In a major move by the Finance Ministry, Nirmala Sitharaman on 19 January, 2020 announced that the ministry is sought to decriminalise Income Tax Act, 1961 and the Prevention of Money Laundering Act, 2002
The minister said in her address on the 'roadmap to a $5 trillion economy at the Nani Palkhivala centenary celebrations in Chennai on Sunday that decriminalising corporate laws, settling tax disputes and rapid privatisation of state-run firms were among the steps that the government was taking to achieve the goal.
The government has looked at the statutory changes that need to be brought about in the Companies Act, 2013 to decriminalise several procedural lapses and those that do not affect public interest as part of efforts to reduce the rigors of compliance and to improve ease of doing business. The plan is to amend around 46 penal provisions to either remove criminality or to limit the punishment to a fine, or to allow rectification of defaults through alternative methods, which would help to de-clog the criminal justice system in the country.
India has been ranked 63rd among 190 nations surveyed by the World Bank in its Ease of Doing Business Index. The country has moved up by 14 positions as of 2019.
I have gone through this (Companies Act) with a comb. We are working to decriminalise companies and ensure that no other Acts including Income Tax Act and PMLA, have such provisions," Sitharaman said in Chennai. The ministers assurance of rationalising penalty provisions in Income Tax Act comes just over a week before she presents the union budget for FY21 in Parliament.
Sitharamans announcement is in consonance with the Prime Ministers address on the 73rd Independence Day celebration, where he said that wealth creation was a great national service and that they should not be seen with suspicion.
