TOP 5 TAKKAR NEWS OF THE DAY (5th JULY 2023)

1. LIBERALISED REMITTANCE SCHEME

TAG: GS 3: ECONOMY

CONTEXT: Recently, The Finance Ministry deferred the imposition of an increased 20% rate for Tax Collected at Source (TCS) by three months to October 1,2023.

THE EXPLANATION:

Liberalised Remittance Scheme (LRS):

• Under the scheme all resident individuals, including minors, may remit up to $250,000 each financial year out of India for any current or capital account transaction, or a combination of both.
• It was introduced in February 2004 and has been revised recurrently in keeping with prevailing economic conditions. Its introductory threshold was $25,000.
• Relevant transactions may include private visits to any country (excluding Nepal and Bhutan), gift or donation, emigration, maintenance of close relatives abroad, business travel (or attending specialised conferences), medical treatment and foreign education, among other things.

What is Tax Collected at Source (TCS) and how does it work?  

• TCS refers to the tax collected by the seller of a commodity at the time of sale. It is over and above the price of the commodity and is required to be remitted to the government’s account.
• Under the mechanism, sellers could be the central government, state government, local authority, statutory authority, corporation and/or company registered under the Companies Act, among others.
• A buyer is classified as a person who obtains goods or the right to receive goods in any sale, auction, tender or any other mode.
• The tax does not apply to Indian individuals if they furnish a declaration that the purchased goods would be utilised for manufacturing, processing or producing articles or things (for purpose of generating power) and not for further sale.
• While LRS designates the upper limit of remittance, the TCS threshold would determine the taxation eligibility of the remittance.

Issue on international credit cards:

• The government announced that transactions facilitated using international credit cards while being overseas would not fall under the purview of the Liberalised Remittance Scheme (LRS).
• Thus transactions via credit cards when travelling abroad will not attract TCS.
• The intent behind the bringing credit cards under the ambit was to remove the differential treatment accorded to credit cards in relation to other modes of foreign exchange.
• Earlier in March,2023 while introducing changes to the Finance Act of 2023, that payments for foreign tours through credit cards were not captured under the LRS.

2. INTER-STATE RIVER WATER DISPUTE TRIBUNAL

TAG: GS 2: POLITY

THE CONTEXT: The Union Government has submitted a proposal to the Cabinet Secretariat for formation of Pennaiyar Water Dispute Tribunal to resolve the Pennaiyar river dispute between Tamil Nadu and Karnataka.

EXPLANATION:

Background of the issue:

• In January, 2019, the Supreme Court permitted the Tamil Nadu Government to seek the constitution of a Tribunal on the dispute over sharing of water of Pennaiyar river.
• In 2020, the Union Government had constituted a Negotiation Commission to resolve the water dispute.
• In December, 2022, the Apex Court was informed by the Additional Solicitor General that the cabinet nod for the constitution of Penniyar Water Tribunal has been approved by the concerned Ministry (Jal Shakti) & the same has been circulated to Ministry of Home Affairs, Ministry of Law & Justice.
• Thereafter, Gazette notification of Pennaiyar Water Disputes Tribunal was to be issued after the Union Cabinet’s approval. For the completion of the process, the Centre had sought for six months.
• In May, 2023, the Apex Court had granted one month’s additional time to the Union Government to constitute the Tribunal, including the issuance of the Gazette Notification.

Inter-State River Water Disputes Tribunal

Constitutional provisions

• As water comes under state list. According to Entry 17 of State List, states can legislate with respect to rivers.
• However, Entry 56 of the Union List gives the Central government the power to regulate and develop inter-state rivers and river valleys.
• Article 262 empowers Parliament to provide for the adjudication of any dispute with respect to the use, distribution or control of the waters in any inter-state river or river valley.
• As per Article 262, the Parliament has enacted the following:

1. River Board Act, 1956: This empowered GOI to establish Boards for Interstate Rivers and river valleys in consultation with State Governments. Till date, no river board has been created.
2. Inter-State Water Dispute Act, 1956: Under this act, if a state government or governments approach the Centre for the constitution of a tribunal, the government may form a tribunal after trying to resolve the dispute through consultations.

