Ministry of Finance

Economic Survey calls for simplification of regulations and process reforms

Attempt to reduce the problems often results in having ever more complex regulations leading to even more non-transparent discretions

Solution is to Simplify Regulations and invest in greater Supervision Even if it implies greater discretion

Discretion needs to be balanced with transparency, Systems of  Ex-Ante Accountability and Ex-Post Resolution Mechanisms

Dated: 29 JAN 2021

The Economic Survey has called for simplification of regulatory processes in the light of uncertainties in the real world scenarios. The Economic Survey 2020-21 was presented in the Parliament today by the Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman.

The Survey states that administrative processes in India are often loaded with significant amount of procedural delays and other regulatory complexities in decision making process making them inefficient and cumbersome for all stake holders. It has highlighted this problem and recommended ways and means to resolve this administrative challenge. 

The Economic Survey observes that in order to solve the problems, authorities often make attempts to reduce discretion by having ever more complex regulations, which is counterproductive and results in even more non-transparent discretion. 

According to the Economic Survey, international comparisons show that the problems of India’s administrative processes derive less from lack of compliance to process or regulatory standards, but from over-regulation.

The Survey observes that it is not possible to have regulations that can account for all the uncertainties in the world and all possible outcomes. The evidence shows that India over-regulates the economy. This results in regulations being ineffective even with relatively good compliance with process.

Using the framework of “incomplete contracts”, the Economic survey argues that the problem of overregulation and opacity in Indian administrative processes flows from the emphasis on having complete regulations that account for every possible outcome. This is due to the inadequate appreciation of the difference between ‘Regulation’ and ‘Supervision’, on the one hand, and the inevitability of incomplete regulations, on the other hand. This is illustrated by a study of the time and procedures needed to voluntarily close a company in India. Even when there is no dispute/ litigation and all paperwork is complete, it takes 1570 days to be stuck off from the records.

Citing academic theories, Economic survey says that real-world regulation would inevitably be incomplete because of the combination of:

1. bounded rationality due to “unknown unknowns”,
2. complexity involved in anticipating and framing “complete” contracts that must specify all obligations in full across all possible contingencies,
3. the difficulty that these two aspects pose for a third party to verify decisions unambiguously.

While real-world regulation is inherently incomplete, increasing the complexity of regulatory provisions reduces verifiability and fosters opaque discretion in the hands of the supervisor. Thus, over-regulation, not simpler regulation, leads to excessive discretion ex post.

The solution, the Economic Survey says, is to avoid substituting supervision with more complex regulation. The optimal solution is to have simple regulations combined with transparent decision-making process. Having provided the government decision maker with discretion, it is important then to balance it with three things:

1. improved transparency,
2. stronger systems of ex-ante accountability (such as bank boards) and
3. ex-post resolution mechanisms.

The Economic Survey notes that where ever such regulatory processes have been simplified, Ease of Doing Business has improved significantly. For example, the new Government e-Marketplace (GeM portal) has increased the transparency in pricing in government procurement. This has not only reduced the cost of procurement but has also made it easier for the honest government official to make decisions.

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RM/DJN
(Release ID: 1693188)

 

Ministry of Finance

Final stage of Union Budget 2021-22 commences with Halwa Ceremony

Finance Minister launches “Union Budget Mobile App” to provide easy and quick access to Union Budget information to all stakeholders

Dated: 23 JAN 2021

The Halwa ceremony, marking the final stage of the Budget making process for Union Budget 2021-22, was held in North Block here today afternoon in the presence of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. A customary Halwa ceremony is performed every year before the “lock-in” process of Budget preparation begins.

 In an unprecedented initiative, Union Budget 2021-22 will be delivered in paperless form for the first time. The Union Budget 2021-22 is to be presented on 1^st February, 2021.

On the occasion, Finance Minister Smt. Nirmala Sitharaman also launched the “Union Budget Mobile App” for hassle-free access of Budget documents by Members of Parliament (MPs) and the general public using the simplest form of digital convenience. The mobile App facilitates complete access to 14 Union Budget documents, including the Annual Financial Statement (commonly known as Budget), Demand for Grants (DG), Finance Bill etc. as prescribed by the Constitution.

The App has a user-friendly interface with embedded features of downloading, printing, search, zoom in and out, bidirectional scrolling, table of contents and external links, etc. It is bilingual (English & Hindi) and will be available on both Android and iOS platforms. The App can also be downloaded from the Union Budget Web Portal (www.indiabudget.gov.in). The App has been developed by the National Informatics Centre (NIC) under the guidance of the Department of Economic Affairs (DEA).

The Budget documents will be available on the Mobile App after the completion of the Budget Speech by the Finance Minister in Parliament on 1^st February, 2021.

