Finance Bill

Government of India has taken steps in bringing about changes in the nation. Presenting of the Finance bill is one such mundane act. Every time such a bill is placed before the Parliament, two to three days of debate takes place and subsequently people get over the issue altogether.

When the finance bill was introduced this year, it stirred up a controversy regarding the amendments included therein. The said bill was passed in the lower house with majority. The amendments which have been brought by the passing of the finance bill change about 40 laws and will have a very significant effect on the nation. [The Controversy over the Finance Bill and its many Amendments by Bloomberg L.P]


The Members of Parliament have objected to the amendments in the bill on the ground that some of the amendments don’t come within the purview of taxation, which is what a finance bill ideally has to contain. But the objections raised were not taken into account by the lower house and the lower house has passed the original bill without making any modifications in the bill.

The objection of the Members of Parliament of RSP was that the list of amendments was not placed before them. When the bill was presented on February 1st,2017, only 8 to 10 acts were allegedly proposed to be amended; while  the Finance Minister Arun Jaitley has contended that all the 40 amendments were all incidental to the acts.[ The Finance Bill,2017: the far-reaching consequences of a Lok Sabha majority by Sruthi Radhakrishnan]

The major amendments which have led to the controversy are mentioned below:

  • Aadhar Card has been made mandatory for PAN and Income Tax: All the Residents have to provide the Aadhar number or Aadhar enrolment number. Failure to provide the same would invalidate the Permanent Account Number (PAN). This has become an issue as there is already a pending case before the Supreme Court of India on the issue of making Aadhar Card mandatory for all. [Here’s why there is so much hullabaloo over Arun Jaitley’s Finance Bill 2017 by Economic]
  • Tribunals, Appellate Tribunals and other authorities: according to the amendment proposed, certain tribunals’ functions are being taken over by other existing tribunals. The change brought about by the government hampers the very own Directive Principles of State policies wherein the independence of the judiciary has been laid down as one of the main principles of democracy. For instance, the Competition Commission Tribunal has been taken over by National Company Law Appellate Tribunal. This raises a major concern as the authorities may not have the required expertise in dealing with the cases of Anti Competition practice as they deal with matters relating to company disputes and governance. Apart from this, it also increases the case burden on the National Company Law Appellate Tribunal where many cases are pending.

The National Highway Tribunal has been taken over by the Airport Appellate Tribunal which does not have any expertise in dealing with matters related to the Highways. Likewise, many other tribunals have been taken over by other existing tribunals which do not have any expertise in the said field.

According to an amendment, the Central government may make rules with regard to the (i) qualifications (ii) appointments (iii) salaries and allowances (iv) resignation (v) removals (vi) term of office (vii) other conditions of service for the members. The term of office has been limited to 5 years and they are eligible for reappointment. The retirement age has been extended to 70 years for chairpersons, chairman or president. In case of vice president, vice chairpersons, vice chairman the retirement age is 67 years. []

The above rules shall be applicable to chairpersons, tribunals, appellate tribunals, and any other specified tribunals. Now the question arises here as to whether or not it will hamper the independence of the judiciary.

In Madras Bar Association v. Union of India [Transfer case No 150 of 2006, Supreme court of India, September 25th, 2014], the Supreme Court held that the functions of the Tribunals are similar to that of the powers and functions of High Courts. Therefore, matters in relation to the appointment, reappointment should be free from the influence of the executive.

The involvement of the executive in the judiciary will hamper the independent decision given by the judges, and in cases where the government is involved, they will not be able to deliver a fair judgment and there are chances that the judges’ opinion may be prejudiced. There are also chances that the appointment and reappointment of judges may not take place in a fair pattern.

  • Political Contribution by the Companies: According to section 182(3) of the Companies Act 2013, a company can contribute only upto 7.5% of the average of its net profits in the last three financial years. The Companies have to disclose the amount given to the parties in their books of accounts. This ensures transparency in funding the political parties.

As per the amendment in the Finance bill 2017, the limit of 7.5% has been removed; the companies need not disclose the amount given to the political parties. Though the amendment has provided that contribution can be made only through cheque, a bank draft, or an electronic means, the information is hidden from the public as only the banks will know about the transaction which will take place. [What is the controversy about Finance Bill 2017? Why everyone is negative about it? By Shashank Rajak]

Irrespective of this, the companies now have a free will to make as much contribution as possible to the political parties and they can also make sure that the laws which are enacted are for the benefit of the company. If the companies decide to pull out the contribution given by them, then a major part of the amount will be gone. The companies and the political parties’ contributions are for mutual benefit. The amendments in the Finance bill have pretty much taken away the concept of transparency.

The Finance Bill proposes to introduce electoral bonds through which the companies can contribute anonymously which further allow the companies to hide.

  • Amendment in Income Tax Act: The amendment in the Finance Bill 2017 proposes that the income tax officials are allowed to do search and seizure without disclosing the reasons for the same. Apart from this the amendment allows the income tax officers to seize any property of the person which is not a part of the raid; While prior to this amendment the officers could seize the property which had been involved in the raid only with sufficient reasons being provided in order to conduct search and seizure. [Why Arun Jaitley must amend regressive Finance Act, 2017 by Minhaz Merchant]

This will allow the income tax officials to have the ultimate power of decision which may in turn be misused by them. Furthermore, there would neither be any checks on them later since the amendment has allowed the officials to conduct search and seizure without disclosing reasons before any court or tribunal.

The above issues have to be discussed and dealt with by both the houses in detail and propose a standing committee to decide the feasibility of passing such laws. Introduction of these amendments in the Finance bill has silenced the role of Rajya Sabha in these matters as the lower house can accept or reject any amendments given by them and even without the approval of the majority in Rajya Sabha, a Finance Bill can be passed if a majority has been obtained in the lower house.

The nation in today’s world is moving forward and that is possible only if there is a chance of free and fair justice without any prejudiced opinion of the authorities. But the executive involvement in the judicial decisions as to the appointment and reappointment affects the principles of natural justice, thereby hampering justice. Giving ultimate powers to income tax authorities may be a good road ahead in the future but according to the saying “absolute power corrupts absolutely”, there would be chances of officials being unfair and prejudiced in their decision making.



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