The House re-assembled after lunch at

thirty-two minutes past one of the clock,




MR. DEPUTY CHAIRMAN: We shall now take up The Taxation Laws (Amendment) Bill, 2006. The hon. Finance Minister to...


SHRI YASHWANT SINHA (JHARKHAND): Sir, before the Finance Minister takes up the Bill, I seek your permission to request the Finance Minister, through you, to make a statement on what is happening in the stock markets, not only today, but what has been happening over the whole of last week, because everyone is concerned. The country is concerned. This kind of situation has never been witnessed in the stock markets. Markets go up and down. Nobody is concerned. I don't expect the Finance Minister, the Prime Minister to worry about that. But this kind of violent fluctuation that is taking place in the market is not good for anyone. It appears as if the Government, the Securities and Exchange Board of India, everyone has lost control over the market and the markets are completely in the grip of manipulators and speculators.

SHRI RAJEEV SHUKLA: China is down by four per cent. London is...(Interruptions)...

SHRI YASHWANT SINHA: He should take the House into confidence. Sir, when the markets had declined even slightly, these people were sitting on this side and they demanded my resignation as Finance Minister. Is the Finance Minister not responsible for this?

SHRI RAJEEV SHUKLA: It is global....(Interruptions)...

SHRI YASHWANT SINHA: What global? Everything is global. (Interruptions)

SHRI RAJEEV SHUKLA: What happened to UTI?

SHRI YASHWANT SINHA: What about UTI? Will he resign? You demanded my resignation. I am demanding his resignation. (Interruptions)

ֳ֯ן : ֯ ך ֮֯ פօ Let us take up the Bill. (Interruptions) During the course of the reply, if the Minister wants, he can do so. (Interruptions)

SHRI C. RAMACHANDRAIAH: Fluctuation is global; corruption is global. For you everything is global! (Interruptions)

SHRI YASHWANT SINHA: It is an extraordinary situation. (Interruptions)

MR. DEPUTY CHAIRMAN: You have said what you wanted to say. It has been brought to the notice of the Finance Minister. If he chooses to clarify, I will give him a chance...(Interruptions)...



SHRI YASHWANT SINHA: Sir, let him make a statement ...(Interruptions)...

ֳ֯ן : ֮֯ פ ...(־֮֬)..֮֯ פ ֵ ? ...(־֮֬).. ֯ ׮֙ և ֮֯ פօ.. ..(־֮֬).. It is for the Government to respond...(Interruptions)...

ִ֤ Ͼֻ : ֳ֯ן ..(־֮֬)....

ֳ֯ן : ֮֯ פ ...(־֮֬).. ֮֯ ...(־֮֬)... ֺ ֮֯ ִֻ ֵ ױ ֯ ָ-ָ ֟ ...(־֮֬)..

ֿ־ӟ ֮ : ָ, ֮ ֮֮ߵ ׾֢ ӡ ֤ ֵ֮ ֯ ...(־֮֬)..

ֳ֯ן : ֮֯ ֯ , ֯ ֯ ך ...(־֮֬).. ֮֯ פ ..(־֮֬)....֋, The matter on the Stock Market has been raised in this House on last Friday ...(Interruptions)... -߮ פ כ֮ The Government is aware of the matter. If the Government choose to make a reply, it is left to them. I cannot say, you make a reply...(Interruptiions)...

ִ׮֟ ֤õ : ָ, -߮ פ כ֮ ..(־֮֬)..

׾ֵ֕ ָ : ָ, -߮ ֮ ...(־֮֬)..

ֳ֯ן : ֋, և- ...(־֮֬).. ֯ ָ ך ...(־֮֬).. ֋, և ״׮Ù ï , ֛ , ֮ ߕ֋ ...(־֮֬)..

SHRI P. CHIDAMBARAM: Sir, I have taken note of what some hon. Members have raised. It would be inappropriate to make off-the-cuff statement. If the hon. Members want a statement, a statement has to be a considered statement. I shall, certainly, keep in mind your demand. And, if I am in a position to make a statement later today, I will make a statement. But, in the meanwhile, I just wish to say that off-the-cuff remarks will have very damaging implications as far as the Capital Market is concerned. This is not the first time when markets have declined.

