Daily Prelims Notes 4 August 2022

Daily Prelims Notes

4 August 2022

Table Of Contents

1. Income tax–rising number & trend
2. System of electronic generation of a Document Identification Number (DIN) 
3. India’s updated climate pledge to Paris Agreement 
4. Power Ministry introduces Bill to establish Carbon market in India
5. Money laundering is a serious issue. But SC verdict on PMLA is problematic
6. India to host UNSC meet on counter terrorism in October
7. The Gujarati and Marathi identities in cosmopolitan Mumbai

1. Income tax–rising number & trend

Subject :Economy

Section:Fiscal Policy

Context :

The Income Tax Department has cut the time limit for verification of return to 30 days from 120 days earlier.

Details:

At present, there are two options for verification – 

• e-Verify returns online, or
• sending a physical copy of duly signed ITR-V to Centralized Processing Centre, Income Tax Department, Bangalore.

Income Tax Return (ITR):

• Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India.
• It contains information about the person’s income and the taxes to be paid on it during the year.
• Information filed in ITR should pertain to a particular financial year, i.e. starting on 1st April and ending on 31st March of the next year.
• The Income Tax Department has prescribed 7 types of ITR forms – ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 and the applicability of the form will depend on the nature and amount of income and the type of taxpayer.

Income Tax:

• Income tax is perhaps the most well known direct tax imposed by the government on annual income generated by businesses and individuals.
• Income tax is calculated as per the provisions of Income Tax Act, 1961 and is directly paid to the central government on an annual basis. 
• Income does not only mean money earned in the form of salary. It also includes income from house property, profits from business, gains from profession (such as bonus), capital gains income, and ‘income from other sources’.
• Income tax is levied on the income of individuals, Hindu undivided families (HUF), unregistered firms and other associations of people.
  • Hindu Undivided Family (HUF) consists of all persons directly descended from a common ancestor, and also the wives and daughters of the male descendants.
  • One can save on taxes by creating a family unit and pooling in assets to form an HUF.
  • An HUF is taxed separately from its members, therefore, deductions (such as under Section 80) or exemptions allowed under tax laws can be claimed by it separately.
  • An HUF is taxed on the same rate as applicable to an individual income tax assessee.
• In India, the nature of income tax is progressive.
• The benchmark we use refers to the Top Marginal Tax Rate for individuals, including health and education cess on tax and surcharge.

Trends: 

• Against the Union Budget estimates of Rs 22.17 lakh crore, the revenue collections as per the pre-actual figures is Rs 27.07 lakh crore, almost Rs 5 lakh crore above the budget estimates.
• 2021-22 marks the highest tax-GDP ratio of 11.7% (which is much lower than the emerging market economy average of 21 percent and OECD average of 34 percent).
  • direct tax to GDP ratio at 6.1% and
  • indirect tax to GDP ratio at 5.6%.
• The tax buoyancy (which is a measure of growth in tax revenues as compared to GDP growth) is 1.9, with
  • 2.8 for direct taxes and
  • 1.1 for indirect taxes.
• The ratio of direct to indirect taxes recovered from 0.9 in 2020-21 back to 1.1 in 2021-22.
• During 2021-22, 70.14 million returns were filed as compared to 60.97 million last year.
  • In 2022-2358.3 million income tax returns (ITRs) were filed by July 31. This latest figure is nearly the same as that of the previous financial year (2020-21).
  • However, on July 31, 7.24 million ITRs had been filed, highest ever single-day records (the maximum being 4.9 million in 2019).
  •  India has one taxpayer for every 16 voters.
  • Only 1% of India’s population pays income tax.

2. System of electronic generation of a Document Identification Number (DIN)

Subject :Economy

Section :Fiscal Policy

Context

The Supreme Court has directed the Union of India/GST Council to issue an advisory to States regarding implementation of the system of electronic (digital) generation of a Document Identification Number (DIN) in indirect tax administration.

