Insights Daily Current Events, 26 February 2015

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Insights Daily Current Events, 26 February 2015

Two additional benches of the Authority for Advance Rulings (Income Tax)

The Union Cabinet chaired by the Prime Minister recently gave its approval for the Creation of two additional benches of the Authority for Advance Rulings (Income Tax), one in New Delhi and one new bench in Mumbai;

How would it help?

• The creation of two additional benches of the Authority would dispose of increased number of cases.
• It would reduce pendency of cases benefitting the tax payer and the Government.
• This will operationalise the facility of advance ruling for resident tax payers. It will facilitate the cause of the resident tax payers in obtaining tax clarity in certain situations.

Background:

• In order to provide the facility of ascertaining the Income-tax liability of a non-resident, to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation, a scheme of Advance Rulings was introduced under the Income-Tax Act, 1961 and the Authority for Advance Rulings was constituted.
• A non-resident or certain categories of resident can obtain binding rulings from the Authority on question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of his tax liability.

In order to enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold, it has been decided to strengthen the Authority for Advance Rulings by constituting additional benches.

Advance Ruing:

What is it?

An advance ruling is a written interpretation of the Income Tax Act in relation to how certain issues that arise from a proposed arrangement are to be treated for tax purposes. A ruling request has to be one where there are issues that require an interpretation of the law and not one seeking to know what the law clearly provides.

Advance Ruling in Income Tax in India:

With a view to avoiding a dispute in respect of assessment of income-tax liability in the case of a non-resident (and also specified categories of residents), a Scheme of Advance Ruling was incorporated under the Income-tax Act.

Implementing Authority:

The Authority for Advance Rulings (AAR) pronounces rulings on the applications of the non-resident/residents submitted in the prescribed form following prescribed procedure and such rulings are binding both on the applicant and the income-tax department.

Thus, the applicant can avoid expensive and time consuming litigation on any question of law or fact which might arise from normal income-tax assessment proceedings.

Composition of the Authority:

The Authority for Advance Rulings consists of a Chairman, who is a retired Judge of the Supreme Court and two members of the rank of Additional Secretary to the Government of India, one each from the Indian Revenue Service and the Indian Legal Service.

Who can seek Advance Ruling?

• Any non-resident person whether individual, company, firm, association of persons or other body corporates can make an application for seeking an advance ruling in regard to his/its tax liability.
• Certain category of Residents.

The Benefits of ADVANCE RULING:

• Helps the applicant in planning his income-tax affairs well in advance.
• Brings certainty in determining the tax liability.
• Helps avoiding long drawn and expensive litigation.
• It is inexpensive, expeditious and binding.

When an advance ruling cannot be sought?

• When the case is already pending in the case of the Non-resident applicant before any income-tax authority, the Appellate Tribunal or any court.
• When the case involves determination of fair market value of any property.
• When the case relates to a transaction which is designed prima facie for avoidance of income-tax.

Sources: PIB, BS.

New Development Bank and the BRICS Contingent Reserve Agreement

The Union Cabinet chaired by the Prime Minister recently gave its approval for establishing the New Development Bank (NDB) and the BRICS Contingent Reserve Arrangement (CRA).

NDB:

What it does?

The New Development Bank will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development.

Benefits:

• The establishment of the Bank will help India and other signatory countries to raise and avail resources for their infrastructure and sustainable development projects.
• It would also reflect the close relations among BRICS countries, while providing a powerful instrument for increasing their economic cooperation.
• It is expected to allow India to raise and obtain more resources for the much needed infrastructure development, the lack of which is coming in the way of inclusiveness and growth as of now.
• It will make available additional resources thereby recycling the savings accumulated in emerging countries which are presently being locked up in Treasury bonds having much lower returns.

Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power.

BRICS Contingent Reserve Arrangement (CRA):

What it does?

The BRICS CRA proposes to provide short-term liquidity support to the members through currency swaps to help mitigating BOP crisis situation, in case such a situation arises.

Benefits:

• The BRICS CRA will help India and other signatory countries to forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability.
• It would also contribute to strengthening the global financial safety net and complement existing international arrangements (from IMF) as an additional line of defence.
• It will ensure equity and inclusiveness by providing a backup safety net arrangement in place that will allow the Government of India to go ahead with its necessary and bold policy decisions without being concerned about the international economic development that may lead to domestic imbalances and worsen BOP position. So far IMF support is the primary safety net that is available to India in case any BOP crisis situation arises.

