Single form for incorporation: Has govt really made starting up businesses simple?

The Ministry of Corporate Affairs would have won the hearts and minds of wannabe entrepreneurs had it ushered in a system of online name selection for the proposed company. Take the case of Yahoo! If you are a new user and want to register, you can tell the system the user ID you want to register with. The system in a matter of seconds tells you if the name is already registered. If it is already registered, your proposal is politely declined and you can offer more alternatives till you and the system zero in on a name that is not already registered. The system itself throws up useful suggestions taking a cue from your proposed name. This is the beauty of the process of digitalisation and iteration where complete records available in a digital form lend itself to easy and quick search. [caption id=“attachment_2180843” align=“alignleft” width=“380”]  ThinkStock[/caption] It shouldn’t be beyond the capabilities of the MCA if such a regime is started that would obviate the need for filling of forms in the first place and the agonising wait that follows. It, in addition, eliminates the human element from the search process. The point is squeezing the content of existing multiple forms like name application, director identification number etc into one, can hardly qualify as simplification of business environment in the country. A couple of years ago, the then minister of corporate affairs preened with pride on reduction of the number of sections in the new Companies Act 2013 vis-à-vis its predecessor, little realising that at the end of the day the law remained as difficult as ever with nebulous concepts like Corporate Social Responsibility (CSR) adding to the compliance cost of corporates. Likewise, the CBDT too preens with pride that the income tax act has fewer than 300 sections whereas the companies act has more than 500, once again little realising that wading through the minefields of the income tax law is a nightmarish experience even for a chartered accountant and legal eagles. In other words, what matters is the substance rather than the form. Let the income tax law run into 1000 sections so long as each section is written in a straightforward language and is consistent with the preceding and succeeding sections and enables quick and easy computation of one’s tax liability without pitting the assessee and the department in an unseemly, costly and prolonged battle. Jaitley has promised to bring in a simpler form of income tax return for the common man after a botched attempt by the overzealous administration to extract all and sundry information from one and all. Jaitley must examine the more moot question first – why on earth the salaried class which has by and large no income other than from salary be called upon to file the income tax return in the first place? The employer is in any case filing periodic details of employees’ salary and tax deducted therefrom, and that should suffice normally. The norm, therefore, should be the salaried class must be exempted from filing returns unless somebody has other incomes that have not been reported to the employer. For example, most of the salaried persons may have savings bank interest in excess of Rs 10,000 that is taxable. This can be asked to be disclosed to the employer who can deduct tax on the combined income of the employee. Of course, this would add to the burdens of the employers but then when they can consider losses from house properties there is no reason why they cannot take on this small additional burden sportingly. This will free up the resources of the tax administration for more productive purposes including gunning after evaders. Incidentally, the introduction of GST would herald the most important qualitative and substantive improvement in the levy and administration of indirect taxes in the country.