Direct Tax Collection in India
Syllabus: GS3/Economy
In Context
- The net Direct Tax collection is 80.61% of the total Budget Estimates of Direct Taxes for F.Y. 2023-24.
What is Tax?
In order to garner income for the government to finance social projects, tax is collected from individuals and corporations via direct tax and indirect tax.
- Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied.
- Income tax, wealth tax, corporation tax, and property tax are some examples of direct tax.
- Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government.
- Goods and Services Tax (GST) is an example of indirect tax.
- Corporation tax forms a large chunk of the government’s tax revenue.
Taxes as the Source of Income of the Government
- Revenue receipts can be of two types — non-tax revenue and tax revenue.
- Tax revenue is the income gained by the government through taxation.
- Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.
- The Union Budget is classified into Revenue Budget and Capital Budget.
- Total tax revenue as a percentage of GDP indicates the share of the country’s output collected by the government through taxes.
Overview of Direct Tax Collection in India
- Widening the tax base has been one of the key action plan areas for the last several years but achievement has fallen short of targets.
- There is a need to enlarge the tax base as well as taxpayer base through both policy as well as enforcement action by bringing into the tax net high net worth assesses and potential tax payers.
- The focus has to be on bringing in new taxpayers, rather than putting a heavier burden on payers who are already in the tax net by targeting sectors that are currently untaxed, especially the informal/unorganised sectors.
Significance of Growth in Direct Tax Collection
- Fiscal Stability: A growing direct tax collection contributes to fiscal stability by reducing reliance on borrowings and ensuring a sustainable revenue stream. This is crucial for maintaining a balanced budget and avoiding fiscal deficits, which can have adverse effects on the overall economy.
- Fund Allocation for Developmental Schemes: The higher-than-expected revenue also means the Centre can direct some proceeds towards developmental schemes without having to worry about breaching the fiscal deficit.
- Signal of Economic Growth: Increasing direct tax collection is often associated with economic growth. As individuals and businesses earn higher incomes and profits, direct tax revenues tend to rise.
- Creditworthiness: Higher direct tax collections can positively impact a country’s creditworthiness in the international financial markets.
- Budgetary Planning: Reliable and growing direct tax revenues provide the government with a more predictable source of income, facilitating better budgetary planning and execution of government programs.
Measures Taken by Government for the Growth of Direct Taxes
- Tax Reforms: The government periodically introduces reforms to simplify the tax structure, reduce compliance burdens, and enhance transparency.
- Digital Initiatives: Initiatives such as the Goods and Services Tax (GST) and the use of online tax filing systems aim to streamline tax administration, reduce manual errors, and improve overall efficiency.
- Taxpayer Education and Awareness: Public awareness campaigns and educational programs have been conducted to inform taxpayers about their rights, obligations, and the benefits of complying with tax regulations.
- International Cooperation: India has actively participated in international initiatives for the exchange of tax-related information. Collaboration with other countries helps in tracking and taxing income generated abroad by Indian residents, reducing the scope for tax evasion.
- Simplification of Tax Laws: Efforts have been made to simplify and rationalize tax laws to make them more comprehensible for taxpayers.
- Clarity in tax laws can contribute to better compliance and reduce disputes between taxpayers and tax authorities.
Way Ahead
- Taxes are vital resources whose maximisation and mobilisation is of importance to governments to finance the development needs of the poor and under-privileged sections of society and important sectors of the economy.
- This is possible through the expansion of the tax base and taxpayer base.
- Tax administration to professionalise the administration and make it taxpayer friendly also needs to be pursued with vigour to improve the administrative efficiency and compliance.
Source: PIB
World Tamil Diaspora Day
Syllabus: GS 2/IR/GS3/Economy
In Context
- Tamils from about 58 countries participated in the two-day World Tamil Diaspora Day celebrations.
About Day
- It is organised by the Government of Tamil Nadu .
