Finance Act 2017 Current Affairs - 2019

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Election Commission of India on Electoral Bonds

In an affidavit filed before the Supreme Court, the Election Commission of India has made the following observations:

  • Electoral bonds, contrary to government claims, wreck transparency in political funding.
  • Electoral bonds coupled with the removal of the cap on foreign funding invites foreign corporate powers to impact Indian politics.
  • Electoral bonds would cause a “serious impact” on transparency in the funding of political parties.

The Election Commission of India further criticises amendments made to various key statutes through the two consecutive Finance Acts of 2016 and 2017.

What were the amendments made?

The Finance Act of 2017 amends various laws, including the Representation of the People Act of 1951, the Income Tax Act and the Companies Act. The Finance Act of 2016 makes changes in the Foreign Contribution (Regulation) Act of 2010.

The amendment to Representation of the People Act allows political parties to skip recording donations received by them through electoral bonds in their contribution reports to the ECI.

The amendments introduced to the Income Tax Act allow anonymous donations. Donors to political parties are not required to provide their names, address or PAN if they have contributed less than Rs. 20,000. The Election Commission notes that many political parties have been reporting a major portion of the donations received as being less than the prescribed limit of Rs. 20,000.

The Finance Act of 2016 allowed donations to be received from foreign companies having a majority stake in Indian companies.

Observations by Election Commission

The Election Commission of India called these measures as a retrograde step and the ECI has no way to ascertain whether the donations were received illegally by the political party from government companies or foreign sources.

The Election commission also expressed concerns that these amendments would pump in black money for political funding through shell companies and allow unchecked foreign funding of political parties in India which could lead to Indian politics being influenced by foreign companies.

Cabinet approves additional posts in NCLAT

The Union Cabinet has approved the creation of six additional posts in the National Company Law Appellate Tribunal (NCLAT). The proposal involves the creation of three additional posts each for judicial members and technical members in the NCLAT. The creation of additional posts will help meet the mandate provided to NCLAT by the Finance Act 2017, the Companies Act 2013 and the Insolvency and Bankruptcy Code 2016.

National Company Law Appellate Tribunal

National Company Law Appellate Tribunal (NCLAT) was established under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal (NCLT). The current Chairperson of NCLAT is Hon’ble Justice Shri S.J. Mukhopadhaya, former Judge of the Supreme Court.

NCLAT is the Appellate Tribunal for hearing appeals against the orders passed by NCLT under the Insolvency and Bankruptcy Code, 2016 (IBC). NCLAT hears appeals against the orders passed by Insolvency and Bankruptcy Board of India.

NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI) – as per the amendment brought to Section 410 of the Companies Act, 2013 by the Finance Act, 2017.