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3 Legal Developments You Must Understand

What does Parliament have in store for us? Which are the laws that are going to change our lives?

Published: Dec 22, 2009 08:34:28 AM IST
Updated: Dec 22, 2009 03:24:58 PM IST

1 Goods & Services Tax
The government intends to introduce a goods and services tax (GST) regime in India by April 2010. The proposed GST will integrate most indirect taxes on goods and services at state and central levels. GST will bring all these taxes under one head that will be levied at the point of sale, instead of the point of origin.

To a large extent, this means there will be cost reduction at the point of origin. This is because GST is to be levied on the value added at each stage of sale and purchase or supply with an in-built credit mechanism such that the tax is a pass-through for businesses, and the tax-burden is borne by the ultimate customer.

Image: Abhijeet Kini
Tax compliance is expected to go up as GST will rely on computer-enabled systems. So a unique identification number could generate a centrally captured trail all the way from the manufacturer to the end retailer. Today, if it wishes, a major retailer can opt not to register select purchases in its system and make cash purchases.

For companies, the benefit will be in the form of lower tax rates owing to a larger tax base and better compliance.
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2 Companies Bill 2009
Last year the Companies Bill 2008 was introduced in the Lok Sabha but did not become law. It was re-introduced in Parliament as the Companies Bill 2009 and is likely to become law in 2010.

If it does, it will likely bring about significant changes in the way business is done in India, make it easier to start and close businesses, and protect shareholders. The bill, introduced by Corporate Affairs Minister Salman Khurshid, is centred on stakeholder protection, with provision for class action suits that allow a group of people with a similar grievance to file a joint petition.

It has met with stiff resistance from certain quarters of the legal fraternity who believe the new bill will only create confusion and overlap and conflict with numerous existing laws.
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3 Fast Tracking Justice
Weighed down by the burden of legal reform, Law Minister Veerappa Moily has taken on the biggest bet of his career, yet. In October this year, he unveiled an audacious roadmap for judicial reforms to reduce the average life of litigation from 15 to just three years, a task he wants accomplished by December 2011. The multi-pronged initiative looks promising with provisions for a National Arrears Grid to compile accurate data and appointments for additional high court and lower court judges temporarily to bring down the court congestion.

One of the proposals includes the setting up of a special purpose vehicle involving the likes of TCS, Infosys and Wipro as well as Innova (the satellite communication provider). The SPV will set up e-systems that will enable the justice administration system to move faster. The SPV will also recruit competent hardware and software personnel who will be attached to the high courts. The techies will also take classes on e-systems for personnel with district courts.


(Compiled by: Shloka Nath, Elizabeth Flock, K.P. Narayana Kumar, Udit Misra)

 

(This story appears in the 08 January, 2010 issue of Forbes India. To visit our Archives, click here.)

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