- Tamils who excelled in 8 categories namely Tamil literature, Education, Social Development, Women, Business, Science and Technology, Sports and Medicine were honoured by the Tamil Nadu Chief Minister
Indian Diaspora
- Diaspora is a word of Greek origin that means scattering or sowing of seeds.
- It is used to refer to people who leave their native lands to live in other parts of the world for employment, business or any other purpose.
- Indian Diaspora is a generic term used for addressing people who have migrated from the territories that are currently within the borders of the Republic of India.
- Historical Linkages : The Indian example of migration began in large numbers during the British rule as indentured labourers to former colonies like Fiji, Kenya and Malaysia.
- It continued in the post-independence period with Indians from different social strata moving to countries like the United Kingdom, the United States, and Gulf countries.
- Composition : ‘Diaspora’ is commonly understood to include Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCI), of which PIO and OCI card holders were merged under one category — OCI — in 2015.
- Distribution : They are spread more than 140 countries in the world.
- The US, Saudi Arabia, the United Arab Emirates, Malaysia, Myanmar, the UK, Sri Lanka, South Africa and Canada host an Indian diasporic population of at least one million each.
Importance :
- The Indian Diaspora today constitutes an important, and in some respects unique, force in world culture.
- The Government of India recognises the importance of Indian Diaspora as it has brought economic, financial, and global benefits to India.
- One of the greatest benefits of engaging with the Indian diaspora has been in terms of remittances.
- Remittances aid in socio-economic development as it is used for the recipient family’s personal use , in temple building, and for donations to schools
- These remittances have played a role in poverty reduction while changing consumption behaviour in rural areas.
- Another tangible long-term advantage in nurturing ties with an active diaspora is an accelerated technological sector
- India’s permanent membership to the United Nations Security Council (UNSC) can become a reality with support from the diaspora.
Issues and Concerns :
- Support of the diaspora is neither automatic nor continuous, and their interests need not be India’s priorities.
- For example, the Indian community in the US was not vocal enough in criticising President Donald Trump’s proposal to restrict the H-1B visa programme that has benefited many Indians.
- Remittances may not always be used for beneficial purposes. For instance, India faced problems due to foreign funding for extremist movements like the Khalistan movement
- Poor schemes coupled with ineffectual implementation sometimes hinder the diaspora’s contribution towards the growth of India.
Recent Policies:
- The government’s initiatives towards the diaspora are two-pronged.
- For one, they cater to the needs of NRIs and OCIs by providing them with consular services, protection and conduct outreach activities to engage with them.
- They create policies to encourage the diaspora to contribute to India’s growth through philanthropy, knowledge transfers, investments in innovation and assistance in other development projects.
- The Know India Programme of the Ministry of External Affairs is a three-week knowledge programme designed for the diaspora youth.The primary objective of the KIP is to foster a closer connection between Indian diaspora youth and their ancestral homeland by augmenting their understanding of India.
- Pravasi Bharatiya Divas (PBD) has been celebrated on 9th January every year since 2003 to mark the contribution of the Overseas Indian community in the development of India.
Future Outlook
- Today, there is more potential for the diaspora to contribute to India’s growth story, their success will also be a reflection of the Indian government’s schemes, policies and outreach activities toward them.
- The Indian government, while continuing to engage with the diaspora as a part of its foreign policy, will have to be cautious of sensitive issues that may impact the security of the state.
Source:TH
Swachh Survekshan Awards 2023
Syllabus: GS2/Government Policy and Interventions
Context:
- Recently, the President of India presented the ‘Swachh Survekshan Awards 2023’ at Bharat Mandapam in New Delhi.
About Swachh Survekshan Awards 2023:
- Indore (in Madhya Pradesh) and Surat (in Gujarat)together were declared as the cleanest cities of the country, and Navi Mumbai (in Maharashtra) ranked third spot.
- Indore has been ranked the cleanest city for the seventh time in a row.
- Clean Cities (population of less than 1 lakh): Sasvad, Patan and Lonavala secured the top three spots respectively.
- Madhyamgram, Kalyani and Haora, in West Bengal, are placed at the bottom.
