted its report on 1 February. The panel also had nominees from the Reserve Bank of India, the Securities and Exchange Board of India, industry bodies, and from the Institute of Cost Accountants of India, Institute of Chartered Accountants of India and Institute of Company Secretaries of India.

The committee held extensive consultations with stakeholders before making its recommendations and received more than 2,000 suggestions during the process.

The stakeholders consulted included all industry chambers, professional institutes, law firms, financial sector entities and other regulators.

The budget allows companies currently fighting cases against the income tax department on retrospective taxes to opt for a one-time settlement.

“Anything which shortens the time to do business is a positive measure. Most measures which promote the economy will help in the ease of doing business. The budget deals with ease of doing business by bringing in IT-enabled measures of governance. They have given tax exemptions for start-ups too," said R.C. Bhargava, chairman of Maruti Suzuki India Ltd.

The government will also introduce a Public Utility (Resolution of Disputes) Bill in 2016-17 to streamline institutional arrangements for resolution of disputes in infrastructure-related construction contracts, public-private partnerships and public utility contracts.

The budget also proposed a new Dispute Resolution Scheme (DRS) to tackle the 300,000-plus tax cases, involving a total amount of 5.5 trillion, pending with appellate authorities.

“There were various steps in the direction of reducing litigations, resolution of disputes and one of the major highlights on ease of doing business is the amendment to Companies Act," said Harshavardhan Neotia, president of lobby group Federation of Indian Chambers of Commerce and Industry (Ficci).

Other notable steps are abolition of 13 cesses with revenue collection below 50 crore, which will save time spent by assessee on compliance.

Interest rate on delayed remittances has been reduced to 15% for customs and excise and rationalised at 24% from three different rates for service tax.

Giving a push to the manufacturing sector, the budget also simplified the tax administration process by reducing the returns to be filed under excise. It also proposed to link prosecution for service tax defaults based on a higher threshold of 2 crore. The provisions of arrest will be invoked only if there is a collection and non-remittance of service tax above 2 crore, thereby recognizing that where a genuine grievance exists, the law will not be harshly applied.

Frivolous cases that involve a duty of less than 5 lakh and have been pending for more than 15 years will be withdrawn by the government.

And, mom-and-pop stores will have the option to stay open all seven days of the week.

“Most of the above steps are pragmatic and will provide some relief to assessees from litigation, simplify compliance and reduce cost of tax administration as promised from time to time by this government," said Abdul Majeed, partner, PricewaterhouseCoopers.

shine.j@livemint.com

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Published: 29 Feb 2016, 02:03 PM IST
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