Centre mulls decriminalization of several provisions in key corporate acts
The Indian government is contemplating the decriminalization of 14 provisions in three significant corporate laws, according to Moneycontrol. These include the Companies Act, 2013; Competition Act, 2002; and Insolvency and Bankruptcy Code (IBC), 2016. "The Companies Act, IBC, and CCI Act under the Ministry of Corporate Affairs are being considered for decriminalisation of some provisions," an official stated. Eight provisions have been identified at the department level while six others have been shortlisted by an inter-ministerial committee for decriminalization.
Announcement expected in upcoming Union Budget
The official announcement regarding the decriminalization of these provisions is anticipated to be made during the forthcoming Union Budget on July 23. The inter-ministerial committee (IMC), responsible for shortlisting six provisions for decriminalization, is chaired by the secretary to the Department for Promotion of Industry and Internal Trade (DPIIT). The IMC includes senior officials from various departments such as finance ministry, NITI Aayog, DPIIT and has been tasked with expediting the identification of provisions that can be decriminalized.
Decriminalization aimed at boosting business environment
The government's initiative to decriminalize these provisions is primarily aimed at enhancing the ease-of-doing-business in India. The objective is to replace many offenses that currently involve imprisonment with a monetary penalty. This move is expected to reduce compliance burdens and eliminate fear of criminal prosecution for minor or technical infractions, thereby improving India's regulatory landscape for businesses.
Decriminalization to be included in Jan Vishwas Bill II
The proposed decriminalization is likely to be incorporated into the upcoming Jan Vishwas Bill II. This bill is expected to decriminalize over 100 provisions in various Acts including the Income-Tax (I-T) Act, Payment and Settlement Systems Act, RBI Act, FEMA Act, and Banking Regulation Act among others. For the first time, provisions under the RBI and I-T Acts are also being considered for decriminalization in this bill.
Decriminalization of provisions in I-T Act under consideration
Under the I-T Act, provisions with compounding of offenses are being considered for decriminalization. This would mean that only a penalty would be imposed for minor offenses. The mechanism of compounding allows tax evaders to avoid prison sentences by paying a penalty to authorities to waive off prosecution charges. This is part of the government's broader initiative to simplify and streamline India's regulatory landscape for businesses.
