NewZNew (Chandigarh) : Confederation of Indian Industry (CII) Chandigarh Council in association with KPMG in India organized a Session on Family Business : Succession Planning & Black Money Act at its Northern Region Headquarter today.
Mr Raman Saluja, Co – Chairman, Special Task Force on Family Business, CII Northern Region and Managing Director Oriental Engineering Works Pvt Ltd mentioned that “Family Business contributes 60-70 percent of GDP of most developed and developing countries and India is no exception. 13% move into the 3rd generation and 4% beyond, in most of the countries. The close-knit structure of families, which fosters teamwork combined with respect to family values and family elders, has been the key to success of many family businesses. Those surviving are because of ‘Family’ and not ‘Business’, however, one third of business families disintegrate because of generational conflict. Families in business need a shared vision, a collective purpose, and a spirit of collaboration and cooperation where keeping the Family together, and preserving the continuity of the Business, takes precedence over individual benefit. Most of the Business families face unique management challenges because of the differences in the attitude & aspirations of family members. As new generations join the family business, it is an enormous challenge to keep the family & business together. Some sacrifice the business to keep the families together, while others sacrifice the family to keep the business.
To help & support Indian families in business to be successful, motivate to maintain the sustainability of the business, CII had partnered with FBN International to constitute the CII FBN India Chapter in 2006. FBN International is the world’s leading network of business owing families, promoting the success and sustainability of Family business by Families, for Families. The vision of CII FBN India Chapter is “Keeping the Indian Business & Families together”, added Mr Saluja. He mentioned that the Code of conduct for CII FBN includes trust and openness, confidentiality, respect & professionalism and non-solicitation.
Making a detailed presentation at the session, Mr Girish Vanvari, Head of Tax, KPMG in India mentioned, “Family businesses are the backbone of the Indian entrepreneurial ownership style and functioning structure. Family businesses are also majority contributors to the country’s GDP. A carefully drafted growth and succession plan is inevitable for any family business to sustain in the longer term and reach that next level. A timely and structured approach towards succession planning would not only help achieve and sustain the Promoter’s ambitions beyond him but also support the development of the Country at large.”
Speaking on the Black Money Act, he mentioned that “The Government has been grappling with the undesirable consequences that black money has on the economic development of the country. The accomplishment in obtaining information from Swiss authorities on undisclosed accounts of Indians in Swiss banks has spring-boarded into the Finance Ministry introducing a Bill to deal solely with offshore black money. This led to the ‘The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015’ which became the Black Money Act (“the Act”). The Act, introduced with the object of tackling the menace of undisclosed overseas income/assets act as a strong deterrent to curb the practice of stashing black money abroad by Indians. The Act became effective from 1 July 2015 and applies to persons who are residents of India (other than not-ordinarily residents). It contains stringent provisions in the form of levy of 30% tax and thrice the penalty, along with initiation of prosecution proceedings which can lead to punishment for a time frame ranging from 3-10 years”. “Considering the stringent nature of the provisions, the Act offers a one-time compliance window for a limited period as an opportunity for resident taxpayers to come clean and voluntarily disclose overseas undisclosed assets acquired out of income chargeable to tax in India, relating to tax year prior to 2015-16. Under this facility, once a taxpayer pays tax at 30% on the value of undisclosed foreign assets and equal amount of penalty, the taxpayer is immune from any other consequence under the Act. The passage of the Black Money Act lead to numerous queries from taxpayers and advisors alike who were grappling with the confusion caused by the broad reach of the legislation. In an attempt to provide clarifications to these queries, the Indian Revenue issued a clarification circular on certain issues, while some are still open to debate”, he added.
Mr Amarbir Singh, Chairman, CII Chandigarh Council & Managing Director, Indian Polymer Industries said, “There is no institution more enduring or universal than a family business. Before the multinational corporation, there was family business. Before the Industrial Revolution, there was family business. Before the enlightenment of Greece and the empire of Rome, there was family business. World over, many enterprises that have grown into global giants in the course of time had started as family businesses. In the Indian context, it is significant to note that family businesses have effectively sustained and grown their operations and transformed themselves to keep pace with the changing times. Going forward, the role of the ‘family’ should encompass those of an entrepreneur, outlining the vision and providing motivation but, most importantly, being a mentor”.
The session was attended by over 80 participants representing the family owned businesses in the Chandigarh Region.
