Broad Picture On Ease Of Doing Business
Post on 13,September 2019   12:00 PM
By - Miss. Vibha Yadav
views 1636

Ease of doing business is something which try to draw light on the regulation procedures, tax structures, protection of property rights etc and world bank in it's ease of doing business index try to rank countries on the basis of all above indicators.India’s rank in the World Bank’s Ease of Doing Business 2019 survey climbed 23 places to 77 among 190 countries surveyed, making it the only country to rank among the top 10 improvers for the second consecutive year. Though it is a positive result but there are some fundamental problems in economy which are standing in the success way of becoming $ 5 trillion economy by 2024-25.

Challenges: According to experts, the regulatory framework of the country being the greatest challenge in the success of ease of doing business. Certain laws and their enforcement create a problem like the Income-Tax (I-T) Act, the Goods and Services Tax (GST) Act, the Prevention of Money Laundering Act (PMLA), the Prohibition of Benami Property Transactions Act and even the laws governing corporate social responsibility (CSR).Excessive regulation and compliance requirement,Overreach by enforcing agencies in the execution of direct and indirect tax laws, also known as “tax terrorism”. 
Issue related to these laws
  1. Overlapping laws: The Companies Act, 2013 and the Foreign Exchange Management Act (FEMA), 1999, have overlapping provisions.
  2. Disproportionate criminal penalties: The risk of being charged with fraud in the running of a company is at par with the risk of being charged with drug running.
  3. Lack of consistency in policymaking: Except matters related to CSR, all other laws are in the administrative domain of the revenue department in the finance ministry. CSR is part of the Companies Act under the administrative control of the ministry of corporate affairs (MCA).
  4. Subjective interpretation of the law: Tax laws are prone to the subjective interpretation of tax officers which causes undue hardships to taxpayers and leaves scope for corruption.
  5. Legislation losing its way: PMLA was originally conceived as a law that would essentially address global concerns over money laundering offences such as drug trafficking, human trafficking and terror. However, with the consequent, amendments in the PMLA, the act now also focuses on trivial issues pertaining to corporate governance.
  6. GST sought to implement the concept of one nation, one tax. However, numerous rate and law changes and a less-than-efficient technology platform, complex and cumbersome compliance with the GST laws have made GST as one of the biggest areas of concern to the trade.
  7. Retrospective nature of law: The Benami law, aimed at punishing the common practice under which a property is held by proxies for the real owners. However, the retrospective nature of the law causes lots of difficulties to genuine people as administrators are indiscriminately applying these provisions.
Way ahead:Taxation laws should be made simpler and tax administration should be impersonal. Current move of Direct tax code(DTC) is right step in this direction. The focus should be on the reduction of interaction between tax officials and tax payers using automatic tax machinery. Companies Act should be reviewed in order to minimize criminalisation of violations. The GST law should be stabilized.
India's tryst to ease of doing business lies in Napoleon's notion of law i.e. law should be so succinct that it can be carried in the pocket of the coat and it should be so simple that it can be understood by a peasant. We should focus on reflecting this statement in real working of administration and laws.

 


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