Current Affairs – February, 2020

This section is a feed of Current Affairs February, 2020 comprising all Current Affairs National and International importance published in february, 2020 Banking, SSC, CLAT, UPSC, State PCS, IBPS, Railways and other Competitive Examinations.

PDF Compilation of these updates can be downloaded from This Link

Cabinet Approval: Capital Infusion in three public sector Units OICL, UIICL and NICL

On February 12, 2020, the Union Cabinet approved on capital infusion in three Public Sector Units namely United India Insurance Company (UIICL), Oriental Insurance Company Limited (OICL) and National Insurance Company Limited (NICL).

Highlights

During the meet the cabinet also approved an immediate release of Rs 2,500 crores in order to address their critical financial position and also regulate their solvency requirements. The capital infusion is aimed at merging the three insurance companies in the future. Merging the companies will improve their operational efficiency and solvency ratio.

The step is being taken to make these companies meet the solvency ratio criteria of IRDA (Insurance Regulatory Development Authority)

Solvency Ratio

The Solvency ratio is the key metric used to measure the ability of an enterprise to meet its debt obligation. It indicates if a company has sufficient cash flow in order to meet its long term and short-term liabilities.

It is the ratio between after-tax net operating income and total debt obligations.

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Cabinet Approves amendment of Double Taxation Avoidance Agreement with Sri Lanka

On February 12, 2020 the Union Cabinet approved the protocol to amend the DTAA (Double Taxation Avoidance Agreement) that was signed between India and Sri Lanka. The DTAA with respect to prevention of fiscal evasion is to be amended.

Highlights

Under the amendment, an anti-abuse provision is to be included. Also, the amendment will include Principle Purpose Test. This will help in curbing strategies that exploit gaps in tax rules.

Significance

Both Indian and Sri Lanka are members of major multilateral organizations such as OECD, G20, BEPS. Therefore, it is essential for both the countries to implement standards based on Multilateral Convention to Implement Tax Treaty related measures.

Why Principle Purpose Test?

India is a signatory of MLI, whereas Sri Lanka is not. Therefore, it is essential for the countries to insert Principle Purpose Test to meet the minimum standards

What is MLI?

In 2016, around 100 countries signed Multilateral Convention to Implement Tax Treaty. The treaty includes features that help to prevent Base Erosion and Profit Shifting. This is called Multilateral Instrument or MLI.

If a country has signed MLI along with India, it is not important to include Principle Purpose Test in the DTAA. As Sri Lanka is not a signatory, DTAA has been included.

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