- Cleanest Cantonment: Mhow Cantonment Board in Madhya Pradesh;
- SafaiMitra Surakshit Sheher: Chandigarh;
- Ganga Towns: Varanasi and Prayagraj secured the 1st and 2nd rank respectively.
- Best Performing State:Maharashtra, Madhya Pradesh and Chhattisgarh secured the rank 1, 2 and 3 respectively.
- Odisha is ranked fourth, followed by Telangana, Andhra Pradesh, Punjab, Gujarat, Uttar Pradesh, Tamil Nadu, Sikkim, Karnataka, Goa, Haryana and Bihar.
- Rajasthan, Mizoram and Arunachal Pradesh were placed at the bottom in the rank.
| Swachh Survekshan: – It is the world’s largest urban sanitation and cleanliness survey conducted under the ambit of the Swachh Bharat Mission (Urban) since 2016. a. It is hosted by the Ministry of Housing and Urban Affairs (MoHUA). – It has been instrumental in fostering a spirit of healthy competition among towns and cities to improve their service delivery to citizens and towards creating cleaner cities. – Theme (2023): ‘Waste to Wealth’ a. For 2024: ‘Reduce, Reuse and Recycle’ |
National Mission for Clean Ganga (NMCG)
Syllabus: GS2/Government Policies and Interventions
Context:
- The National Mission for Clean Ganga (NMCG), the agency responsible for abatement of pollution in river Ganga and its tributaries, has assumed new powers.
About
- The NMCG issued a notification recently to amend the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016.
- The NMCG now has powers to allow discharge of treated sewage, which conforms to the norms prescribed under the Environment (Protection) Act, 1986.
- The discharge into rivers or any other water bodies is allowed only after exploring the option of its direct reuse for purposes such as agricultural use, industrial use, etc.
- The move will ensure more water into the rivers. For instance, 560 minimal liquid discharge treated sewage water from the Okhla Sewage Treatment plant in Delhi may be released into Yamuna, which will increase the flow of the river.
| National Mission for Clean Ganga (NMCG) – NMCG was registered as a society on 12th August 2011 under the Societies Registration Act 1860. – It acted as the implementation arm of National Ganga River Basin Authority(NGRBA) which was constituted under the provisions of the Environment (Protection) Act (EPA),1986. a. NGRBA has since been dissolved with effect from the 7th October 2016, consequent to the constitution of National Ganga Council (National Council for Rejuvenation, Protection and Management of River Ganga). – Parent body: Ministry of Jal Shakti – Mandate: a. To ensure effective abatement of pollution and rejuvenation of the river Ganga by adopting a river basin approach. b. To maintain minimum ecological flows in the river Ganga with the aim of ensuring water quality and environmentally sustainable development. – The Act envisages five tier structure at national, state and district level: a. National Ganga Council under the chairmanship of Prime Minister of India. b. Empowered Task Force (ETF) on river Ganga under chairmanship of Union Minister of Jal Shakti (Department of Water Resources, River Development and Ganga Rejuvenation). c. National Mission for Clean Ganga (NMCG). d. State Ganga Committees. e. District Ganga Committees in every specified district abutting river Ganga and its tributaries in the states. – NMCG has a two-tier management structure and comprises Governing Council and Executive Committee. a. Both are headed by Director General, NMCG and the Executive Committee has been authorised to accord approval for all projects up to Rs.1000 crore. |
Challenges persists
The NMCG, though well-intentioned, faces several challenges in its quest to rejuvenate the Ganges River.
Funding and resource constraints:
- Inadequate allocation: Despite being a ₹20,000 crore mission, only a fraction of the funds have been disbursed to states, hindering project implementation.
- Financial dependence: States often lack their own budget for river conservation, making them reliant on central funds, creating delays and uncertainty.
Infrastructure and technological limitations:
- Outdated sewage treatment plants: Many existing STPs require upgrades or are malfunctioning, leading to untreated sewage flowing into the river.
