Parliament clears finance and appropriation bills

Krishnanand Tripathi
Finance Minister Arun Jaitley in the Rajya Sabha on 11 May, 2016. Referring to court orders, Jaitley told the upper house that the government was told to create levies and funds outside the appropriation bill.

Finance Minister Arun Jaitley in the Rajya Sabha on 11 May, 2016. Referring to court orders, Jaitley told the upper house that the government was told to create levies and funds outside the appropriation bill.

A day after the Lok Sabha cleared Appropriation Bill and Finance Bill, Rajya Sabha also Wednesday cleared them by a voice vote , completing the second phase of this year’s budgetary exercise.

Responding to the debate, finance minister expressed grave concerns over judicial encroachment in budget making and taxation powers of legislatures.

Jaitley said: “Financial powers and budget makings are only powers that you have left. Taxation is the only power left with the states. It would be wholly misconceived for any party to say let us also hand over the taxation power to judiciary.”

Referring to an order of the top court earlier in the day asking the government to create a new fund in addition to national disaster relief fund and state disaster relief fund, finance minister said that we have NDRF and SDRF and the Supreme Court has directed us to create a new fund.

“We’ve passed the appropriation bill. From where do I get this extra money outside the appropriation bill to comply with this direction of the supreme court?” asked the finance minister.

Expressing concerns over the judicial encroachment in the legislature’s budget making powers, finance minister said: “Can’t you see, step by step, brick by brick the edifice of India’s legislature is being destroyed. And outside the appropriation bill, we’re being told to create this levy, create this fund. There can’t be a tax, an expenditure unless it is approved by the Parliament.”

Urging the members not to invite judicial interventions to resolve centre-state issues over taxation, Jaitley said there were political issues. He said: “So, we’ll tell courts to have a judicial review of presiding officers’ rulings, we’ll have budget making going outside the appropriation bill and if there is a taxation dispute between centre and a state, some major party now says let a judge resolve it. So the taxation power also goes.”

He said taxation was a political issue and should be sorted out politically, adding this power cannot be handed over to the courts.

Talking about the government’s attempt to curb the flow of illicit foreign money in the to coutry, finance minister Arun Jaitley today said India getting Mauritius to sign a revised tax treaty after a decade long effort was an attempt to curb black money generation and will help minimise round tripping of funds.

Replying to a debate on the Finance Bill in the Rajya Sabha, Jaitley said India has been trying to renegotiate the treaty with the island nation since 1996.

“Finally in the last one year we had four rounds of discussion. We have been able to renegotiate and as part of the renegotiation, we are phasing out some of those (round tripping) aspects.

“And hopefully the fears which members had that the route can also be partly used for round tripping…, in our effort against black money we have even gone ahead and tried to minimise the dangers of that particular situation,” Jaitley said.

The Minister’s statement was in response to concerns raised by several members about round tripping of funds by Indians wanting to avoid paying domestic taxes.

Under the revised treaty, from April 1, 2017, companies routing funds into India through Mauritius will have to pay short-term capital gains tax at half the rate prevailing during the 24-month transition period. Full rate, currently at 15 per cent, will kick in from April 1, 2019.

“So that there is no immediate impact on the market, we have grandfathered all past and investments which will take place till April 1, 2017,” Jaitley said.