׾ֵ֮ יָ : ָ ֛ ...(־֮֬)..

ֳ֯ן : ָ ׮֋ ..(־֮֬)..

SHRI P. CHIDAMBARAM: Please listen to me...(Interruptions)...If you are serious, you listen to me.

ֳ֯ן : ֟ ...(־֮֬)..֯ ֮ ™ ? ...(־֮֬)...

SHRI P. CHIDAMBARAM: If the hon. Members are not serious, I am not going to speak.

ֳ֯ן : ֯ Ù ֲ ֟ ֟ ..(־֮֬).. ...(־֮֬).. ֯ ֟ ...(.־֮֬)...

׾ֵ֮ יָ : ֳ֯ן , ֱև ...(־֮֬)...

ֳ֯ן : և .? .(־֮֬).. ֯ ך, ֯ ך ..(־֮֬)..

ֵָ : ָ ..(־֮֬)..

ִ֤ Ͼֻ : ...(־֮֬)...

׾ֵ֮ יָ : ָ .... (־֮֬)..

ֳ֯ן : ֯ ך ..(־֮֬).. ֯ ך ..(־֮֬).. ָָ ? ..(־֮֬).. ָ ֮ ך ..(־֮֬)..ֿ־ӟ ֮ , ׾֢ ӡ ־ֲ օ և ֮֯ ߓ פ ? ..(־֮֬).. ֯ ׮֋ ֮ ֤ ֮ ֟ ֯ ֟ ..(־֮֬)..

׾ֵ֮ יָ : ֮֯ ײֻ ֟ ...(־֮֬)..

ֳ֯ן : ֮ ...(־֮֬).. ..(־֮֬).. ֲֻ֟ ? ָ ֻ֟ ֯ ? ...(־֮֬).. ֯ ך, ֯ ך ..(־֮֬).. יָ , ֯ ך ..(־֮֬).. ׾ֵ ..(־֮֬).. Please don't do this. ֕ , ִ ׾ֵ ֲ և ״׮Ù ׸ױ֮ ֟ ֯ ֮ ...(־֮֬)..

׾ֵ֮ יָ: ֮֮ ֲ ָ ָָ ߅ ...(־֮֬)..

ֳ֯ן : ֤ ....(־֮֬)..I am sorry, you are not listening to him...(Interruptions)...

׾ֵ֮ יָ: ׾֢ ӡ ֟ ..(־֮֬).. ֮֮ ...(־֮֬)..

ֳ֯ן : ֟ ...(־֮֬). և ..(־֮֬).. ..(־֮֬)...Nothing will go on record...(Interruptions)..

֟־Ο ֟ : ָ ֟ ...(־֮֬)..

ֳ֯ן : ֯ ָ ֟ ..(־֮֬)..֯ ׮֋, ֯ ׮֋ ..(־֮֬).. ֈ ...(־֮֬).. ֋, ָݵ , ֯ ֻ֟ ? ...(־֮֬).. (ֿ : 1Rָ)


ֳ֯ן (֟) : Arguments , ֯ ֻ֟ ... (־֮֬) ֯ ... (־֮֬) ߕ ך, ֟ ... (־֮֬)

THE MINISTER OF FINANCE (SHRI P. CHIDAMBARAM): I have said what I had to say. I take very serious note of what hon. Members have said, and I will come back at the appropriate time. I cannot make off- the-cuff remarks and if anyone knows that better, it is my good friend, Shri Yashwant Sinha. He must advise his colleagues not to demand an off-the-cuff statement. But I have taken note of what you said, and I will come back. (Ends)



That the Bill further to amend the Income-tax Act, 1961,

the Customs Act, 1962, the Customs Tariff Act, 1975 and

the Central Excise Act, 1944, as passed by Lok Sabha,

be taken into consideration.


