ASPIRANTS DAILY CURRENT AFFAIRS + PIB SUMMARY 03 FEB 2022

Table of Contents:

GS Paper 2:

  • Winter olymbics

GS Paper 3:

  • Budget 2022-2023:Direct taxes
  • Budget 2022-2023:Indirect taxes
  • Import Duty Changes in budget 2022

GS Paper 2

Winter olymbics

Why in News?

 The Russian President, Pakistan Prime Minister and five Presidents from Central Asia will reach China for the opening of the Winter Olympics.

What is the Significance of the Visit?

  • China has close relations with Russia but has been largely silent on the crisis in Ukraine amid a build-up of Russian forces along its borders.
  • China has also declared that it sought to discuss developing communications satellites for Pakistan and to cooperate on the construction of the Pakistan Space Centre.

What is the Winter Olympics?

  • Winter Olympics is the premier competition for sports that are played on ice or snow.
  • It is held every four years and features participants from across the world.
  • Ice skating, ice hockey, skiing and figure skating are some of the popular sports that are played at the Winter Games.
  • The first Winter Olympics were held in 1924 in Chamonix, France.
  • Winter sports were initially played at the Summer Olympics, with the 1908 London Olympics hosting four figure skating events and Antwerp 1920 having figure skating as well as ice hockey.
  • However, in 1924, a separate event was created for winter sports, called the International Winter Sports Week.
  • It was held in Chamonix, France – the host country for the 1924 Summer Olympics.
  • Two years later, the International Winter Sports Week in Chamonix was officially recognised as the first Winter Olympic Games.
  • This years’ edition of the Winter Olympic Games will be held in Beijing, China from 4th February to 20th February 2022.
  • India has been participating in the Winter Olympics since 1964.

GS Paper 3:

Budget 2022-2023: Direct taxes

Why in News

Recently, the Finance Minister presented the Union Budget 2022-23 in Parliament.

  • The proposals relating to taxes and duties aim to simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation. No changes have been proposed to the income tax slabs and tax rates (individual taxpayers).
  • A direct tax is a tax that a person or organisation pays directly to the entity that imposed it. Example: income tax, real property tax, personal property tax, or taxes on assets.

What is there for Individuals?

  • Updated Return:
    • The government has proposed to provide a one-time window to correct omissions in Income Tax Returns (ITRs) filed.
    • Taxpayers can file the updated returns within two years from the assessment years.
  • Tax relief to persons with disability:
    • The government proposed to allow the payment of annuity and lump sum amount to the differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years.
    • The present law provides for deduction to the parent or guardian only if the lump sum payment or annuity is available to the differently abled person on the death of the subscriber i.e. parent or guardian.
  • Parity between employees of State and Central government:
    • Tax deduction limit increased from 10%to 14% on employer’s contribution to the
    • National Pension System account of State Government employees which brings them at par with central government employees.
    • It would help in enhancing social security benefits.

What is there for Corporates Businesses & Co-operatives?

  • Reduced Alternate minimum tax rate and Surcharge for Cooperatives:
    • To provide a level playing field between co-operative societies and companies, the government proposed to reduce this rate for the cooperative societies also to 15%.
    • Proposed to reduce the surcharge on co-operative societies from present 12% to 7% for those having total income of more than 1 crore and up to 10 crores.
    • This would help in enhancing the income of cooperative societies and its members who are mostly from rural and farming communities.
  • Incentives for Start-ups:
    • Earlier, the eligible start-ups established before March 2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation.
    • In view of the Covid pandemic, the government will extend the period of incorporation of the eligible start-up by one more year, that is, up to March 2023 for providing such tax incentive.

What about the Virtual Digital Assets?

  • Scheme for taxation of virtual digital assets:
    • Specific tax regime for virtual digital assets introduced. Any income from transfer of any virtual digital asset to be taxed at the rate of 30%.
    • No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
    • Loss from transfer of virtual digital assets cannot be set off against any other income.
    • To capture the transaction details, Tax Deduction at Source (TDS) to be provided on payment made in relation to transfer of virtual digital assets at the rate of 1% of such consideration above a monetary threshold.
    • Gift of virtual digital assets also to be taxed in the hands of the recipient.

What is there to make Taxation Simpler?

  • Litigation Management:
    • In cases where the question of law is identical to the one pending in the High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.
    • To greatly help in reducing repeated litigation between taxpayers and the department.
  • Deterrence against tax-evasion:
    • No set off of any loss to be allowed against undisclosed income detected during search and survey operations.
  • Tax incentives to International Financial Services Centres (IFSC):
    • Subject to specified conditions, the following to be exempt from tax:
      • Income of a non-resident from offshore derivative instruments.
      • Income from over the counter derivatives issued by an offshore banking unit.
      • Income from royalty and interest on account of lease of ship.
      • Income received from portfolio management services in IFSC.

What has the Government done for Tax Rationalisation?

  • Rationalising TDS Provisions:
    • Benefits passed on to agents as a business promotion strategy taxable in the hands of agents.
    • Tax deduction provided to the person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.
  • Rationalisation of Surcharge:
    • Surcharge on AOPs (consortium formed to execute a contract) capped at 15%.
      • Done to reduce the disparity in surcharge between individual companies and AOPs.
    • Surcharge on long term capital gains arising on transfer of any type of assets capped at 15%.
      • To give a boost to the start up community.

