Skip to main content

Lok Sabha clears bankruptcy code

Amid a surge in bad loans, the Lok Sabha on Thursday approved a Bill to overhaul century- old laws that regulate insolvency. The proposed Insolvency and Bankruptcy Code aims to slash the time it takes to wind up a company or recover dues from a defaulter. The Bill will become a law once the Rajya Sabha clears it.
The proposed uniform law will streamline the existing insolvency process which depends on 11 separate laws. Minister of State for Finance Jayant Sinha, while answering queries from fellow lawmakers, described the Code as “ transformational” and said it would help India improve its ranking in the World Bank survey on ‘ ease of doing business’.
To a query on whether the new legislation would help in taking the overseas assets of wilful defaulters, Sinha said in this regard first cross- border treaties need to be put in place. “ We have to make crossborder treaties. We have to have an understanding with other nations that we are taking action on this defaulter. When we have a good law like this in which the other nations will be clear that by due process of law we are taking action, then they will also believe us and they will cooperate with us in attaching the assets and properties in their countries,” he said.
“The Insolvency Bill is a landmark legislation which creates a common process for all creditors to interact with a company that has defaulted on its obligation and should go a long way in speeding up the resolution process for stressed assets in the country,” said Varun Gupta, partner, deal advisory, KPMG.
“This legislation is a huge step towards ease of doing business in India and will over a period of time bring business practices in India closer to more developed markets,” he added.
“A comprehensive code for resolution of distress is the need of the hour and it’s adecisive and commendable step by the Lok Sabha. Once enacted into law, it hopefully will have a far reaching impact on ease of doing business in India,” said Ashwin Bishnoi, partner at Khaitan & Co.
Among other recommendations, the Bill proposes an insolvency regulator for oversight. It lays down a transition provision during which the central government will exercise all the powers of the regulatortill the time one is set up.“This will enable quick starting of the process on the ground, without waiting for the proposed institutional structure to develop,” the report states. The Bill recommends the existing Debt Recovery Tribunals to be the adjudicating authority for individuals and unlimited liability partnership firms. The National Company Law Tribunal would be the adjudicating authority for companies and limited liability entities. It also proposes setting up of information utilities, to collect and collate financial information from listed companies and their creditors.
“There is a significant amount of work still to be done in creating the insolvency practitioners ecosystem, the tribunals and the operating guidelines over the next few months, but boards of companies will have to start re- examining how they deal with all classes of creditors once the Code comes into place,” KPMG’s Gupta said.
The Code was tabled in Parliament in the Winter Session and was immediately sent to a joint committee for investigation. The panel comprises 20 members of Lok Sabha and 10 members of Rajya Sabha and is headed by Rajya Sabha MP Bhupender Yadav.
The panel suggested a number of key changes to the Bill, including provisions for dealing with cross- border insolvency, an increase in workers’ outstanding dues, and providing agreater voice to operational creditors like employees and suppliers of a bankrupt entity.
Business Standard New Delhi, 06 May 2016

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s