Document Identification Number (DIN):

• A Document Identification Number (DIN) is a unique 20-digit identification code attached to every communication issued by the Government offices to taxpayers.
  • With this number, the taxpayer can ascertain the genuineness of the communication received from the government, digitally.
• Issued by The Central Board of Indirect Taxes and Customs.
• Purpose- for all GST related communications (including emails) to be sent by the government offices to taxpayers and other concerned parties.
• Structure:

• Importance– It  will help in creating a digital directory for maintaining a proper audit trail of genuine Government communications.
  • Taxpayers can verify if the communication received from officials is valid or not. 
•  The documents that need to have a document identity number mandatorily are:
  • Search authorisation letters,
  • Summons,
  • Arrest memos,
  • Inspection notices and
  • Letters issued during an enquiry.
• Exceptions: 
  • When there are technical difficulties in generating the electronic DIN or
  • When communication for investigation/enquiry/GST DIN Verification, etc., is to be issued on a short notice or in urgency and the authorised officer is unavailable at his regular place of duty (office).
• Taxpayers are requested to take note that any documents issued by Government offices without a DIN (other than those issued in the circumstances mentioned under exceptions) will be treated as invalid.

3. India’s updated climate pledge to Paris Agreement

Subject: Environment

Section: Climate change

Context: India’s updated climate pledge to the Paris Agreement received the Union Cabinet’s nod August 3, 2022.

Concept:

Paris Agreement

• The Paris Agreement is a global treaty wherein some 200 countries agreed to cooperate to reduce GHG emissions and rein in climate change.
• The agreement seeks to limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industry levels.
• Thirty days after the date on which at least 55 Parties to the Convention accounting in total for at least an estimated 55 % of the total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession with the Depositary.
• On 5 October 2016, the threshold for entry into force of the Paris Agreement was achieved. The agreement, which came into force on November 4, 2016, currently it has 188 parties.
• The national pledges by countries to cut emissions are voluntary called Nationally Determined Contributions (NDC), of which all Parties are required to report regularly on their emissions and on their implementation efforts.
• There will also be a global stock take every 5 years to assess the collective progress towards achieving the purpose of the Agreement and to inform further individual actions by Parties.
• As per the Paris Agreement’s provisions, countries must ‘update’ their pledges every five years to make higher commitments to greenhouse gas (GHG) emissions reductions.

India’s INDC

• India’s first pledge, also known as India’s Intended Nationally Determined Contribution (INDC), submitted in 2015, had three primary targets.
• It states that India will improve the emissions intensity of its GDP by 33–35% by 2030 over 2005 levels; increase share of non-fossil fuels-based electricity to 40% by 2030, and enhance its forest cover, thereby absorbing 2.5 to 3 billion tonnes of carbon dioxide.

India’s Progress:

• As of June 2022, cumulative installed power capacity from non-fossil sources is 7 per cent (when including large hydropower projects).
• Installed capacity from fossil fuels like coal and gas will fall to 36 per cent by 2030
• India had achieved 25 per cent of emission intensity reduction of GDP between 2005 -2016 and is on a path to achieve more than 40 per cent by

Updated INDC:

These two targets would be submitted to the UNFCCC as India’s updated NDC in writing.

• India now stands committed to reducing emissions intensity of its GDP by 45 per cent by 2030 from its 2005 levels, as per the updated NDC.
• The country will also target about 50 per cent of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 (which include large hydropower and not just from renewable energy (RE) sources like solar and wind)

4. Power Ministry introduces Bill to establish Carbon market in India

Subject: Environment

Section: Climate change

• Power Minister RK Singh on Wednesday introduced the Energy Conservation (Amendment) Bill, 2022 in Parliament, which provides for setting up Carbon markets.
• Besides, the Bill also seeks to mandate the use of non-fossil sources, including green hydrogen, green ammonia, biomass and ethanol, for energy and feedstock.
• Other amendments in the Bill include bringing large residential buildings within the fold of the energy conservation regime, enhancing the scope of Energy Conservation Building Code, and strengthening the governing council of Bureau of Energy Efficiency.
• The Energy Conservation (Amendment) Bill aims to make it mandatory for buildings with a minimum connected load of 100 kW to meet their energy requirements from renewable sources By adopting energy efficiency measures

Bureau of Energy Efficiency

• The BEE is a statutory body established through the Energy Conservation Act, 2001 under the Union Ministry of Power.
• It assists in developing policies and strategies with the primary objective of reducing the energy intensity of the Indian economy.
• BEE coordinates with designated consumers, designated agencies, and other organizations to identify and utilize the existing resources and infrastructure, in performing its functions.
• It functions under Ministry of Power.

