by Harish Gupta, National Editor, Lokmat Group
special report
Corporate Tax Ordinance
PM, President used extra-Ordinary powers
Cabinet to approve the decision post facto
Harish Gupta
New Delhi, Sep 22
It was a rare occasion in the Independent India's history when the President used his extra-ordinary powers to promulgate the Taxation Laws (Amendment) Ordinance 2019. The Ordinance was issued to bring into effect the slew of corporate tax rate cuts late on Friday night.
If it was a “HOWDY” moment for the Indian and foreign investors, there is some confusion and surprises too. The surprise is as to why the President, Ram Nath Kovind, had to use his extra-ordinary powers to sign the Ordinance hours before the Prime Minister left for the USA on a week-long tour. Secondly, what prevented the PM to hold an emergency Cabinet meeting to get the proposals passed. A Cabinet comprises of PM and one Cabinet Minister and the presence of all 25 Cabinet ministers is not required as per the Supreme Court ruling.
Its clear that the decision was taken in the last hours of the Prime Minister's planned departure on September 21 night to Houston (USA).
This is first time in several decades when the President used his extra-ordinary powers to promulgate the Ordinance without Cabinet approval. There have been occasions in the past when the President used his extra-ordinary power to sign the Finance Bill when the Parliament failed to pass it in Parliament due to ruckus.
But in the instant case, Kovind used the provision in the Government of India (Transaction of Business) Rules that allows for the promulgation of an Ordinance with the understanding that the Union Cabinet would retrospectively give its approval.
Though the Union Cabinet had met on Wednesday in the morning and Finance Minister Nirmala Sitharaman was in town. But it was only after she left for Goa that the Prime Minister decided to give the historic Corporate tax bonanza to boost investments and sentiment in the country and the USA & elsewhere. Surely, it was a last hour decision before the PM was to depart to Houston on September 20 evening. The PM used his extra-ordinary powers to send the file to the President recommending for the promulgation of Ordinance before he departs.
The President too used his extra-ordinary powers to issue the Ordinance which had no Cabinet approval.
The Ordinance amends the Income Tax Act 1961, and the Finance (No. 2) Act 2019 to give any domestic company an option to pay income tax at the rate of 22% subject to condition that it will not avail itself of any exemption or incentive. This was surely an extra-ordinary situation as Cabinet will approve the decision in September end after the PM returns.
Ends
