New Delhi, March 22, 2017

Parliament passes finance Bill

Finance minister Arun Jaitley on Wednesday defended the government's decision to make Aadhaar mandatory for filing income tax returns and applying for permanent account numbers (PAN), saying it would plug the loopholes of duplicate PANs used by some assessees to hide their identities.

In reply to the Finance Bill, 2017 in the Lok Sabha, Jaitley however remained silent on the Congress demand to extend BJP's promise to waive off farm debts in Uttar Pradesh to the entire country as the banks are flush with funds after demonetisation. He, however ruled out imposing any tax on agriculture income, saying it is a state matter.

Jaitley said 98 per cent adults in the country have Aadhaar cards or have applied for the same and the technology should be used to cub tax evasion.

The government finds it appropriate to use Aadhaar for anti-evasion, he said.

Later the house passed the Bill, which virtually means that Parliament has cleared it since the Rajya Sabha does not have powers to reject a money Bill. The cleared Bill included 40 official amendments, including the one on reducing the cap on cash transactions from Rs 3 lakh to Rs 2 lakh from April 1.

Just before the bill was passed, BJD members staged a walkout over the Aadhaar issue while Congress members walked out as the government gave no commitment to waive farm loans.

"Aadhaar Number has been made mandatory for filing of Income Tax returns to curb tax evasion and frauds," said the finance minister.

He said some assessees are using five PANs each to dodge the system and evade taxes.

Mohammed Salim of CPI (M) wondered as to why Aadhaar number can't be used for all the purposes to even replace PAN.

Bhartruhari Mahtab of Biju Janata Dal said the Supreme Court had said in September last year that Aadhaar is not mandatory and wanted to know whether the government was "forcing" people to have it.

"Yes, we are," Jaitley said, adding, "If the technology, which has a network of 1.08 billion people and all tax-paying households have it, and they give it along with their ITR, then the scope for fraud and tax evasion comes down."

Aadhaar has biometric details, so its chances of misuse become minimal, the finance minister said.

"When the country has so much technology, and when it is being put to use, then why create such a hue and cry about it? It is an anti-evasion measure which will benefit the country. So the government considers it right to implement it," he said.

Jaitley said the UIDAI had been conceptualised by the previous UPA dispensation and the NDA government is putting it to use with 98 per cent adults or more than 108 crore people in India having been issued Aadhaar number.

"We have kept a provision that a person who does not have Aadhaar can say I have applied for Aadhaar. We can't allow people to say I will not make Aadhaar, but through multiple PAN cards will continue to evade taxes," he said.

With regard to taxation of agriculture income, Jaitley said "Centre does not have the power to impose tax on agriculture. It is outside the legislative competence of Parliament... It is a state subject... There is no tax on agriculture and it won't be levied."

During the discussion on the finance bill, Mahtab had raised the issue of imposition of tax on agriculture income.

Jaitley said the government will achieve the tax collection target of a "record" Rs 17 lakh crore as provided in the Revised Estimate. He said tax buoyancy has improved in the last 2 years, countering opposition charges that tax numbers are declining.

He said the government would bring a bill to amend Excise and Customs Act, along with 4 bills on GST in Parliament shortly to enable introduction of the new indirect tax system by July this year.

Defending demonetisation, he said the I-T department has sent SMS, emails to 1.8 million people, out of which 8,71,000 have responded.

Action will be taken against the rest under the I-T Act, Jaitley said.

He said studies have proved that excess cash in system leads to tax evasion, crimes.

Jaitley said the RBI is in the process of counting the amount of demonetised currency that has come back.

[The Business Standard]