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2013 – The Year That Was!

Published on Mon, Dec 30,2013 | 14:13, Updated at Mon, Dec 30 at 14:13Source : 

By: Ameet Patel, Partner, Sudit K Parekh & Co. 

And yet another year draws to an end. 2013 saw several interesting events happening all over the world. It also saw several important events not happening – especially in India. Here’s how I remember the year that has flown by with a little bit of crystal grazing for the year 2014. In every year there are hits and misses. 2013 was no exception.

2013 can be easily remembered as the year in which the Government of India hardly governed India. Scam after scam and political crisis after crisis has kept governance at bay. A weak government coupled with a suddenly aggressive opposition have seen precious Parliamentary sessions being wasted. Important policies have remained on the back burner. A few things did see the light of the day but they have been mostly driven by electoral reasons rather than actual good governance. The Food Security Bill and the Lok Pal Bill were clearly brought in under pressure and have met with stiff criticism from persons who have seen through the UPA’s motives in bringing these so called socially useful Bills. The Companies Act, 2013 has finally been enacted but then it’s only partially in place. We have the unique situation of two Acts being in force simultaneously in that some sections of the 1956 Act are still in force while some sections of the 2013 Act are in force. Important legislations like the DTC and the GST are hanging fire for ages now.

On the tax front, 2013 has seen some mind blowing decisions by the tax department. Companies like Vodafone, Shell, and Nokia have bore the brunt of the Indian taxmen. Transfer Pricing has turned into a deadly weapon in the hands of the tax department. And all this at a time when GAAR is not even in place yet. One shudders as to what will happen in 2015-16 when GAAR actually comes into force. Even sovereign nations like Mauritius and Cyprus have been brutally punished by the Indian tax authorities by being virtually black labelled. Both these countries are obviously reeling under this onslaught. They are dependent to a great extent on the investments that flow to other countries like India via their jurisdiction. Considering the fact that we badly need foreign investment and a huge portion of the FDI and FII investment into India comes in via these two countries, I find this belligerent attitude of the Indian government towards these two countries quite strange. The renegotiation of the India Mauritius tax treaty is turning out to be as mysterious as an Enid Blyton Famous Five book. Both sides maintain that the other side is not allowing the renegotiation to move forward. The Indian FM has gone on record to say that the Mauritius side is not responding to the Indian government’s initiatives on the renegotiation. On the other hand, the Mauritian spokespersons (and the Mauritian friends that I have spoken to) say that they have done all that they can to offer a reasonable LOB clause in the treaty and that it is the Indian side which is acting tough and unreasonable. Hopefully, 2014 will see an end to this impasse. In 2013, we heard about FPIs. Prior to that, in 2011 and 2012, we had been told about QFIs. The latter just did not kick off because of tax issues. The former i.e. FPIs appears to be in a state of readiness. However, again, tax ambiguities have delayed the new regime. What the SEBI and RBI propose, the CBDT disposes. The investor lobby and the allied banking/custodian lobby tried very hard to get changes to the QFI regime enacted in terms of tax clarity. But they failed. The same thing is happening in FPI regime also. Despite all the public statements and press releases, nothing has yet been formally announced by the CBDT. Till that happens, I am quite sure that foreign investors will not return to India in large numbers – whether in the form of FIIs or QFIs or FPIs.

The present Government has miserably failed in improving the implementation of the tax laws in the country. Tax payers continue to suffer. Refunds continue to be held back by hapless tax officers who dare not issue these refunds for fear of being pulled up for playing havoc with the “revenue target” of their respective range. Service tax refunds continue to play truant. Non granting of credit for TDS claimed in the tax return is now a common phenomenon. The only silver lining on the tax front has been the push given by the Government to the e-governance initiatives. More and more tax filings are now mandatorily to be done electronically. This is certainly a step in the right direction. At the same time, in the initial years of implementation, it is bound to throw up glitches and create problems for the tax payers. I sincerely hope that the new Government will solve these problems once and for all.