At the Halwa Ceremony, the Union Finance Minister was accompanied by Union Minister of State for Finance & Corporate Affairs Shri Anurag Singh Thakur; Dr A.B. Pandey, Finance Secretary & Secretary (Revenue); Shri T.V. Somanathan, Secretary, Expenditure; Shri Tarun Bajaj, Secretary, Economic Affairs; Shri Tuhin Kanta Pandey, Secretary, DIPAM; Shri Debashish Panda, Secretary, Financial Services; Dr K.V. Subramanian, Chief Economic Advisor; Shri Rajat Kumar Mishra, Additional Secretary (Budget) and other officials of the Ministry. 

Shri P.C. Mody, Chairman, CBDT, Shri M. Ajit Kumar, Chairman, CBIC, besides others officers and staff of the Ministry of Finance, involved in the Budget preparation and compilation process, were also present on the occasion.

Later, the Finance Minister reviewed the status of the compilation of the Union Budget 2021-22 and extended her best wishes to the officials concerned.

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RM/KMN
(Release ID: 1691577) 

 

Government of India

Department of Revenue Ministry of Finance

Central Board of Direct Taxes

New Delhi, 21st January, 2021

PRESS RELEASE

Income Tax Department conducts searches in Pune

The Income Tax Department carried out search and survey operations on 12.01.2021 in the cases of leading builders located in Borivali-Mira Road-Bhayander Area of Thane.

The search action has resulted in seizure of unaccounted cash of Rs. 10.16 crore. Total unaccounted income of earlier years detected during the search operation is Rs. 520.56 crore including the cash seized. The unaccounted income inter alia includes on-money on sale of land and flats; accommodation entries of non-genuine unsecured loans routed through certain shell/paper companies; unaccounted cash receipts in the nature of capital introduction/cash loan; unaccounted cash expenses etc.

Further, the unrecognized sales revenue of Rs. 514.84 crore for FY 2019-20 has been accepted by the group during the search action. Accordingly, the group has agreed to pay Self Assessment Tax on the same. Lockers found during the course of search operation are yet to be operated. Further investigations are in progress.

(Surabhi Ahluwalia)

Commissioner of Income Tax (Media & Technical Policy)

Official Spokesperson, CBDT

 

Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes

New Delhi, 12th January, 2021

PRESS RELEASE

Income Tax Department conducts searches in Hyderabad

The Income Tax Department carried out a search and seizure action on 07.01.2021 based on investigation in income tax evasion using bogus sub- contractors/shell entities along with enquiries made relating to entities flagged for providing fake Input Tax credit.

The search was carried out on a prominent civil contractor working in Telangana, generating cash through the use of bogus sub-contracts and bogus billers. The search has been conducted on 19 premises across Hyderabad. The search has also covered a network of individuals running the racket of entry operation and generation of huge cash through fake billing.

Several shell entities/firms were used by the searched entry operators for layering of unaccounted money and cash withdrawals against fake bills issued wherein bogus Input Tax Credit (ITC) was passed on. Statements of such entry operators, their dummy partners/employees, the cash handlers of the beneficiaries have also been recorded, clearly validating the entire money trail.

The search has led to seizure of evidences of bogus sub-contracts being given through intermediaries operating shell entities. Evidence of the use of this modus to generate huge unaccounted cash was found along with details of the entire network of the entry operators, intermediaries, cash handlers, beneficiaries and the firms and companies involved. Forensic analysis of digital data including pen drive, retrieved mails has given clinching evidences in this regard.

So far, documents evidencing accommodation entries of more than Rs. 160 crore have already been found and seized. The assessee company has also admitted the same in its statement.

Further investigations are in progress.

(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT

 

Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes

New Delhi, 12th January, 2021

PRESS RELEASE

CBDT launches e-portal for filing complaints regarding tax evasion/Benami

Properties/Foreign Undisclosed Assets

Taking another step towards e-governance and encouraging participation of citizen as stakeholders in curbing tax evasion, the Central Board of Direct Taxes has launched an automated dedicated e-portal on the e-filing website of the Department to
receive and process complaints of tax evasion, foreign undisclosed assets as well as complaints regarding benami properties.

The public can now file a Tax Evasion Petition through a link on the e-filing website of the Department  https://www.incometaxindiaefiling.gov.in/ under the head “File complaint of tax evasion/undisclosed foreign asset/ benami property”. The facility allows for filing of complaints by persons who are existing PAN/Aadhaar holders as well as for persons having no PAN /Aadhaar. After an OTP based validation process (mobile and/or email), the complainant can file complaints in respect of violations of the Income-tax Act, 1961, Black Money (Undisclosed Foreign Assets and Income) Imposition of Tax Act, 1961 and Prevention of Benami Transactions Act (as amended) in three separate forms designed for the purpose.

Upon successful filing of the complaint, the Department will allot a unique number to each complaint and the complainant would be able to view the status of the complaint on the Department’s website. This e-portal is yet another initiative of the Income Tax Department to bring about enhanced ease of interaction with the Department, while strengthening its resolve towards e-governance.

(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT