. No.	Topic Name	Prelims/Mains
1.	Difference between Cess and Surcharge in India	Prelims & Mains
2.	India’s Largest Floating Solar Plant	Prelims & Mains
3.	Foreign Portfolio Investors	Prelims & Mains
4.	GI Tags in India	Prelims Specific Topic

 

1 – Difference between Cess and Surcharge in India:GS III

 

Topic à Indian Economy

 

·       Cess:

·       In its most basic form, a cess is a levy on tax.

·       It is crucial to keep in mind that a cess may only be used for the intended purpose.

·       For instance, the Indian government only utilizes money collected from an education cess for education.

·       Furthermore, all taxpayers must pay this tax.

·       To the Consolidated Fund of India, cess taxes are paid.

·       In general, cess is anticipated to be levied up until the government has a strong enough reason to do so and to disappear after that reason has been achieved.

·       Since a cess is imposed in addition to the present tax, it differs from other taxes like excise duty and income tax (tax on tax).

·       For instance, adding a 5% education tax to a 20% income tax will increase the entire tax to 21%. (Base tax of 20 percent + an additional 5 percent cess).

·       The main cesses currently in effect are those for education, roads, infrastructure, clean energy, Krishi Kalyan, and swachh bharat.

 

·       Types of Cess:

 

·       There are various types of cess levied in India. They are:

·       Infrastructure Cess

·       Krishi Kalyan Cess

·       Cess on Exports

·       Road and Infrastructure Cess

·       Duty on Tobacco and Tobacco Products

·       Health and Education Cess on Income Tax

·       Swachh Bharat Cess

·       Education Cess

·       Cess on Crude Oil

 

·       Surcharge:

 

·       Individuals with net taxable salaries of more than Rs 1 crore are subject to a 10% surcharge on their tax obligations.

·       If net income is between Rs 1 crore and Rs 10 crore, domestic corporations must pay a surcharge of 5%. Surcharges at a rate of 10% are applied if net income exceeds Rs 10 crore.

·       If the net income is between Rs 1 crore and Rs 10 crore, a surcharge of 2 percent is imposed on international firms.

·       The surcharge is raised to 5 percent if the net income is greater than Rs 10 cr. If the net income surpasses Rs 1 crore and Rs 10 crore, both domestic and foreign enterprises receive a margin of relief.

·       A tax surcharge on income is a significant source of funding for the state.

·       The Union Government may use this money for any purpose it sees fit.

·       It’s important to note that just the tax that must be paid, not the entire income, is covered.

·       The Consolidated Fund of India receives this payment, which may be used for any purpose.

·       For instance, a 10% surcharge on a 30% income tax rate increases the tax burden to 33%.

 

·       Surcharge and Cess have following similarities:

 

·       The central government imposes both a cess and a surcharge.

·       Both are gathered and placed in the Consolidated Fund of India.

·       State governments are not permitted to combine any of these.

 

·       About the inclusion of Cess and Surcharge in the Tax Devolution Pool:

 

·       As part of the division of labour and responsibilities between the Union and states as outlined in the Seventh Schedule and as stipulated by Article 246 of the Constitution, the Centre is authorised to impose and collect both direct and indirect taxes under the Union List.

·       To the governments’ detriment, this has caused a significant resource mobilisation imbalance that prevents them from fulfilling their pledged social expenditure obligations.

·       Tax cesses and surcharges, as well as the cost of collection and transfer to the National Disaster Response Fund, are subtracted from gross tax income to determine the net proceeds of taxes (also known as net tax revenue) (NDRF).

·       A larger pool of cesses and surcharges consequently lowers the total amount of the divisible taxes, lowering resource transfer to the states.

·       The central government has 63 percent of the revenue raising authority to spend on 38 percent of expenditures, while states are accountable for more than 62 percent of expenditures but only 37 percent of revenue raising ability.

·       Because cess and surcharges are excluded from the divisible pool, which is net of taxes, benefits do not accrue to the states despite an increase in cesses and surcharges from Rs 49,628.02 crore in 2010–11 to Rs 3,74,471.14 crore in 2021–22.

·       States have repeatedly asked the Union administration to either completely abolish cesses or, if they are maintained for a longer period of time, to include them into the divisible pool, over the years.

·       As a result of this inclusion, States will get a bigger portion of devolution from the Centre’s net revenues, enabling them to fulfil their own social, human development, and infrastructure obligations.

·       The fourteenth and fifteenth Finance Commissions recommended including cesses and surcharge revenue in the divisible pool by enacting a constitutional change.

 

Source à The Hindu

2 – India’s Largest Floating Solar Plant:GS III

Topic à Renewable Energy Sector

 

·       Context:

 

·       The Ramagundam floating solar PV project’s commercial operation date for the final 20 MW of its 100 MW capacity was recently announced.

 

·       This officially declares the 100 MW Ramagundam floating solar PV project in Telangana operational as of July 1, 2022.

·       The project is the biggest of its sort in India.

 

·       Floating solar panels: what are they?

 

·       These are platforms with photovoltaic (PV) modules attached on them that float on lakes, reservoirs, and, under the right circumstances, oceans and seas.

·       The majority of the time, these platforms are moored on calmer bodies of water, including ponds, lakes, or reservoirs.

·       These systems don’t require land levelling or vegetation removal, are relatively quick to build, and operate quietly.

 

·       What are the Ramagundam Project’s Key Highlights?

 

·       It comes equipped with cutting-edge technology and eco-friendly features.

·       The reservoir’s 500 acres are covered by the project. 40 blocks, each with a 2.5 MW capacity.

·       One floating platform and an array of 11,200 solar modules make up each block.

·       The high-density polyethylene (HDPE) floaters on which the solar panels are mounted.

·       Through an unique HMPE (High Modulus Polyethylene) rope, the complete floating system is fastened to the dead weights positioned in the balancing reservoir bed.

·       All of the electrical apparatus, including the inverter, transformer, HT panel, and SCADA (Supervisory Control and Data Acquisition), is situated on floating platforms made of ferro cement, making this project distinctive.

·        

·       What are the project’s environmental advantages?

·       Little Land Needed:

 

·       The smallest amount of land needed, especially for accompanying evacuation plans, is the most evident benefit from an environmental standpoint.

 

·       Reduce the rate of water evaporation:

 

·       Additionally, the presence of floating solar panels reduces the rate of water evaporation from water bodies, aiding in water conservation.

·       The evaporation of about 32.5 lakh cubic metres of water annually can be stopped.

 

·       Effective at Cutting CO2 Emissions:

 

·       The presence of a body of water beneath the solar panels keeps the temperature there stable, increasing production and efficiency. Similar to how 1,65,000 tonnes of coal use may be reduced annually, 2,10,000 tonnes of CO2 emissions can be reduced as well.

 

·       What Problems are related to it?

 

·       Costly to Install:

 

·       Installing floating solar panels costs more than installing a conventional PV system.

·       The fact that the technology is relatively new and needs specialised training and tools is one of the key causes.

·       However, it is anticipated that installation prices will decrease as technology improves.

 

·       Restrictive Application:

 

·       Large-scale floating solar arrays are common, and they offer electricity to sprawling cities, businesses, or utilities.

·       Therefore, it is more practical to choose rooftop installation or ground-mounted solar.

 

·       Understanding the topography of the water bed:

 

·       Understanding the geography of the waterbed and whether it is suitable for setting up anchors for floats is essential when developing floating solar systems.

 

·       What additional solar energy initiatives are there?

 

·       The solar park Scheme:

·       Calls for the construction of multiple solar parks, each with a nearly 500 MW capacity, spread out over various states.

 

·       Solar rooftop scheme:

 

·       To use solar energy by mounting solar panels on the homes’ roofs.

 

·       Atal Jyoti Yojana:

 

·       For the installation of solar street lighting (SSL) installations in states with fewer than 50% of homes using grid power, the AJAY scheme was introduced in September 2016. (as per Census 2011).

 

Source à The Hindu

 

 

3 – Foreign Portfolio Investors:GS III

 

Topic à Indian Economy

 

·       Context:

 

·       FPIs have already sold more than Rs 1.81 lakh crore worth of stocks in 2022.

 

·       Background:

 

·       Due to concerns of an aggressive rate hike by the US Federal Reserve that hurt investor emotions, foreign investors withdrew close to Rs 40,000 crore from the Indian equities market in May.

·       FPIs have massively withdrew Rs 57,137 crore from the equity market in the first two months of FY23 (April and May).

·       Even in June, the selling pressure is anticipated to persist.

 

·       The causes of the current FPI exodus from India:

 

·       Geopolitical risk increasing

·       Escalating inflation

·       Central banks’ tightening of monetary policy

·       Due to the ongoing conflict between Russia and Ukraine, the supply chain has been disrupted.

·       Impact of the conflict between Russia and Ukraine on crude oil prices.

·       Concerns about rising inflation, more rate increases by the RBI, and their effects on economic growth loomed large on the domestic front.

·       Globally, the US Federal Reserve raising interest rates, global central banks tightening monetary policy, and the rise of the foreign currency dollar rate have caused offshore investors to pull their stock out of delicate markets.

·       Investors are wary because they worry that high inflation will hurt company profitability and have a negative influence on consumer spending.

 

·       In the past eight months (from October 2021 to May 2022), foreign investors withdrew a staggering net amount of Rs 2.07 lakh crore from the equity market.

·       The greatest in the previous 15 years, FPI equity outflows reach $15 billion from January to March 2022.

·       FPIs flows are anticipated to remain erratic in the short term as a result of the market’s current geopolitical influences.

 

·       Foreign Portfolio Investment: What is it?

 

·       FPI refers to investments made in Indian securities by non-residents, including shares, corporate and government bonds, convertible securities, units of business trusts, and more. Foreign Portfolio Investors are the category of investors who invest in these securities.

 

·       What principal legislation or rules apply to an FPI in India?

 

·       The Securities and Exchange Board of India is primarily in charge of regulating FPIs (SEBI).

·       The SEBI (Foreign Portfolio Investors) Regulations, 2019, which abolish the previous 2014 Regulations, were recently introduced by SEBI.

·       FPIs must also abide by the Income-tax Act of 1961 and the Foreign Exchange Management Act of 1999.

 

·       Criteria for Foreign Portfolio Investment:

 

·       An individual must fulfil the following qualifications in order to qualify as an FPI:

 

·       According to the Income Tax Act of 1961, the petitioner cannot be an Indian non-resident.

·       must not be a national of a nation covered by the FATF’s public statement.

·       If the bank itself is the applicant, it must come from a nation whose central bank is a BIS member.

 

·       Regulations that an FPI must follow under the Income Tax Act of 1961:

 

·       FPIs generate income in the form of dividends, interest, and capital gains since they invest in securities like shares, bonds, debentures, business trust units, etc. FPIs would also need to regularly transfer these incomes (along with capital investments) outside of India.

·       The applicable income tax on such income must be deposited with the government treasury prior to the transfer of money. Depending on the type of income, taxes are either deposited as withholding taxes, self-assessment payments, or a combination of the two.

·       Prior to sending the money, the custodian/banker would additionally need a certificate from a licenced tax expert.

·       Furthermore, the FPI must submit an annual tax return following the conclusion of the fiscal year (April 1 through March 31 in India).

 

·       What effects do the 2019 SEBI (FPI) Regulations have?

 

·       The committee, led by former RBI deputy governor H R Khan, made recommendations that served as the basis for the new laws.

·       The following modifications that went into effect along with the 2019 regulation can be used to understand the substantial impact of SEBI loosening the regulatory framework for foreign portfolio investors under new regulations. These modifications include:

 

 

Source à The Hindu

 

 

 

 

 

4 – GI Tags in India:

Prelims Specific Topic

 

·       Context:

 

·       Mayurbhanj’s superfood “ant chutney” is expected to find more recognition with a GI label.

 

·       The GI tag:

 

·       A GI is primarily a produced product (handicrafts and industrial goods), an agricultural product, or a natural product that comes from a specific geographic region.

 

·       Such a name typically carries a guarantee of quality and originality, which is mostly attributed to the location of its origin.

 

·       Once GI protection has been granted, no other manufacturer may use the name incorrectly to advertise identical items. Additionally, it reassures clients about the legitimacy of the goods.

·        

·       Who is a geographical indication’s registered owner?

 

·       A registered proprietor can be any group of people, producers, organisation, or authority that was created by or is recognised by the law.

·       Their name needs to be listed as the registered proprietor for the requested geographic indication in the Geographical Indication Register.

 

·       How long is the Geographical Indication registration valid?

 

·       A geographical indication may be registered for a maximum of ten years.

·       It may be renewed periodically for additional terms of 10 years each.

·       The Geographical Indications of Goods (Registration and Protection) Act, 1999, which went into effect in September 2003, is responsible for managing geographic indication registration in India. Darjeeling tea was the first product in India to receive a GI label in the 2004–2005 academic year.

 

Source à The Hindu