Current Affairs – November 2016

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Union Government to introduce Direct Transfer of Fertilizer Subsidy

The Union Government has decided to introduce Direct Benefit Transfer (DBT) system for fertilizer subsidy payments.

Under the proposed system, 100% subsidy on various fertilizer grades will be released to the manufacturers and importers on basis of actual sales made by the retailer to the beneficiaries.

Key facts

  • Initially, the modified subsidy procedure under DBT system will be introduced on pilot basis in 16 select districts.
  • In the second phase, the new payment system will be rolled out in all states only after its due stabilization in first phase.
  • The proposed DBT will address the issues relating to diversion and smuggling of urea.

How DBT system for fertilizer subsidy is different?

  • The DBT in fertilizer sector being implemented is slightly different from the normal DBT implemented in LPG subsidy.
  • Under it, the subsidy will be released to the fertilizer companies instead of the beneficiaries, after the sale is made by the retailers to the beneficiaries.
  • The subsidy will be released on submission of claims generated in the web-based online Integrated Fertilizer Monitoring System (iFMS) by fertilizer companies.

Potential benefits

  • It will reduce diversion and smuggling of fertilizers to a large extent. Thus, it will help Government to save subsidy to the some extent.
  • The fertilizers will be available to all on ‘no denial’ basis and release fertilizer subsidy to fertilizer companies has no direct relation with landholding of the farmers.

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Lt General AK Bhatt appointed as new DGMO

The Appointments Committee of Cabinet (ACC) has appointed Lt-General A K Bhatt as the new director-general of military operations (DGMO).

He will succeed Lt-General Ranbir Singh who has been promoted and will take over 1 Corps (headquarters at Mathura), command of a strike corps on the Western border.

Lt-General A K Bhatt will be in charge of all army operations including on the LoC which has seen heightened tension.

He belongs to the Gorkha Rifles. Earlier he had served in the military operations directorate as a brigadier. Prior to this appointment he was posted as the additional director general of the complaints and advisory board at the Army HQ. Earlier he had commanded the 21 Division in Assam.

In September 2016, Lt-General Ranbir Singh along with foreign Secretary had declared Army Special Forces had conducted surgical strikes against terror launch pads at five separate locations in Pakistan-occupied-Kashmir (PoK) on 29 September 2016.

Note: 1 Corps of Indian Army is one of the three assault forces of the army — which is mandated to cross into Pakistan in a short notice. Other two are 2 Corps (Ambala) and 21 Corps (Bhopal). In all, the Army has 14 Corps under six operational or regional commands. The fourth is the new 17 Mountain Corps being raised as a deterrent against China.

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Union Government introduces Taxation Laws (Second Amendment) Bill, 2016

The Union Government has introduced the Taxation Laws (Second Amendment) Bill, 2016 in the Parliament.

The bill amends existing tax laws to impose a higher rate of tax and penalty in respect of undisclosed incomes. It proposes, Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY), an anti-poverty scheme.

It seeks to attract more people to disclose their unaccounted cash and also to put in a framework in place to use that for the welfare of the people especially in the rural areas.

It also ensures that tax defaulting assessees and black money holders are subjected to tax at a higher rate and stringent penalty provision.

Key features of Bill

  • Mandatory for black money declarants to deposit 25% of amount disclosed in Pradhan Mantri Garibi Kalyan Yojana (PMGKY) 2016 for a 4 year lock-in period without interest.
  • Those who choose to declare their ill-gotten wealth stashed till now in banned Rs. 1,000 and Rs. 500 currency notes under the PMGKY scheme will have to pay a tax at the rate of 30% of the undisclosed income.
  • Additionally, 10% penalty will be levied on the undisclosed income and PMGK Cess (surcharge) at the rate of 33% of tax (33% of 30%).
  • Further, the declarants will have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).
  • The money from PMGK will be used for projects in irrigation, infrastructure, primary education, primary health, housing, toilets and livelihood so that there is justice and equality.
  • For those who continue to hold onto undisclosed cash and are caught they will be levied with flat 60% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%.
  • Besides, if the assessing officer can charge a 10% penalty in addition to the 75% tax.

Why it is necessary?

In general, evasion of taxes deprives the nation of critical resources which could enable Government to undertake development and anti-poverty programmes. It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage. The Taxation Laws (Second Amendment) Bill, 2016 seeks to remove existing redundant provisions of the IT Act, 1961 which can possibly be used for concealing black money.  It also ensures that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.

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