Sir, you will recall that when I made the Budget Speech, I said that I do not want to burden the Finance Bill with a number of amendments to various laws which tend to clutter the Finance Bill. It also diverts attention from the main features of the Finance Bill. So, I said that we will move a separate Taxation Laws (Amendment) Bill. That is how this Bill is being introduced. Broadly, Sir, this amends some provisions of the Income Tax Act, some provisions of the Customs Act, some provisions of the Customs Tariff Act, and some provisions of the Central Excise Act. Many of these are procedural amendments. Many of them are based on experience. By tightening some provisions, we are trying to remove some drafting lacunae. I do not blame anyone for the drafting lacunae, this can happen under any Government. There are some drafting lacunae which we found, and we are trying to rectify those drafting lacunae. The Lok Sabha has accepted this Bill with amendments. As amended by the Lok Sabha this Bill is coming before the House. If any hon. Member has any particular question or difficulty, I will, certainly, respond to that while replying to the debate. But, I think, the amendments are quite self-explanatory, and I would request this hon. House to debate and return the Bill. (ENDS)

The question was proposed.

ָ֕ (ֻ֓ Ϥ) : ֳ֯ן , ֮֮ߵ ׾֢ ӡ ֮ -׌ ֻ ָ ֲ ӡִݬ , ָ , ֕֙ , և ײֻ , ִ ֤ ߚ ߔ ֮-֓և

ֳ֯ן , ֮ () ײֻ ֮֮ߵ ӡ ָ , , Ù , Ù ׸ , և ֣ ß־ ֕֙ ֟ , ױ և ײֻ ֟ , ױ ֤ ׾֮֕ פ ֟ ִ ָ ׾֮֕ ֋ , ִ ֤ ֵ֤ , ™ ֋ ׬ӿ half-hearted ׬ָ ו֮֟ ֮ ֮֟ , ׾ֿ Ù Ӳ׬֟ ֮ ֮֟ , ִ , ָ ֮ ß֮ parallel economy, black money ֻ֟ , black money ׮ֻ֮ ׻֋, measures ׻֋ ֋ , ֱ ֮ () ײֻ, ו ӡ separate bill ֋ , ִ ™ ־֮֬ ֵ

ֳ֯ן , ֮ ֟ , ײֻ ֟ , ִ ׿ֿ ߚ ߔ , back door ִ ֤ ׮ֻ ֋ ִ ײֻ ֲ rounding figures round , 49 50 ֟ , 51 50 ֟ 1S/AKG ָ ֿ:


ָ֕ (֟) : ָ ֋ ֈӛ , ֋ , ֋ ֈӛ ׻֋ ߬ 10 ֵ ֮ פ ֲ ֟ , ִ ֤ ֵ֤ ֲ ֛ ֟, ו ֕ ß֮ ֺ , ָ taxation laws ֮ complicated ִ ָ , ױ ָ ֱ ֌ ֮ ֛ ß־ ãן ֮ ֟ ִ ֤ , ֤ ֤õ , , פ ׬ָ ֋, ïꌙ ֋, ֳֵߟ ֵ ֲ ׮ֻ ֋, ֲ ִ ֤, , ֛-֛ , ָ ֮֮ ꅠ ׻֋ ־ֿ ֟ ָ procedure , ו ָ ָ ׸ߕ ֌ ֮ ֛ , simplify ֋ -- Ϭ֮ ֟ , ֮֯ן׮׬ , פ ֵԻֵ ֋, ׻֋ ״ֻ ֋, , ֻ֟ Դָ֤֮ , ָ , ָ culprit ָ ֛ ֛ ׻֋ ־ã ׬׸ ָ ™ ֮ simplification ־֮֬ , Դָ֤֮ ֤ ״ֻ Ӆ ™ ־֮֬ և ײֻ ֵ, separate bill, ֵ ֵ , ִ ֵ

ן׸ ֋ , ֻ ֻ procedure ָ ֋ ֲ Ù ֵ , ִֵ ֵ ִ֯ פ ֋, ™ ֕֙ , ִ ָ ־֮֬ ׻֋ ִ֟ ײֻ ֮֮ߵ ׾֢ ӡ half-heartedly ֋ ָ Ù simplify ־ֿ ֲ ֣, ײֻ ִ֣Ԯ (ִ֯)




SECRETARY-GENERAL: Sir, I have to report to the House the following message received from the Lok Sabha, signed by the Secretary-General of the Lok Sabha:

"In accordance with the provisions of rule 96 of the Rules of

Procedure and Conduct of Business in Lok Sabha, I am directed

to enclose the Constitution (One Hundred and Fifth Amendment)

Bill, 2006, which has been passed by Lok Sabha at its sitting held

on the 22nd May, 2006, in accordance with the provisions of article

368 of the Constitution of India."