The Agreement will enter into force and the Bank will begin operations only after all member countries deposit their instruments of ratification with Brazil.

Sources: PIB.

Monuments of National Importance in India

The Union Minister of State for Culture, government of India, recently said that the government is taking some innovate steps to preserve the monuments of National Importance in India.

• 3685 monuments/sites in the country have been declared as of national importance till date.

Monuments of National Importance:

• As per the Ancient Monuments and Archaeological Sites and Remains Act, 1958, ancient monuments or archaeological sites and remains, as the case may be, which are of historical, archaeological or artistic interest, and have been in existence for not less than 100 years, may be declared by the Central Government as of national importance.
• The protection and maintenance of monuments, declared as of national importance is taken up by Archaeological Survey of India.

Sources: PIB.

Earthquake Prone Zone

Bureau of Indian Standards, based on the past seismic history, has grouped the country into four seismic zones, viz. Zone-II, -III, -IV and –V.

• Of these, Zone V is the most seismically active region, while zone II is the least.

Seismic Zone Intensity on Modified Mercalli (MM) intensity scale associated with various zone is as follows:

• II (Low intensity zone)                                   VI (or less)
• III (Moderate intensity zone)                         VII
• IV (Severe intensity zone)                             VIII
• V (Very severe intensity zone)                       IX (and above)

Different zones:

• Zone-V comprises of entire northeastern India, parts of Jammu and Kashmir, Himachal Pradesh, Uttaranchal, Rann of Kutch in Gujarat, parts of North Bihar and Andaman & Nicobar Islands.
• Zone-IV covers remaining parts of Jammu & Kashmir and Himachal Pradesh, Union Territory of Delhi, Sikkim, northern parts of Uttar Pradesh, Bihar and West Bengal, parts of Gujarat and small portions of Maharashtra near the west coast and Rajasthan.
• Zone-III comprises of Kerala, Goa, Lakshadweep islands, and remaining parts of Uttar Pradesh, Gujarat and West Bengal, parts of Punjab, Rajasthan, Madhya Pradesh, Bihar, Jharkhand, Chhattisgarh, Maharashtra, Orissa, Andhra Pradesh, Tamilnadu and Karnataka.
• Zone-II covers remaining parts of the country.

Sources: PIB.

Panel against trying juveniles as adults

A parliamentary committee has rejected the government’s proposal to try juveniles as adults for heinous crimes like rape and murder. The government was trying to bring changes in the law to make this happen.

• Giving its observation on the Juvenile Justice (Care and Protection of Children) Bill, 2014, the Parliamentary Standing Committee on HRD said children below 18 years are amenable and should be treated in the same manner and “differential treatment” for children above 16 years of age “should not arise”.
• The government had said that the offender will not be handed either life imprisonment or capital punishment if found guilty.

Crimes by Juveniles:

• As per data available with the National Crime Records Bureau (NCRB), there has been a rise of 132% in incidents of crimes committed by juveniles against women in 2013 over previous year i.e. 2012. But they cannot be punished according to the law.

So to overcome this hurdle, the Ministry of Women and Child Development had introduced the Juvenile Justice (Care and Protection of Children) Bill 2014 in the Lok Sabha which contains both punitive and reformative measures for children in conflict with law.

Juvenile Justice (Care and Protection of Children) Bill 2014:

Objectives of the bill:

• To provide both deterrent and reformative options for overall development of children.
• The Bill seeks to achieve the objectives of the United Nations Convention on the Rights of Children as ratified by India in December, 1992. It specifies procedural safeguards in cases of children in conflict with law.
• It seeks to address challenges in the existing Act such as delays in adoption processes, high pendency of cases, accountability of institutions, etc.
• The Bill further seeks to address children in the 16-18 age group, in conflict with law, as an increased incidence of crimes committed by them have been reported over the past few years.

Important provisions in the Bill:

• The Bill defines a child as anyone less than 18 years of age. However, a special provision has been inserted for the possibility of trying 16-18 year olds committing heinous offences, as adults. A heinous offence is defined as one for which the minimum punishment under the Indian Penal Code is seven years.
• States shall constitute one or more Child Welfare Committees (CWCs) for each district for dealing with children in need of care and protection.
• A Special Juvenile Police Units (SJPU) will be established in each district, consisting of a police officer and two social workers. One Child Welfare Police Officer will be present in every police station.
• Prospective adoptive parents must be consenting. A single or divorced person can also adopt, but a single male cannot adopt a girl child. Parents must be physically fit, financially sound, and mentally alert and motivated to adopt. Regulations regarding adoption shall be framed by the Central Adoption Resource Authority.
• Any official, who does not report an abandoned or orphaned child within 24 hours, is liable to imprisonment up to six months or fine of Rs 10,000 or both.
• One or more Juvenile Justice Boards (JJBs) to be constituted, for each district, for dealing with children in conflict with law. JJBs are composed of a Metropolitan or Judicial Magistrate and two social workers, one of whom shall be a woman.

