APRIL 01, 2020

By Vijay Kumar

for the words and figures "the 1st day of April 2020, the words, figures and letters "the 1st day of July 2020" shall be substituted.

These words in a notification pertaining to the Indian Stamps Act, were interpreted to mean that the Financial Year has been extended to 30th June 2020. Once the modern day oracles (aka tax experts) interpret something, they can't wait until it's viral or the virus takes over, whichever is earlier. Messages started doing the rounds that the Financial Year has been extended with such fervour that the government had to issue a clarification that nothing of the sort has happened.

It is now confirmed - the Financial Year 2019-20 has ended and we have entered the Financial Year 2020-21. The PIB in a Press Release on 30th March 2020 stated -

There is a fake new circulating in some section of media that the Financial Year has been extended. A notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted.  There is no extension of the Financial Year.

The Finance ministry said that a notification has been issued by the Department of Revenue, Ministry of Finance on 30th March, 2020 which relates to certain amendments to the Indian Stamp Act. It pertains to putting in place an efficient mechanism for collection of Stamp Duty on Security Market Instruments transactions through Stock Exchanges or Clearing Corporation authorized by Stock Exchanges Depositories. This change was earlier notified to be implemented from 1st April, 2020. However, due to the prevailing situation, it has been decided that the date of implementation will now be postponed to 1st July 2020.

So one issue has attained finality; let's continue with our viruses and other woes.

Take advantage of the Corona Virus - let's kill the GST Viruses:

This appears to be a godsent opportunity. Now that we are locked down, let's clean up the mess we have accumulated in GST. No blaming, no complaining, let us all seriously work in developing a clean, clear, simple, efficient, effective GST system. Let's put some good brains tested corona free in a lock-down and after fifteen days, they should come out with a new GST system which aims at a simple and workable tax system.

We should start with the assumptions that:

1. All taxpayers are not cheats.

2. Taxpaying is not the only activity of the taxpayers.

3. Tax Department is not the only agency harassing the taxpayers.

4. Complicating the laws and procedures will not bring in more revenue.

5. Technology should assist the taxpayer and the government instead of making life a nightmare.

6. Taxpayers deserve respect and tax collectors are servants of the State.

7. Tax collectors should assist the taxpayers in compliance, not book cases for the impossible.

8. If the system does not work, it is the fault of the government and not the taxpayers.

9. Taxpayers cannot be punished for the blunders of the government.

We can certainly do it. We are capable of running a huge railway system, sending a space probe (Mangalyaan) to orbit Mars, holding elections for about 90 crores voters, perhaps even facing the corona virus. Can't we run a simple tax system?

Let us device a system on the broad lines that:

1. The Law is very simple and brief

2. The moment a problem arises, there should be a clarification, preferably in favour of the taxpayer.

3. There should be only one registration for one taxpayer for business anywhere in India.

4. There should be only one tax and one tax authority.

5. All that a taxpayer has to do should be to upload all invoices (input and output), pay the tax at the end of the month and fill in a few fields in an automatically generated return.

6. There should be only one rate of tax (yes, one rate for Hawaii chappals and air-conditioners) and preferably a low rate of 5%.

7. There should be an apex dispute resolution body at the National level consisting of a High Court Judge, CBIC Chairman, an advocate and three members from the trade. Their decisions shall be binding on the government.

Please read the following excerpts (slightly edited) from a scholarly article.

- As policymakers struggle to combat the problem, they find themselves in uncharted territory. Much has been written about the practices and policies used in other countries.

- Some aspects of this crisis - starting with its timing - can undoubtedly be attributed to plain and simple "bad luck" that were clearly not under the full control of policymakers. Other aspects, however, are emblematic of the profound obstacles that leaders faced in recognizing the magnitude of the threat, organizing a systematic response to it, and learning from early implementation successes - and, most importantly, failures.

- What this suggests is a systematic failure to absorb and act upon existing information rapidly and effectively rather than a complete lack of knowledge of what ought to be done.

- Here are explanations for that failure - which relate to the difficulties of making decisions in real time, when a crisis is unfolding - and ways to overcome them.

- In its early stages, the crisis looked nothing like a crisis. The most effective time to take strong action is extremely early, when the threat appears to be small - or even before there are any cases.

- The systematic inability to listen to experts highlights the trouble that leaders - and people in general - have figuring out how to act in dire, highly complex situations where there's no easy solution. The desire to act causes leaders to rely on their gut feeling or the opinions of their inner circle. But in a time of uncertainty, it is essential to resist that temptation, and instead take the time to discover, organize, and absorb the partial knowledge that is dispersed across different pockets of expertise.

- Avoid partial solutions. A second lesson that can be drawn from experience is the importance of systematic approaches and the perils of partial solutions.

- An effective response needs to be orchestrated as a coherent system of actions taken simultaneously.

- Learning is critical. Finding the right implementation approach requires the ability to quickly learn from both successes and failures and the willingness to change actions accordingly.

- The difficulty in diffusing newly acquired knowledge is a well-known phenomenon in both private and the public-sector organizations. But, accelerating the diffusion of knowledge that is emerging from different policy choices should be considered a top priority at a time when "every country is reinventing the wheel,".

- It is especially important to understand what does not work. While successes easily surface thanks to leaders eager to publicize progress, problems often are hidden due to fear of retribution, or, when they do emerge, they are interpreted as individual - rather than systemic - failures.

- Collecting and disseminating data is important.

- The need for immediate action implies that an effective response will require a decision-making approach that is far from business as usual. If policymakers want to win the war, it is essential to adopt one that is systemic, prioritizes learning, and is able to quickly scale successful experiments and identify and shut down the ineffective ones. Yes, this a tall order - especially in the midst of such an enormous crisis. But given the stakes, it has to be done.

Well, that was from a study by the Harvard Business Review about Corona Virus - equally applicable to GST.

Corona Virus - Lenient Sentence by CBI Court for GST Officers:

Two CGST officers were arrested by the CBI on 25.03.2019 accepting a bribe of one lakh rupees from a taxpayer. On 21.3.2020, the CBI Court in Pune convicted both the officers. The advocate for one of the accused urged that - nowadays entire Nation is facing problem of COVID-19. We are under threat of life and also our family is facing same problem. He further submitted that even Government has taken move to release under-trial prisoners and avoid crowd from prison. He requested to take lenient view while awarding sentence.

The Judge observed, "Now a days entire Nation is facing problem of COVID-19. As the accused persons having small children and nobody is there to look after them, in my view, though offence is serious, it is desirable to take lenient view while awarding sentence."

They were both sentenced to rigorous imprisonment for three years each and to pay fine of Rs.50,000/- each. He could have sentenced them to seven years each!

Good News

The world economy will go into recession this year with a predicted loss of global income in the trillions of dollars. This will spell serious trouble for developing countries, with the likely exception of China and the possible exception of India.

from a report published by UNCTAD on 30th March 2020

Until next week