THE
draft Indian Financial Code (IFC) provides for grant of tax incentives to any
financial service provider by a regulator following an explicit directive by the
Central Government.
IFC
has been recommended and drafted by Financial Sector Legislative Reforms
Commission (FSLRC) that submitted its report to Finance Ministry last week.
IFC says: "The Central Government may notify, by an
order in writing, a direction to a Regulator to ensure the provision of any
identified financial service, on such conditions as may be contained in the
order, - (a) by any identified category of financial service providers; or (b)
to any identified consumers or classes of consumers."
It adds: "The directions under this section must be
with a view to ensure effective and affordable access of financial services to
persons who would ordinarily not have such access. The Central Government will
reimburse the cost of granting such access by 30 providing either cash or cash
equivalents, or tax benefits to identified financial service
providers."
IFC
also envisages exempting financial agencies from payment of income tax, wealth
tax and service tax or any other tax with respect to its wealth, income,
services, profit or gains.
Under
IFC, a Financial Agency means – (a) the Corporation; (b) the
Council; (c) the Debt Agency; (d) the Financial Authority;
(e) the Redress Agency; and (f) the Reserve Bank.
IFC
has defined each of these agencies. Financial Authority, for instance, means the
proposed Unified Financial Authority.
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