Budget 2022-2023: Indirect taxes

Why in News

      The Union Budget 2022-23, while continuing with the declared policy of a stable and predictable tax regime, intends to bring more reforms that will take ahead the vision to establish a trustworthy tax regime.

  • An indirect tax is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of market price of the goods or service purchased. For example, Goods and Services Tax (GST), Import duties.

What are the Key Proposals?

  • Record GST Collection: GST collections touched a record of Rs 1.40 lakh crore in January 2022 on rapid economic recovery (despite the corona virus pandemic).
  • Special Economic Zones: Customs Administration of SEZs shall be fully IT driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks.
  • Customs Reforms and Duty Rate Changes: Faceless Customs has been fully established. Customs’ reforms have played a very vital role in:
    • Domestic capacity creation,
    • Providing a level playing field to MSMEs,
    • Easing the raw material supply side constraints,
    • Enhancing ease of doing business
    • Being an enabler to other policy initiatives such as PLIs and Phased Manufacturing Plans.
  • Project Imports and Capital Goods: National Capital Goods Policy, 2016 aims at doubling the production of capital goods by 2025.
    • This would create employment opportunities and result in increased economic activity.

    • However, several duty exemptions, even extending to over three decades in some cases, have been granted to capital goods for various sectors like power, fertilizer, textiles, leather, footwear, food processing and fertilizers.
      • These exemptions have hindered the growth of the domestic capital goods sector.
    • The budget proposed gradual phasing out of the concessional rates in capital goods and project imports.
    • The Budget provided for applying a moderate tariff of 7.5% which will be conducive to the growth of the domestic sector and ‘Make in India’.
  • Sector-specific Proposals:
    • Electronics: Customs duty rates to be balanced to provide a graded rate structure – to facilitate domestic manufacturing of wearable devices and electronic smart meters.
      • Announced a new Phased Manufacturing Programme (PMP) for producing wrist wearable devices, hearable devices and electronic smart meters in the country.
      • The PMP incentivises the manufacture of low value accessories initially, and then moves on to the manufacture of higher value component.
    • Gems and Jewelry: Customs duty on cut and polished diamonds and gemstones being reduced to 5%.
      • Nil customs duty to be imposed on simply sawn diamond.
    • MSME & Exports: Exemption being rationalised on implements and tools for agri-sector which are manufactured in India.
      • Further, to incentivise exports, exemptions are being provided on many items.
    • Tariff to Encourage Blending of Fuel: Tariff measures will be introduced to encourage the blending of fuel.
      • Meanwhile, unblended fuel will attract an additional differential excise duty of Rs 2/ litre from 1st October, 2022, to further encourage the blending of fuel.

Import Duty Changes in budget 2022

Why in News?

The Finance Minister introduced a host of changes in Customs duty on several items in the Union Budget for 2022-23.

  • This would mean that imports become more expensive or cheaper depending on the change in customs duties.

What are the Changes in the Import Duty?

  • The customs duty on umbrellas was doubled to 20%, while exemptions provided on import of parts of umbrellas were withdrawn.
  • Similarly, the customs duty on single or multiple loudspeakers, whether or not mounted in their enclosures was hiked to 20% from 15%.
  • Import duty was reduced for cut and polished diamonds, asafoetida, cocoa beans, methyl alcohol and acetic acid.
  • Duty on capital goods and project imports was rationalized by phasing out concessional rates and applying a moderate tariff of 7.5%.
    • Under Project Import Scheme, goods imported by a company are placed under a single tariff in the Customs Tariff Act, 1975 to facilitate faster assessment and clearances of goods.
    • The tariff changes will come into effect from 1st May 2022, as per the Finance Bill 2022-23.

What is the Reason behind increasing the Import Duty?

  • For Protecting Domestic Industries:
    • The hike in import duty for items, such as umbrellas, are in line with the increase in import duty on toys last year.
    • The hike is being done for industries which manufacture items that do not deploy any major technology.
      • Umbrellas, for instance, are manufactured in small units spread across 10-12 districts with Kerala being the major manufacturing state.
    • The government seems to be offering protection to such industries.
  • For Popularising One Station-One Product:
  • It also falls in line with the other Budget announcement of popularising one station-one product to popularise local businesses and supply chains as announced in Budget 2022.
  • One station-one product as a concept aims to promote a local product from each stop of the Indian Railways by making the railway station of that area a promotional and sales hub for the product.
  • The concept of ‘One station one product’ has based itself on the successful One District One Product (ODOP) scheme. Based on a district’s strengths, ODOP has been a transformational step towards realising the true potential of a district, fueling economic growth, generating employment and rural entrepreneurship.

How have import duty changes been made in Recent Years?

  • In 2021, customs duty exemptions were given to the steel scrap industry, which has now been extended for another year.
    • It is likely to provide relief to micro, small and medium-scale secondary steel producers.
  • Over the last five years, import duty hikes have been made on several occasions such as almonds, apples, and others. Other items such as cellphone parts and solar panels have seen the most regular hikes, with an aim to protect and nurture the domestic industry growth.
  • Prior to the large-scale hikes, India’s peak customs duty — the highest of the normal rates — on non-agriculture products had come down steeply from 150% in 1991-92 to 40% in 1997-98 and subsequently, to 20% in 2004-05 and 10% in 2007-08.

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