Energy Conservation Building Code (ECBC) 2017:

• Developed by Ministry of Power and Bureau of Energy Efficiency (BEE), ECBC 2017 prescribes the energy performance standards for new commercial buildings to be constructed across India.
• It sets minimum energy standards for new commercial buildings having a connected load of 100kW (kilowatt) or contract demand of 120 KVA (kilovolt-ampere) and above.
• The EC Act of 2001 gives the Central Government Government authority, but the state governments are free to adapt the code to meet unique local or regional requirements and to notify the Central Government of any changes.
• ECBC 2017 was developed by BEE with technical support from United States Agency for International Development (USAID) under the U.S.-India bilateral Partnership to Advance Clean Energy – Deployment Technical Assistance (PACE-DTA) Program.

Eco Niwas Samhita 2021:

• It is an Energy Conservation Building Code for Residential Buildings (ECBC-R) to give a further fillip to India’s energy conservation efforts.
• It specifies code compliance approaches and minimum energy performance requirements for building services, and verification framework with Eco Niwas Samhita 2021.

5. Money laundering is a serious issue. But SC verdict on PMLA is problematic

Subject: Polity

Section: National Organisation

Context : Recent SC judgement

What is the recent verdict?

• Enforcement Case Information Report (ECIR) cannot be equated with an FIR, and ED officers are not mandated under law to register an ECIR before initiating investigation or at any other stage of the case
• Supplying of Enforcement Case Information Report (ECIR) is not mandatory and disclosure of reasons during arrest is enough
• Authorities under the PMLA (ED officers) are not the same as police officers and the evidentiary value granted to statements of witnesses and accused persons recorded by the ED (Section 50) is not ultra vires Article 20 of the Constitution (that provides the right against self incrimination)
• The powers of arrest granted to the ED under Section 19, PMLA are in sync with purpose of the statute
• Mere possession of proceeds of crime (without any integration, layering etc.) are sufficient to allege money laundering
• The “twin conditions” under Section 45 of the Act, dictate that a court can grant bail only if it is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence AND that he is not likely to commit any offence while on bail.

Vienna Convention on Money Laundering

• It was the first major initiative in the prevention of money laundering held in December 1988.
• This convention laid down the groundwork for efforts to combat money laundering by obliging the member states to criminalize the laundering of money from drug trafficking.
• It promotes international cooperation in investigations and makes extradition between member states applicable to money laundering.
• The convention also establishes the principle that domestic bank secrecy provisions should not interfere with international criminal investigations.

Palermo protocols

• The Palermo protocols are three protocols that were adopted by the United Nations to supplement the 2000 Convention against Transnational Organized Crime (the Palermo Convention). They are:
  • the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children; and
  • the Protocol against the Smuggling of Migrants by Land, Sea and Air.
  • the Protocol against the Illicit Manufacturing and Trafficking in Firearms, Their Parts and Components and Ammunition
• These protocols and convention fall within the jurisdiction of the United Nations Office on Drugs and Crime.

Relevant Articles

Article 20 : Protection in respect of conviction for offences

(1) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the Act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.

(2) No person shall be prosecuted and punished for the same offence more than once.

(3) No person accused of any offence shall be compelled to be a witness against himself.

Article 253 : Legislation for giving effect to international agreements.

Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body

6. India to host UNSC meet on counter terrorism in October

Subject : International Relations

Section: International Organisation

Context: In a first, India will host diplomats and officials from all 15 countries of the United Nations Security Council, including China, Russia and the United States, for a special meeting on terrorism, in Delhi and Mumbai in October.

Concept :

• The meeting of the Counter-Terrorism Committee (CTC), which India is chairing for 2022 as a member of the UNSC, will focus particularly on challenges such as terrorism financing, cyberthreats and the use of drones, said officials.
• In addition, India has been pushing for the UN members to adopt a Comprehensive Convention on International Terrorism (first proposed in 1996), which is likely to be raised during the meeting.

