The government is looking to get two major legislations, one on black money and the other on Goods and Services Tax (GST), passed in the Budget session after Parliament reconvenes on Monday.
The black money bill seeks to impose harsh penalties on those hiding wealth overseas and the GST bill is aimed at rationalisation of indirect taxes.
The government proposes to make Foreign Income and Assets (Imposition of Tax) Bill, commonly known as black money bill, effective from the assessment year starting April 2016. The bill, introduced in the Lok Sabha last month, proposes that wrongful disclosure and tax evasion be made a punishable offence to attract a jail term of up to10 years. But it also provides a one-time compliance window to disclose foreign assets and accounts to avoid prosecution.
Since it is a Money Bill, the legislation will not require clearance from the Rajya Sabha where the government is in the minority. The other major legislation is the GST bill that promises a modern tax regime to increase investment and broaden tax base to realise double-digit economic growth.
Finance Minister Arun Jaitley has already convinced investors in the US that the Parliament will pass the bill in the coming three weeks. This will allow states to tax services and the Centre to tax goods at the retail level. The bill should see the light of the day as the Centre and the states have reached a near consensus following Jaitley’s assurance to states on compensation for revenue losses.
The Centre has agreed to zero-rate petroleum for three years under GST and to compensate the states for any revenue loss on account of subsuming entry taxes.
This will mean that though petroleum will be included in GST, it will be taxed at zero per cent, allowing states to tax it for three years. After three years, petroleum goods will be taxed through GST.