Compliance burden down, PAN made common ID for ease of doing business
The Jan Vishwas (Amendment of Provisions) Bill, introduced in the Lok Sabha on December 22, 2022, aims to reduce the compliance burden for both people and businesses
New Delhi Building on the government’s ongoing efforts to reduce compliance burden for corporations, Union finance minister Nirmala Sitharaman on Wednesday announced a series of measures in the Budget – amending 42 central laws, making the PAN (permanent account number) as a common identifier, promoting investor protection, and requesting financial sector regulators to simplify norms in their respective areas.
“For enhancing ease of doing business, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalised. For furthering the trust-based governance, we have introduced the Jan Vishwas Bill to amend 42 central Acts,” she said, adding that the Budget proposed “a series of measures to unleash the potential” of the economy.
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The Jan Vishwas (Amendment of Provisions) Bill, introduced in the Lok Sabha on December 22, 2022, aims to reduce the compliance burden for both people and businesses. It decriminalises and reduces various provisions of these outdated laws. According to a report by PRS Legislative Research, the bill includes acts such as the Indian Post Office Act, 1898, the Environment (Protection) Act, 1986, the Public Liability Insurance Act, 1991, and the Information Technology Act, 2000. After introduction, the bill was referred to a joint committee of Parliament.
The Budget also proposed a common identifier for business entities. “For the business establishments required to have a permanent account number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies. This will bring ease of doing business; and it will be facilitated through a legal mandate,” Sitharaman said in her Budget speech in Parliament.
To make the financial sector nimble for faster service delivery, including credit through innovative use of technology, the Budget proposed sector regulators to bring reforms in their respective areas after thorough consultations with stakeholders in a timebound manner. Later she said many regulators, such as the Reserve Bank of India (RBI), have already undertaken several reforms.
“To meet the needs of Amrit Kaal and to facilitate optimum regulation in the financial sector, public consultation, as necessary and feasible, will be brought to the process of regulation-making and issuing subsidiary directions. To simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For this, they will consider suggestions from public and regulated entities. Time limits to decide the applications under various regulations will also be laid down,” she said.
The Budget also announced the government’s intent to simplify the process for claiming deduction on amortisation of preliminary expenditure before the commencement of business activities. The preliminary expenses eligible to be amortised are expenditure in the preparation of a feasibility report, market survey, legal charges for documentations necessary to carrying out the business, fee to register the company and so on.
“At present for claiming amortisation of certain preliminary expenses, the activity is to be carried out either by the assessee or by a concern approved by the board. In order to ease the process of claiming amortisation of these expenses it is proposed to remove the condition of activity in connection with these expenses to be carried out by a concern approved by the board,” the finance minister said. The format for reporting of such expenses by the assessee shall be prescribed, she added.
The Budget also raised the threshold limits for presumptive taxation schemes. “In order to ease compliance and to promote non-cash transactions, it is proposed to increase the threshold limits for presumptive scheme of taxation for eligible businesses from ₹2 crore to ₹3 crore and for specified professions from ₹50 lakh to ₹75 lakh. The increased limit will apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed 5% of the total gross receipts/turnover,” Sitharaman said.
Saurabh Agarwal, tax partner at EY India, said the measures taken for the ease of doing business, such as the usage of PAN as a common identifier for select government digital systems, the mandate to financial regulators to look into reduction of compliance burdens, will be highly appreciated by the industry at large. Besides, there are several measures in the Budget to help businesses. “Introduction of new provisions in the GST Act which allow sharing of the GST common portal data with other government agencies also shed light on the government’s continued focus on strict compliance monitoring and inter-departmental data sharing,” he added.