The most important event on the political front that has continued to dominate the media and private discussions all over India and abroad was the announcement by the BJP that Mr Narendra Modi would be its Prime Ministerial candidate in the 2014 general elections. The emergence of the AAP and its maverick leader Arvind Kejriwal who has now been sworn in as the new CM of Delhi have been the most welcome highlight of the political scene in India. The AAP has captured the imagination of several people. However, it remains to be seen whether the victory in Delhi can be translated into a similarly successful political front at the national level. If that happens in 2014, we will definitely have a watershed year coming up in India. The general elections will probably be the most bitterly contested elections in the history of India. #Pappu and #Feku will dominate the headlines in the months to come. We will have many more “nonsensical” decisions of the Government or the cabinet being trashed by the Prince Charming of the Congress. We will have many more “Maut ka Saudagar” and “Tucch Maal” and “Shehzaada” type of adjectives being used by various politicians in the days to come. And then there is the lurking fear of a Third Front coming to power. God forbid but if this does happen, then where would we, as a country, be headed? One can imagine the state of law and order or rather the absence thereof in the country. Leaders who have been convicted will come to power. Leaders who ought to have been convicted but have escaped the clutches of law for various reasons will come to power. Leaders who care a tuppence for discipline, law and judiciary will govern us. So, the choice before the voters is a tough one. Every which way, it’s a case of choosing between the devil and the deep sea.

Business has continued to be humdrum in 2013. Small businessmen have been particularly hit. The re-entry of Mr Narayan Murthy into the active management of Infosys and the exit of so many top level directors/officers of the same company have queered the pitch for this IT giant. The closure of Kingfisher airlines and the sale of stake in USL by Vijay Mallya have seen this flamboyant businessman losing a lot of fizz. Inflation continues to scale new heights every day even as some of the politicians who suffer acutely from the foot-in-the-mouth disease make pathetic averments that it is possible to get a full mean even today for as low as Rs. 5, 12 etc. The fact of the matter is that 2013 has seen the prices of essential items go into the stratosphere – perhaps trying to emulate the flight of space shuttle Mangalyam towards the red planet. Onions have brought tears to the eyes of every Indian except the Jains. And the common man continues to see no action of any kind from the rulers to bring down these prices.

The conviction of Lalu Prasad Yadav, Sanjay Dutt and the infamous rapists of the Delhi braveheart have further reinforced the faith that we Indians have in our judiciary. On the other hand, the scepticism with which we read about the slow or non moving progress of certain other high profile cases – like the Radia tapes, the Tarun Tejpal “light banter”, the costly Ashton Martin car pile up, the Assaram Bapu case, the Robert Vadra land grab case, the Adarsh Society scam etc. only confuses us about the efficacy of our judicial system and the willingness of our leaders to heed the law of the land. As judicial activism picks up speed, and as we have more AAP type changes in the political scenario, 2014 is definitely the year to watch out for. We will see many interesting developments. Hopefully, several crooks will go behind bars. Hopefully, several crooks in the making will think 10 times before venturing further into the slimy world of politics or sports or real estate or any other field that provides multiple opportunities for corrupting one’s self and the system around us.

2013 has been a year in which we saw the Mango People i.e. the Aam Aadmi rebelling and questioning the status quo of the past 6 decades. The Anna Hazare led movement helped channelize the anger of the common man against the callous and insensitive political animals. One fervently prays and hopes that in 2014 the Babus, the Netas and the Sahebs will change their stripes. If the common man refuses to buckle under the pressure of the daily grind, there is a strong possibility of an actual revolution taking place in the country. Hopefully, in 2014, more and more spoilt kids of politicians will be put behind bars for taking law into their hands. If a brat thinks he can vandalise a toll booth only because the hapless man at the booth dared to ask him for the toll then 2014 should see strong willed political bosses putting their foot down and showing the brats their rightful place in the worst of jails. The thugs and/or anarchists who move around as religious or spiritual gurus or leaders should also be put in their right places. Let us hope and pray that 2014 sees many such bigots and maniacs exposed.

The year 2013 has been a Dhoom 3 year. There were lots of noises on all fronts. Let us see how 2014 turns out. Whether there will be another Dhoom or only Doom and Gloom – time will tell.



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