- Limited monitoring and data collection: Real-time water quality monitoring systems are crucial for effective action, but their coverage is insufficient.
Social and behavioral challenges:
- Cultural practices: Traditional practices like idol immersion and washing clothes in the river contribute to pollution.
- Industrial waste discharge: Untreated industrial effluents from factories continue to pollute the river, requiring stricter enforcement of environmental regulations.
Policy and governance challenges:
- Riverbed sand mining: Unsustainable sand mining practices can damage the riverbed and disrupt ecological balance.
- Fragmented institutional framework: Multiple agencies at central state and local levels are involved, but coordination and accountability are often lacking.
- Limited focus on upstream river basins: Pollution control efforts primarily focus on the main stem of the Ganga, neglecting upstream tributaries that contribute significantly to the problem.
Measures
- Several Sewage Treatment Plants took time to be commissioned as there were problems with land acquisition. Hence, there is a need to ease the process of land acquisition.
- The Detailed Project Reports, which prescribe steps to execute a project, and the roles of various actors, needs revision as there is an impression that building treatment plants is entirely the Centre’s responsibility.
- The parameters used by the Central Pollution Control Board (levels of dissolved oxygen, biochemical oxygen demand, and faecal coliform), vary widely along various stretches of the river, reflecting still a long way ahead.
- On the lines of the air quality index, there is a need to develop a water quality index, to be able to better communicate about river-water quality of various locations.
Way Ahead
- The NMCG has made significant progress in several areas, such as setting up wastewater treatment plants, increasing public awareness, and promoting riverfront development.
- Continuous efforts to address the challenges, along with innovative solutions and increased public participation, are crucial for the mission’s long-term success and the ultimate revival of the Ganges.
Source: IE
Supreme Court Concern on GM Mustard
Syllabus: GS3/Agriculture
Context
- The Supreme Court has raised concerns regarding the biosafety of transgenic mustard hybrid DMH-11, which has been approved by the Genetic Engineering Appraisal Committee (GEAC) for environmental release.
What are GM crops?
- Crops that have undergone genetic engineering processes to alter their DNA are referred to as genetically modified crops.
- The techniques used in GM crops are: gene guns,electroporation,microinjection, agrobacterium etc.
- The types of modification are: transgenic, cis-genic, subgenic and multiple trait integration.
- The main trait types in GM crops are herbicide tolerance(HT),insect resistance (IR), Stacked traits etc.
Indian Scenario in GM crops
- Bt Cotton: In 2002, the GEAC had allowed the commercial release of Bt cotton.
- Bt cotton has two alien genes from the soil bacterium Bacillus thuringiensis (Bt) that allows the crop to develop a protein toxic to the common pest pink bollworm.
- It is the only GM crop that is allowed in India.
- Many varieties of GM crops are under different stages of development, like Bt brinjal and DMH-11 mustard.
| GM Mustard – The Delhi University Center for Genetic Manipulation of Crop Plants created the genetically altered mustard variety known as DMH (Dhara Mustard Hybrid)-11. – In DMH-11 mustard genes from soil bacterium makes mustard — generally a self-pollinating plant — better suited to hybridisation than current methods. – The Genetic Engineering Appraisal Committee (GMEC) approved the commercial production of Mustard DMH-11 in 2022. |
Regulatory framework in India
- The Genetic Engineering Appraisal Committee (GEAC): It under the Ministry of Environment, Forest and Climate Change (MoEF&CC), is responsible for the assessment of proposals related to the commercial release of GM crops.
- Acts and rules that regulate GM crops in India are:
- Environment Protection Act, 1986 (EPA)
- Biological Diversity Act, 2002
- Plant Quarantine Order, 2003
- GM policy under Foreign Trade Policy
- Food Safety and Standards Act, 2006
- Drugs and Cosmetics Rule (8th Amendment), 1988.
Need for GM crops
- Food Security: Genetically modified crops can improve yield, build resistances to pests, flood,frost , drought etc.
- Sustainable food system: Crops can also be modified to reduce carbon emissions and boost the sustainability of food production.
