- 1 Important Current Affairs For UPSC ESE PRELIM 2020 EXAM: Part 4
Important Current Affairs For UPSC ESE PRELIM 2020 EXAM: Part 4
Current Affairs pertaining TAXATION
1) DIRECT TAX CODE
- Recently, the draft legislation of the new Direct Tax Code (DTC) was submitted by the task force, headed by Akhilesh Ranjan, to the Government of India.
- The Direct Tax Code (DTC) is an attempt by the Government of India to simplify the direct tax laws in India. It will revise, consolidate and simplify the structure of direct tax laws in India into a single legislation.
- When implemented, it will replace the Income-tax Act, 1961 (ITA), and other direct tax legislations like the Wealth Tax Act, 1957.
2) CAPITAL GAINS TAX
- Capital gains on investments made in India through companies in Mauritius and Singapore became fully taxable from April 1 after the concession period of 2 years ceased to exist.
- India amended the double tax avoidance agreements (DTAA) with the two countries in 2016, to prevent aggressive corporate tax avoidance.
- The loophole in these tax treaties had led to a situation where gains from investments into India from the two countries were taxed neither in India nor in the country where the investing entity was located.
- Now, entity from Mauritius and Singapore will have to pay capital gains tax here while selling shares in a company in India.
3) NEW ANGEL TAX RULES
- Recently the government notified new rules pertaining to angel tax which will exempt registered start-ups of a specified size from the tax.
- Angel tax is an income tax levied at 30.9 % tax on investments made by external investors in unlisted startups or companies.
- Definition of start-up broadened: An eligible start- up would be one that is registered with the government and has been incorporated for less than 10 years (from previous 7 years), and has a turnover that has not exceeded ₹100 crore over that period.
- Start-ups can apply for an exemption
if their paid-up share capital is up to Rs25 crore, compared to Rs10 crore earlier.
4) AUTOMATIC EXCHANGE OF INFORMATION (AEOI)
- AEOI between Switzerland and India kicked off from September 1, 2019.
- Under this mechanism, India will start receiving information on all financial accounts held by Indian residents in Switzerland, for the year 2018 Automatic Exchange of Information (AEOI) is systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country, which is possible under most of the Double Taxation Avoidance Agreements (DTAAs) and Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC).
- It aims to reduce global tax evasion. It is to be carried out under Common Reporting Standard (CRS) of OECD.
- AEOI is the exchange of information between countries without having to request it.
- Vast amounts of money are kept offshore and go untaxed to the extent that taxpayers fail to comply with tax obligations in their home jurisdictions.
- Tackling this cross national transfer of money.to avoid and evade taxes indicate that national efforts are not enough to fight black money.
- Hence there is the need for tax cooperation and tax information exchanges between countries.
Need for AEOI:
- Tax payers operate cross border whereas tax administration is limited to national borders. This has helped tax evasion by shifting money to other countries by citizens. Both tax evasion and tax avoidance have escalated; facilitated by quick transfer of income from one country to another.
Current Affairs pertaining to Financial Market
1) ELEPHANT BONDS
- A high level government-appointed committee on trade and industry has suggested it to issue ‘Elephant Bonds’ to people for declaring undisclosed income to mandatorily invest 50%.
- Elephant Bonds are the 25-year sovereign bonds in which people declaring undisclosed income will be bound to invest 50 per cent.
- The fund, made from these bonds, will be utilized only for infrastructure projects.
2) SOCIAL STOCK EXCHANGE
- In budget session, Finance Minister proposed a social stock exchange (SSE) under the regulatory ambit of the Securities Exchange Board of India (SEBI) to support social enterprises and non- profits in raising funds.
- It is an electronic fundraising platform that allows investors to buy shares in a social enterprise that has been vetted by the exchange.
- Social enterprises, volunteer groups and welfare organisations will be listed on this platform so that they can raise capital. o Social enterprise is a revenue-generating business whose primary objective is to achieve a social objective, for example, providing healthcare or clean energy.
- It will act as crowd-sourcing platforms for fundraising by non-profit entities aimed at impact investment and transparency.
3) CHIT FUNDS (AMENDMENT) BILL, 2019
- The Bill makes amendments to the Chit Funds Act, 1982, to facilitate orderly growth of the Chit Funds sector and remove bottlenecks being faced by the Chit Funds industry, thereby enabling greater financial access of people to other financial products.
- Additional names for chit funds: The 1982 Act specifies various names which may be used to refer to a chit fund. These include chit, chit fund, and kuri. The Bill additionally inserts ‘fraternity fund’ and ‘rotating savings and credit institution’ to this list.