Sir, I lay a copy of the Bill on the Table. (Ends)


SHRI SANTOSH BAGRODIA (RAJASTHAN): Mr. Deputy Chairman, Sir, I rise to support the Taxation Laws (Amendment) Bill, 2006, to amend the Income-Tax Act, 1961, to amend the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944 and the Central Sales Tax Act, 1956. Sir, I first refer, straightaway, to the Statement of Objects and Reasons. In the first paragraph, in the last line, it says, " The object of rationalising and simplifying certain procedures, widening of tax base, and plugging loopholes leading to leakage of revenue." This is, definitely, a good intention. But, is it really true and effective? Is this Act going to really help in rationalisation? Will it help in simplification? Will it help in leakage of revenue? This has to be seen. My colleague, Shri Bhardwajji, has just now mentioned that whenever an officer comes to any office for assessment, or, even if he comes as a friend, he or she is scared of the Assessing Officers. Why? Because, this is the kind of mindset of these Income-Tax, or, Excise Duty, or Customs Officers, the standard practice is to scare the assessee.

(Contd. by 1T/PB)


SHRI SANTOSH BAGRODIA (CONTD.): It is the assessee who is making the payment. If there is an assessee who is avoiding the tax or who is evading the tax -- not avoiding the tax, but evading the tax -- the strongest possible action should be taken. I am for it. But since you are taking the tax from these people, actually, these are your customers. I should say, these are the customers of the Department. So, Sir, through you, I will request the hon. Minister that if he will make it more friendly, you will be able to assess better. There will be less corruption because whoever is doing the assessment must be fair to the assessee also. He must interpret the law, not necessarily, in the interest of the assessee or against the interest of the assessee just to scare him. A number of cases, hundreds and thousands and lakhs of cases can be seen where the assessment has been done at a particular level, say, one lakh rupees, and after appeals at different levels, you will find the assessment comes down to Rs. 5000. Do you think that the concerned Income-Tax Officer or the Sales Tax Officer or the Excise Duty Officer doesn't understand it? He is doing it only to scare the assessee for more corruption. In this kind of situation where this kind of assessment is done, the concerned officers should be made accountable. The action should be taken against such officers who are blatantly increasing the tax liability for no rhyme or reason. I will request the hon. Minister for this action, for this kind of an amendment. I think, either through a Bill or through an administrative order, something should be done on this. The law is meant to be interpreted properly by the officers, and it is to help the assessees.

Sir, my second point relates to the second paragraph of the Statement of Objects and Reasons of the Bill. I am referring here only those lines which are important for my discussion. It is said, "... requiring payment exceeding twenty thousand rupees by way of an account payee cheque." Sir, when charitable institutes are making such payments, I would say that the number of issues is so high or the cost has increased so much that even this Rs. 20,000 seems to be too low. I will request the hon. Minister to increase it to Rs. 50,000.

Sir, the next point is also related to this paragraph. It is said, "it is further proposed to exclude from the previous year 2004-05 any sum received from a charitable entity ..." As a normal practice, we should not do anything which is retrospectively effective. It becomes very difficult for an ordinary citizen to comply with because, something has already happened and you want to make a law which is retrospectively affecting him. If this is necessary in this case, I will support it. But, Sir, such type of thing should be avoided as much as possible.