- Higher Productivity: With GM crops it is possible to produce more food from less area and with less chemical pesticides and fertilizer.
- GM crop production uses only about 10% of the land non-GM crop production uses.
- Nutritional Security: Genetic modifications can enhance the nutritional content of crops. The crops may contain higher levels of essential nutrients, addressing malnutrition and improving public health.
Reasons for opposition of GM crops
- Unintended side effects: Environmentalists argue that the long-lasting effect of GM crops is yet to be studied and thus they should not be released commercially. Genetic modification can bring changes that can be harmful to humans in the long run.
- Threat to biodiversity: Some crops have been engineered to create their own toxins against pests. This may harm non-targets such as farm animals that ingest them.
- Health risks: GM crops are modified to include antibiotics to kill germs and pests. And when we eat them, these antibiotic markers will persist in our body and will render actual antibiotic medications less effective over a period of time, leading to superbug threats.
- Social and economic issues: There are concerns about multinational agribusiness companies taking over farming from the hands of small farmers. Dependence on GM seed companies could prove to be a financial burden for farmers.
- Public concern: People in general are wary of GM crops as they are engineered in a lab and do not occur in Nature.
Way Forward
- The environmental release of DMH-11 marks the beginning of a new era in self-reliance and sustainability in agriculture. This will help to achieve the target of Zero Hunger by 2030.
- Governments must address the problems brought on by GM crops, particularly in the areas of safety testing, legislation, industrial strategy, and food labeling.
Source: TH
Group Insolvency Mechanism
Syllabus: GS3/Indian Economy
Context
- Reserve Bank of India Governor Shaktikanta Das recently pushed for a specified framework for the group insolvency mechanism.
Group insolvency mechanism
- Group insolvency mechanism is a legal framework designed to handle insolvency scenarios where multiple companies within a corporate group are financially distressed.
- This framework addresses the complex interdependencies between these companies, preventing cascading failures and ensuring a more comprehensive and efficient resolution process.
- Many developed countries, including the UK, US, and Japan, have implemented or are developing group insolvency frameworks.
- The UNCITRAL Model Law on Cross-Border Insolvency provides recommendations for countries to consider Group insolvency mechanisms when designing their own frameworks.
Need
- In the absence of a specified framework, the group insolvency mechanism has been evolving under the guidance of the courts in India.
- Also, current insolvency frameworks often treat each company within a group as a separate entity. This can be problematic when companies within a group are financially interconnected, with debts and assets shared across subsidiaries.
Benefits
- Increased creditor recoveries: A coordinated approach can maximize asset realization and improve creditor returns compared to separate proceedings for each company.
- Preservation of viable businesses: The framework can help identify and rescue healthy companies within the group, preventing unnecessary job losses and economic disruption.
- Enhanced overall economic stability: By preventing domino effects and resolving group insolvencies efficiently, the framework can contribute to a more stable business environment.
Challenges
- Complexity: The possible challenges in adopting the group framework are: intermingling of assets, devising a definition of a ‘group’ and addressing cross-border aspects.
- Absence of market for stressed assets: On stressed assets, one major impediment for implementing a successful resolution plan has been the absence of a vibrant market for stressed assets in the country. This effectively limits the pool of prospective resolution applicants for stressed assets under IBC.
- Potential abuse: Safeguards are needed to prevent companies from misusing the framework to their advantage or to shield assets from creditors.
