Setting A Wrong Precedent

In the past, amendments to the Finance Bill were only related to the clauses contained in it. The exercise was restricted to either amending the provisions in order to make them more liberal or dropping some provisions on the basis of suggestions received in the intervening period of presenting the Bill and moving it for final approval of Parliament. Generally, no new provisions are introduced in the Finance Bill at the discussion stage. The rationale being that if new provisions are introduced in the taxation laws by amendments at the fag end of Parliament, when it is being taken to be passed, there would be no occasion for a public debate on them. These would be adopted in the course of only a few hours by the members present in the House.

 

While moving the amendments to the Finance Bill, 1996, the finance minister introduced some new provisions. These were introduced in Parliament on July 22, 1996 and were related to:

nIncreasing the limit of disallowance of expenditure exceeding Rs 10,000, which is paid in cash, in terms of Section 40A (3). According to the finance minister, the limit of Rs 10,000 was too low and was causing a lot of hardship, particularly to transport contractors, civil contractors and assessees in trade where exigencies of business payment have to be made in cash. Hence the limit was increased from Rs 10,000 to Rs 20,000.

nThe limit under Section 80L for exemption was increased from Rs 13,000 to Rs 15,000 with a reservation that out of this Rs 3,000 would be allowed only for dividends.

nCommercial buildings held as stock-in-trade would not be liable to pay wealth tax.

Technically, there could be no objection to introducing these new taxpayer-friendly provisions in the Finance Bill. However, in the past this has generally been avoided and it would not be a healthy practiceinc"-->