I am not very popular with Departmental Officers – Revenue Secretary Bhide
ADDRESSING a joint meeting organised by FAPCCI and CII at Hyderabad yesterday, Mr. PV Bhide, Revenue Secretary said that he was not very popular with the departmental Officers. (good that he knows it)
Mr Bhide and his team were there to explain the Direct Taxes Code.
He said apprehensions, mostly in the media, about winding up the Board and making officers powerless were not correct. He said the code tried to reduce discretionary powers of the officers and aimed at a better dispute settlement mechanism.
He strongly defended retrospective legislation and said that it was not easy to get laws amended retrospectively. First of all you have to convince your minister, then the cabinet and then Parliament and even the industry can represent to parliamentarians. When somebody remarked that the Finance Bill is passed in a few minutes, he said that the provisions are discussed at length in cabinet and committee meetings and perhaps due to political compulsions, other issues find more interest in parliament.
(Though Mr. Bhide finds it very difficult to get through the process of retrospective legislation, the fact is that retrospective legislation is smuggled through parliament only through the Finance Bills, maybe with the confidence that nobody will recognise them. Sometimes the government has the audacity to tell Parliament that the retrospective legislation is to nullify a Supreme Court order!.
We have come across a situation recently – A Secretary to the Government of India wanted to know how to retrospectively amend an Act. We told him – simply draft the amendment and take the Bill to Parliament – the Finance Ministry does it every time – you can take help from the Revenue Secretary. “But he has a Finance Bill every year, while it was forty years ago that my ministry went to parliament with a Bill. If I introduce something now, there will be sensation!”, said the frustrated Secretary who was scared to even discuss it with his minister. Just see how easy the Revenue Secretary's job is – in getting retrospective legislation through parliament. - DDT )
The Revenue Secretary said that the Code offers the best possible tax rates anywhere in the world.
Minimum Alternate Tax (MAT) - asset based tax:
The RS said that if 50% of the companies don't show profits – there is something wrong. You don't invest your money to get losses. If you are not able to show return on the assets, wind up or merge. Of course he said that they would consider issues like long gestation periods. A FAPCCI Member had earlier mentioned about the case where an assessee had to borrow money to pay Income tax and the Supreme Court held that interest on money borrowed to pay income tax is not deductible.
Code is Revenue neutral and he would be happy to get what he has been getting. But wherever he has lost, that had to be compensated and MAT is one such measure.
On charitable trusts, he said, if after doing all the charity, if there is some profit left, they should pay some tax on that.
He added that Foreign investment comes because it is profitable to do business in India in spite of the taxes.
We are not throwing away all the DTAA – Government of India has a great reputation of keeping its promises. We are only recognising the supremacy of parliament.
Income Tax department not to do Agency Functions:
The Revenue Secretary said that he wants the department to be just a tax collecting department and not to be deciding what a charitable trust is and what incentives are to be given. If incentives are to be given, that has to be done by the Ministries concerned from their budgetary allocations. Immediately he added that the Code does not propose to withdraw any concessions to the SEZs, which is a policy of the Commerce Ministry.
Mr. Bhide tried hard to convince his audience that he and the Code were right, but he was not prepared to concede anything.