- Enforcement: Effective enforcement mechanisms are crucial for ensuring compliance with the framework and achieving desired outcomes.
| About Insolvency and Bankruptcy Code (IBC) – Introduced in: 2016 – It was introduced in the background of India’s Non Performing Assets (NPA) and debt defaults piling up and older loan recovery mechanisms were not performing. – Objectives: – To find a way to save a business through restructuring, change in ownership, mergers etc. – To maximize the value of assets of the corporate debtor. – To promote entrepreneurship, availability of credit, and balancing of interests. – Approach: The IBC has changed the regime from ‘Debtor-in-Possession’ to ‘Creditor-in-Control’. A. Debtor-in-Possession (DIP): The debtor remains in control of its assets and operations during the insolvency process and the existing management team, with oversight from a court-appointed insolvency professional, continues running the business. B. Creditor-in-Control (CIC): The creditors, typically through a committee, take control of the debtor’s assets and decision-making and the existing management may be replaced by experienced professionals appointed by the creditors. – Outcomes: As per the IBC, there are two outcomes: resolution or liquidation. A. Resolution aims to revive the financially stressed company as a going concern, preserving jobs, and maximizing value for creditors. B. On the other hand, liquidation aims to maximize the realization of assets and distribute the proceeds to creditors to satisfy their outstanding debts. – Under the IBC, three classes of persons can trigger the corporate insolvency resolution process (CIRP) which are, a. financial creditors, b. operational creditors and c. corporate debtors. |
Way Ahead
- A robust secondary market in loans can be an important mechanism for management of credit exposures by the lending institutions.
- Any amendments to the Code with emphasis on a financial creditor-led resolution framework, in an overarching manner is the need of hour.
Source: IE
News In Shorts
WB seeks classical language status for Bangla
Syllabus: GS1/Culture
Context
- The West Bengal Chief Minister urged the central government to include ‘Bangla’ as a classical language.
Classical Languages
- As per the guidelines of the Central government, a language must meet some requirements to be declared “classical”. They are
- The high antiquity of its early texts; recorded history of over 1500-2000 years;
- A body of ancient literature/texts, which is considered a valuable heritage by generations of speakers;
- A literary tradition that’s original and not borrowed from another speech community; and
- Being distinct from modern, without discontinuity between the classical language and its later forms or its offshoots.
- The Government of India has officially recognised six languages as having classical status – Tamil (2004), Sanskrit (2005), Telugu, Kannada (2008), Malayalam (2013), and Odia (2014).
- All the Classical Languages are listed in the Eighth Schedule of the Indian Constitution.
Bengali Language
- Bengali is the official language of West Bengal. It is also the official language of Bangladesh.
- It is the 2nd most spoken language in India, it is also the 7th most spoken language in the world.
- Bengali is an Indo-Aryan language native to the Bengal region of South Asia. The Bengali script is derived from Brahmi, a n ancient Indian script.
- Bengali is written from left to right.
Source: TH
Indian of the Year Award
Syllabus :Miscellaneous
In News
- ISRO presented with “Indian of the Year Award” for the year 2023.
- The coveted award, presented in the category of ‘Outstanding Achievement,’ lauds ISRO’s trailblazing efforts in advancing the frontiers of space exploration.
Indian of the Year Award
- CNN-News18 Indian of the Year is an initiative which acknowledges individuals in India who have made noteworthy contributions across diverse fields, leaving a lasting impact on the nation.
- The IOTY awards recognises excellence from seven categories: Entertainment, Business, Sports, Youth Icon, Rising Sports Star, and Climate Warriors.
- This year Bollywood’s King Shah Rukh Khan was honoured with the Indian of the Year award
Source:PIB
Atal Setu
Syllabus: GS3/Economy and Infrastructure
Context
- Prime Minister Modi inaugurated the Mumbai Trans Harbour Link (MTHL) or Atal Setu in Maharashtra.
About
- It is a 21.8-km long six-lane bridge having 16.5 km length over the sea and about 5.5 km on the land, built at a cost of about ₹17,840 crore.
- The bridge has been constructed with corrosion-resistant material that promises to stand firm against earthquakes, cyclones, high wind pressures and tides.
- It is fitted with technology to oversee a smooth commute, including an Intelligent Traffic Management system, Video Incident Detection system, Speed Enforcement system, emergency call boxes etc.
Significance
- Atal Setu is the longest bridge and also the longest sea bridge in the country.
- The bridge has shortened the distance between Mumbai and Navi Mumbai to just 20 minutes which earlier took 2 hours.
Source: TH