UNSC

• The Security Council was established by the UN Charter in 1945. It is one of the six principal organs of the United Nations.
• The other 5 organs of the United Nations are—the General Assembly (UNGA), the Trusteeship Council, the Economic and Social Council, the International Court of Justice, and the Secretariat.
• Its primary responsibility is to work to maintain international peace and security.
• The council is headquartered at NewYork.

Members:

• The council has 15 members: the five permanent members and ten non-permanent members elected for two-year terms.
  • The five permanent members are the United States, the Russian Federation, France, China and the United Kingdom.
  • India, for the eighth time, has entered the UNSC as a non-permanent member last year (2021) and will stay on the council for two years i.e 2021-22.
• Each year, the General Assembly elects five non-permanent members (out of ten in total) for a two-year term. The ten non-permanent seats are distributed on a regional basis.
• The council’s presidency is a capacity that rotates every month among its 15 members.

Voting Powers:

• Each member of the Security Council has one vote. Decisions of the Security Council on matters are made by an affirmative vote of nine members including the concurring votes of the permanent members. A “No” vote from one of the five permanent members blocks the passage of the resolution.
• Any member of the United Nations which is not a member of the Security Council may participate, without vote, in the discussion of any question brought before the Security Council whenever the latter considers that the interests of that member are specially affected.

Financial Action Task Force (FATF)

• The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris.
• The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
• Member Countries: it consists of thirty-seven member jurisdictions.
  • India is one of the members.
• FATF has two lists:
  • Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
  • Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
• The FATF Plenary is the decision-making body of the FATF. It meets three times per year.

7. The Gujarati and Marathi identities in cosmopolitan Mumbai

Subject : History

Section :Post independence

Context:

• The controversy triggered by Governor B S Koshyari’s statement has rekindled an old debate on a sensitive issue that is rooted in the origin story and political cross-currents of Maharashtra

The struggle for Maharashtra

• Maharashtra was created on May 1, 1960 by cleaving the bilingual Bombay State into the unilingual states of Maharashtra and Gujarat, dominated linguistically by Marathi and Gujarati speakers respectively. The leadership of the Congress party was forced to retain Mumbai in the new state of Maharashtra. Other suggestions — including handing over Mumbai to Gujarat or making it a Union Territory — were categorically rejected by stalwarts from Maharashtra.
• The birth of the new state was preceded by a period of intense turmoil. In 1956, police fired on a peaceful demonstration by the Samyukta Maharashtra Samiti demanding a separate state of Maharashtra, killing 106 people. The stone statue of patriots holding a torch at Hutatma Chowk in the heart of Mumbai is a stark reminder of the blood and sweat that was shed during the agitation for Mumbai (then Bombay).

The States Reorganisation Act, 1956

• The States Reorganisation Act, 1956 was a major reform of the boundaries of India’s states and territories, organising them along linguistic lines.
• Although additional changes to India’s state boundaries have been made since 1956, the States Reorganisation Act of 1956 remains the single most extensive change in state boundaries after the independence of India.
• The Act came into effect at the same time as the Constitution (Seventh Amendment) Act, 1956,which (among other things) restructured the constitutional framework for India’s existing states and the requirements to pass the States Reorganisation Act, 1956 under the provisions of Part I of the Constitution of India, Article 3
• On the basis of the recommendations of State Reorganisation Commission in 1956, 14 states and 6 UTs were created.
• The chronology of states’ bifurcation in India after 1956:
• 1960 – Bombay state split into Maharashtra and Gujarat
• 1963 – Nagaland carved out of Assam
• 1966 – Haryana and Himachal Pradesh carved out of Punjab state
• 1972 – Meghalaya , Manipur and Tripura were formed
• 1975 – Sikkim became part of Indian union
• 1987 – Goa and Arunachal Pradesh became states (earlier these were UTs)
• 2000 – Uttaranchal (out of UP), Jharkhand (out of Bihar) and Chhattisgarh (out of Madhya Pradesh) were formed
• Telangana (out of Andhra Pradesh), when it was eventually created in 2014, became India’s 29^th State