Key Highlights of the Non-Fiscal Amendments contemplated under the Finance (No. 2) Bill of 2019
The Finance (No. 2) Bill 2019 introduced before the Lok Sabha has proposed Amendments to the following Enactments –
- Reserve Bank of India Act, 1934
- Insurance Act, 1938
- Securities Contracts (Regulation) Act, 1956
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
- General Insurance Business (Nationalisation) Act, 1972
- Banking Companies (Acquisition And Transfer Of Undertakings) Act, 1980
- National Housing Bank Act, 1987
- Prohibition of Benami Property Transactions Act, 1988
- Securities and Exchange Board of India Act, 1992
- Central Road and Infrastructure Fund Act, 2000
- Finance Act, 2002
- Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002
- Prevention of Money-Laundering Act, 2002
- Finance (No.2) Act, 2004
- Payment And Settlement Systems Act, 2007
- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
- Finance Act, 2016
- Finance Act, 2018
The Amendments that will have a direct and pressing impact leading to/altering the existing law has been detailed and discussed in this update.
Amendment to the Payment and Settlement Systems Act, 2007
The Finance Bill proposes to eliminate any direct or indirect charge imposed by banks or system providers for using the electronic modes of payment under the Income-Tax Act, 1961.
Amendment to the Securities Contracts (Regulation) Act, 1956
The Finance Bill proposes to extend the scope of the penalty to furnish any information, documents, books, returns or reports. Earlier information, documents, books, returns or reports had to be submitted solely to a recognised stock exchange, but the Bill proposes that such information, documents, books, returns or reports also be submitted to the Securities and Exchange Board of India.
Amendment to the Prevention of Money Laundering Act, 2002
- The Finance Bill, to enhance due diligence, proposes to add the following responsibilities for reporting authorities (i.e. bank, financial institution, intermediary, etc) –
a) Authentication of Identity Cards of clients
b) Examining the ownership and financial position including sources of funds of the clients
c) Recording purpose behind conducting specified transaction and intended nature of the relationship between the transacting parties.
- The Bill proposes that transactions cannot be carried out by reporting authorities unless the above conditions are fulfilled by clients.
- Reporting authority to increase the future monitoring of the business relationship with clients if they perceive transactions as suspicious or likely to involve proceeds of crime.
- All information obtained by Reporting Authority pertaining to this provision must be retained for a period of five years.
Amendment to the SEBI Act, 1992
- The Finance Bill proposes to include electronic communication as a legal method of communication for calling a listed company for trial in respect of any proceedings initiated by Securities and Exchange Board of India (“SEBI”) regarding failure to redress investors’ grievances.
- The Finance Bill proposes to include the activities of knowingly altering, destroying, mutilating, concealing, falsifying, or making a false entry in any information, record, document (including electronic records), as fraudulent and unfair trade practices. The provision also prescribes a hefty penalty of Rs.1,00,000/- which may extend to Rs.10 crore or three times the amount of profit made out of such act, whichever is higher.
Source: Ministry of Finance