Sir, on the same paragraph, the next thing is, "... empowering the Tax Recovery Officer to exercise limited powers of the Assessing Officer." This is not clear. Why should a Tax Recovery Officer also have limited powers of the Assessing Officer? The Assessing Officer has already done that job. That is a departmental officer, and then you again want to give powers to the Tax Recovery Officer who is, as it is, under heavy pressure to get the taxes recovered, and for recovery of these taxes, he will go on scaring the assessees further, either lawfully or unlawfully. So, I don't think this kind of power is good in the civil society.

Sir, clause 3 is good. Clause 4 talks about the changes in the Central Sales Tax. When the VAT is already introduced, I really don't know why these changes in the Central Sales Tax are required. ...(Interruptions)...


SHRI SANTOSH BAGRODIA: If it does not subsist, then why do you have it in the Statement of Objects and Reasons? That is what I am trying to say. ...(Interruptions)... If it does not, then, it should not be there.

SHRI PAWAN KUMAR BANSAL: There was an amendment in the Lok Sabha. That was negatived, and, thereafter, as passed by the Lok Sabha, there is no need of that.

SHRI SANTOSH BAGRODIA: All right. I can understand your difficulty because the whole thing has been delayed. It might be required earlier, but not required now. I don't know about it. I just thought I should draw the attention of the hon. Minister towards this.

Now, Sir, I come to the Memorandum regarding the Delegated Legislation. The same thing has been said here also. The Memorandum says, "... the Tax Recovery Officer may also exercise or perform such powers and functions which are conferred on, or assigned to, an Assessing Officer." (Contd. by 1u/HK)


SHRI SANTOSH BAGRODIA (CONTD.): I have already mentioned about it and I would not like to elaborate on it further. Memorandum No. 1 and Memorandum No.2 are okay because they seem to be administrative in nature. Sir, coming to the Bill itself, clause 2 says about the Assessing Officers to rectify mistakes. If the power is limited to rectify mistakes only, I support this. But if it is anything beyond the rectifying mistakes, then that should be stopped. Clause 23C of Section 10 is proposed to be amended to provide for one-time notification of entities covered by sub-clause (o), that is, charitable funds. I fully support it. This would dispense with the renewals which are currently required in every three years and which are cumbersome and definitely delaying. Similarly, the time limit of one year proposed to be provided for grant and rejection of application is good because there is a time limit. This will streamline the procedure of approval and avoid delay. Sir, clause 5 (c) of the Bill, that is, Section 35(i)(ii)(iii) is good. I fully support it. Similarly, Sir, the amendment proposed to provide for one-time approval for entities in clause 5(e) of the Bill is okay and I fully support it. Most of the clauses are good and acceptable. Clause 10(a) regarding retrospective amendment of Section 56 is proposed to exclude sums received from fund or foundation or university or other educational institution, hospital or other medical institution or charitable fund or institution, wholly public or wholly public religious, or charitable trust or institution referred to in clause 23C of Section 10, or charitable trust or institution registered under Section 12 AA. From the purview of income from other sources, this will address difficulties likely to be encountered by persons receiving sums or money from charitable or religious entities. I fully support it. Similarly, Sir, is the clause 12 (a) of the Bill. I fully support it. This is being proposed in order to enable the Government to monitor whether the aggregate annual receipts of such entities are below Rs.1 crore. Clause 14 of the Bill is also good. This will enable rectification of the Assessment Order. So, I fully support it. Many amendments have been made for TDS. I have no objection to them because that is an administrative requirement. Coming to the indirect taxes, clause 20 provides for amending Section 17 of the Customs Act for issue of speaking order within 15 days from the date of assessment. This is very good because there is a time limit, otherwise the orders are not given for a long time and in the process the Department and assessee both suffer. Next I come to clause 22 and clause 35. They seek to introduce a new sub-section 1A under section 28 of the Customs Act and Section 11A of the Central Excise Act respectively to provide for an optional scheme for voluntary payment of duty by assesses in full or in part in cases involving fraud, mis-statement, etc., along with interest and 25 per cent of the duty amount as penalty within 30 days of the receipt of the show-cause notice thereby dispensing with the rigorous of adjudication procedure. I think, that will help in a big way. This is good because this will help in a big way. The process of adjudication will be reduced and a lot of revenue will come very fast.

(Contd. by 1w/KSK)