Powers and responsibilities of the JJBs include:

• ensuring legal aid for a child;
• adjudicating and disposing of cases related to children in conflict with law;
• conducting regular inspection of adult jails to ensure no child is lodged in such jails and other inspection visits and;
• Conducting inspection visits of residential facilities for such children.

Sources: The Hindu, PIB, prsindia.org.

India home to 18% of world’s raptors

A recent publication by the Zoological Survey of India says that India is home to 106 species of raptors, popularly known as ‘birds of prey.’

Important revelations:

• The publication reveals that more than 18 per cent of the 572 species of raptors spread all over the world can be found in India alone.
• The list also includes some of the interesting and lesser-known species of raptors: Andaman Serpent Eagle and Great Nicobar Serpent Eagle: which can only be found in the Andaman and the Great Nicobar islands respectively.
• Among the raptors found, the Indian White-backed Vulture, the Long Billed Vulture, the Slender Billed Vulture, the Red headed Vulture and the Forest Owlet are in the ‘critically endangered’ category, and the Egyptian Vulture and the Saker are in the ‘endangered’ list of the International Union for Conservation of Nature’s (IUCN) ‘Red List.’

Sources: The Hindu.

Overdraft underJan-Dhan comes under priority sector lending: RBI

Giving a big boost to Pradhan Mantri Jan-Dhan Yojana (PMJDY), the Reserve Bank of India, recently said bank overdrafts of up to Rs.5,000 in accounts opened under this financial inclusion mission would be treated as priority sector lending.

Details:

Overdrafts extended by banks up to Rs.5,000 in PMJDY accounts will be eligible for classification under priority sector advances (‘others’ category) as also weaker sections, provided the borrower’s household annual income does not exceed Rs.60,000 for rural areas and Rs.1.20 lakh for non-rural areas.

PRADHAN MANTRI JAN DHAN YOJANA:

The PMJDY was conceived as a national mission on financial inclusion with the objective of covering all households in the country with banking facilities and having a bank account for each household.

• It is a scheme for comprehensive financial inclusion. Accounts can be opened with zero balance.

The mission mode objective of the PMJDY consists of 6 pillars.

During the 1st year of implementation under Phase I (15th August, 2014-14th August,2015), three Pillars namely:

1. Universal access to banking facilities
2. Financial Literacy Programme and
3. Providing Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs 1 lakh and RuPay Kisan card, will be implemented.

Phase II, beginning from 15th August 2015 upto15th August, 2018 will address the other three pillars,

1. Creation of Credit Guarantee Fund for coverage of defaults in overdraft accounts
2. Micro Insurance and
3. Unorganized sector Pension schemes like Swavlamban.

In addition, in this phase coverage of households in hilly, tribal and difficult areas would be carried out. Moreover, this phase would focus on coverage of remaining adults in the households and students.

The implementation strategy of the plan is to utilize the existing banking infrastructure as well as expand the same to cover all households.

The major shift this time in this Financial Inclusion effort of the Government is that households are being targeted instead of villages as targeted earlier. Moreover both rural and urban areas are being covered this time as against only rural areas targeted earlier. The present plan pursues digital financial inclusion with special emphasis on monitoring by a Mission headed by the Finance Minister.

Benefits under PMJDY Scheme:

• Interest on deposit.
• Accidental insurance cover of Rs.1.00 lac
• No minimum balance required.
• Life insurance cover of Rs.30,000/-
• Easy Transfer of money across India
• Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
• After satisfactory operation of the account for 6 months, an overdraft facility will be permitted
• Access to Pension, insurance products.
• Accidental Insurance Cover, RuPay Debit Card must be used at least once in 45 days.
• Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household.

Sources: The Hindu, PIB, pmjdy.gov.in.

Section 66A a necessary deterrent, says government

The government recently argued before the Supreme Court that Section 66A of the Information Technology Act should be interpreted on a case by case basis.

