LS passes Companies (Amendment) Bill to decriminalise selected corporate offences
New Delhi: Lok Sabha has passed the Companies (Amendment) Bill, 2020, which decriminalises a number of technical and filing-related corporate offences. It also allows direct listing of Indian companies on foreign stock exchanges and revokes the criminal provisions added to the Companies Act for violations of provisions of corporate social responsibility rules.
The bill, which seeks to decriminalise various penal provisions and introduce a new chapter related to producer organisations in the legislation was passed by the Lower House in its late night sitting.
Speaking on the legislation, Finance Minister Nirmala Sitharaman said decriminalisation of various provisions under the companies law will help small companies by reducing litigation burden on them. She informed that 48 sections of the Companies Act, 2013 will be amended to decriminalise various offences. The Minister asserted that there will, however, be no relaxation for serious offences, including fraud, deceit and those that cause injury to public.
Ms Sitharaman informed that there will also be a new chapter on producer organisation which will be helpful for farmer producer organisations (FPOs) in the country. For promoting ease of doing business, the Minister said that 17 provisions in the Companies Act, 2013, have also been amended which paves way for easy and user friendly fulfillment of statutory compliances.
Lok Sabha has also passed the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020. The bill aims at providing relaxations related to compliance by extending the time limit and waiving penalty in relation to certain specified laws. These laws include the Income Tax Act, 1961 (IT Act), some Finance Acts, the Central Excise Act, 1944, the Customs Act, 1962, and the Prohibition of Benami Property Transactions Act, 1988. Earlier in her reply, Finance Minister Nirmala Sitharaman said the bill will replace the ordinance which was promulgated in March this year. The bill also extends the deadline for filing declaration and due amount under the Vivad Se Vishwas Scheme till 31st December.
The legislation provides these relaxations in view of spread of the coronavirus pandemic in India. The bill proposes amendment in the IT Act to provide that donations made by a person to the PM CARES Fund will be eligible for 100 per cent deduction in the taxable income.
Congress, DMK, TMC, RSP members opposed the bill and said that it allows the government to invoke the clause of force majeure retrospectively, which they said will be misused to defer GST payments to State governments. The opposition also raised the issue of the PMCARES fund and asked the government about the reason to create a separate relief fund other than PMNRF.
Ms Sitharaman in her reply stated that the amendment in the tax related laws is brought about only to provide relief to taxpayers, so that statutory compliances can be met amidst the COVID-19 pandemic. Speaking about the PMCARES fund, the Finance Minister explained its difference from the Prime Minister’s National Relief Fund (PMNRF) by chalking out a comparative analysis. She said, PMCARES is a registered public trust whereas PMNRF has not been registered till date since its inception in 1948.
Ms. Sitharaman informed that PMNRF fund which also has been given tax deduction benefit does not come under the purview of RTI. She informed that both the relief funds are eligible for receiving the benefits under Corporate Social Responsibility (CSR) compliance. Pointing at a glaring deviation, she informed that PMNRF has the president of the Congress party as its member whereas PMCARES ex-officio members include Prime Minister, Defence Minister, Home Minister and Finance Minister of the country. Ms. Sitharaman highlighted that huge sums of amounts have been transferred from PMNRF to Rajiv Gandhi Foundation, which she said raises substantial doubt over the financial business of the relief fund.
Speaking over the bill, Union Minister of State for Finance Anurag Thakur said that the opposition has been making baseless claims about the registered public fund right from its inception in March. He said, the opposition has been busy in scoring political mileage even when the country is reeling under the effects of a pandemic. Mr.Thakur emphatically asserted that the fund received in PMCARES trust is only through voluntary donations and raising doubts over it will be like casting aspersion on over 135 crore Indians. He enumerated a list of donors ranging from Children to elderly who have willfully contributed to the trust.
Taking a sharp jibe at Congress, he said, unlike the Prime Minister’s National Relief Fund initiated in 1948 without any proper registrations and trust deed, the PMCARES fund is a registered public trust. Mr. Thakur added that even the Supreme Court in its recent judgement ruled out transferring of funds from PMCARES to National Disaster Relief Fund citing that all the donations to it are voluntary. He said, PMCARES has been constituted as per law and is functioning in the most transparent manner. The minister said the fund was constituted to help people affected by COVID pandemic. He said, the initial corpus of nearly two lakh rupees was donated in the fund by Prime Minister Narendra Modi.