Background:

• The Supreme Court had asked the government to explain what constituted “grossly offensive” under section 66 of the Act.

Government’s view:

The government maintained that the provision was a necessary deterrent and could not be cast away on the apprehension that it would be misused to affect the freedom of speech and expression.

Section 66A:

Section 66A defines the punishment for sending “offensive” messages through a computer or any other communication device like a mobile phone or a tablet. A conviction can fetch a maximum of three years in jail and a fine.

Controversy over Section 66A:

The law came in for criticism after several arrests by police over Facebook and other social media postings.

• Two young women were arrested in Mumbai over a posting which the Shiv Sena found offensive.
• A lecturer was arrested in Kolkata for forwarding cartoons of chief minister Mamata Banerjee.
• A writer was arrested in UP for criticising the suspension of IAS officer DS Nagpal.

In the wake of these incidents, many petitions were filed in SC challenging the law as being too vague, broad and arbitrary. SC in an interim order passed at the outset, restrained police from arresting anyone without clearing such action first with their superiors in such cases.

Arguments against the Law:

The SC has received petitions demanding that the law either be aligned with Article 19(2) of the Constitution or be struck down.

• The opponents argue the I-T Act cannot prescribe restrictions on a citizen’s right to freedom of speech and expression that were wider than warranted under Article 19(2), which allows the state to curtail them only on the grounds of public order, security of state etc. Any other restriction on free speech on social media would be an unreasonable restriction under the Constitution.

Sources: The Hindu, PIB, IE.

Mock Questions:

1) Consider the following statements regarding the Authority for Advance Ruling (Income Tax) India:

1. It is a statutory body.
2. The rulings of the Authority are binding both on the applicant and the income-tax department.
3. Only non residents can seek advance rulings from the Authority.

Which of the above statements are true?

a) Only 1.

b) Only 1 & 3.

c) Only 1 & 2.

d) Only 2.

Consider the following statements regarding the proposed BRICS New Development Bank:

1. The bank will provide loans only to BRICS countries.
2. IMF has agreed to provide $2 billion assistance to set up the bank.
3. In the Bank each participant country will be assigned votes based on its capital share.

Which of the above statements are true?

a) Only 1.

b) Only 1 & 2.

c) Only 3.

d) None

2) Consider the following statements regarding BRICS Contingent Reserve Arrangement (CRA):

1. It proposes to provide long-term liquidity support to the members.
2. The support is provided through currency swaps.

Which of the above statements are true?

a) Only 1.

b) Only 2.

c) Both

d) None

3) Consider the following statements regarding the Monuments of National Importance in India:

1. As per the Ancient Monuments and Archaeological Sites and Remains Act, 1958, a monument can be declared as of national importance only if it has been in existence for not less than 100 years.
2. The monuments are declared as of National importance by the Archaeological Survey of India (ASI).

Which of the above statements are true?

a) Only 1.

b) Only 2.

c) Both

d) None

4) As per the groupings made by the Bureau of Indian Standards, based on the past seismic history, which of the following states are included under Seismic Zone 5 (the most seismically active region):

1. Manipur
2. Nagaland
3. Himachal Pradesh
4. Uttar Pradesh.

Options:

a) Only 1.

b) Only 1, 2 & 3.

c) Only 1 & 2.

d) All

5) Only 1,2 and 4Consider the following statements regarding the Juvenile Justice (Care and Protection of Children) Bill 2014: according to the provisions of the Bill

1. A Special Juvenile Police Units (SJPU) will be established in each district, consisting of a police officer and two social workers.
2. A single or divorced person cannot adopt a girl child.
3. States shall constitute one or more Child Welfare Committees (CWCs) for each district for dealing with children in need of care and protection.

Which of the above statements are true?

a) Only 1.

b) Only 1 & 3.

c) Only 1,2 and 4

d) All

6) Which of the following raptors fall under ‘critically endangered’ category of IUCN’s red list?

1. Indian White-backed Vulture.
2. Long Billed Vulture.
3. Red headed Vulture.
4. Egyptian Vulture.

Options:

a) Only 1.

b) Only 1, 2 & 3.

c) Only 1, 2 & 4.

d) All

7) Consider the following statements regarding Jan Dhan Yojana:

1. Under the Scheme, bank accounts can be opened even with zero balance.
2. Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household.

Which of the above statements are true?

a) Only 1.

b) Only 2.

c) Both

d) None