Features of River Boards Act 1956

• It provides for the establishment of River Boards, for the regulationand development of inter-State rivers and river valleys.
• Central Government may establish a board on a request of State Government for advising the interested government in relation to matters involve concerningthe regulation or development of an inter-state river or river valley.
• Different Boards may be established for different inter-State rivers or river valleys.
• The Board is to consist of the Chairman and such other members as the Central Governmentthinks fit to appoint. They must be persons having special knowledge and experience in irrigation,electrical engineering, flood control, navigation, water conservation, soil conservation,administration or finance.
• Functions of the Board includes conservation of the water resources of the inter-State river, schemes for irrigationand drainage, development of hydro-electric power, schemes for flood control, promotion ofnavigation, control of soil erosion and prevention of pollution.
• The functions of the Board are advisory and not adjudicatory.

Features of Inter-State Water Disputes Act, 1956

• A State Government which has a water dispute with another State Government may request theCentral Government to refer the dispute to a tribunal for adjudication.
• The Central Government, if it is of opinion that the dispute cannot be settled by negotiation, shallrefer the dispute to a Tribunal.
• The Tribunal consists of a Chairman and two othermembers, nominated by the Chief Justice of India from among persons who, at the time of suchnomination, are Judges of the Supreme Court. The Tribunal can appoint assessors to advise it in the proceedings before it.
• On the reference being made by the Central Government, the Tribunal investigates the matterand makes its report, embodying its decision. The decision is to be published and is to be finaland binding on the parties.
• Jurisdiction of the Supreme Court and other courts in respect of the dispute referred to theTribunal is barred.

Water Dispute Tribunals in India:

Tribunal	States Concerned	Date of Constitution	Current Status
Godavari Water Disputes Tribunal	Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh, Orissa	April 1969	Report and decision given in July 1980.
Krishna Water Disputes Tribunal – I	Maharashtra, Andhra Pradesh, Karnataka,	April 1969	Report and decision given in May 1976.
Narmada Water Disputes Tribunal	Rajasthan, Madhya Pradesh, Gujarat, Maharashtra	October 1969	Report and decision given in December 1979. Narmada Control Authority (NCA) was constituted to implement the decision.
Ravi & Beas Water Tribunal	Punjab, Haryana, Rajasthan	April 1986	Report and decision given in April 1987. Further Report is pending.
Cauvery Water Disputes Tribunal	Kerala, Karnataka, Tamil Nadu, Puducherry	June 1990	Report and Decision given on 5 February 2007. Supreme Court modified the decision on 16 February 2018. The Cauvery Water Management Authority (CWMA) and Cauvery Water Regulation Committee (CWRC) were constituted to implement the modified decision.
Krishna Water Disputes Tribunal -II	Karnataka, Andhra Pradesh, Maharashtra, Telangana	April 2004	Report and decision given on 30 December 2010. SLPs filed pending in the Court. The term of the Tribunal has been extended after the bifurcation of Andhra Pradesh. The matter is under adjudication in the Tribunal.
Vansadhara Water Disputes Tribunal	Andhra Pradesh,Odisha	February 2010	Report and decision submitted on 13 September 2017. Further Report is pending.
Mahadayi Water Disputes Tribunal	Goa, Karnataka, Maharashtra	November 2010	Report and decision submitted on 14 August 2018. Further Report is pending.
Mahanadi Water Disputes Tribunal	Chhattisgarh, Odisha	March 2018	Under adjudication by the Tribunal. Report and decision are awaited.

3. IRAN IN THE SHANGHAI COOPERATION ORGANISATION (SCO)

TAG: GS 2: INTERNATIONAL RELATIONS

THE CONTEXT: Recently, Iran has joined as the ninth and newest member of the Shanghai Cooperation Organisation (SCO) at the virtual summit of the grouping. SCO leaders stated that the formation of a “more representative” and multipolar world order is in the global interest.

EXPLANATION:

Highlights of the summit:

• India is hosting the Shanghai Cooperation Organisation (SCO) summit for the first time.
• India refused to join other members on paragraphs relating to China’s Belt and Road Initiative (BRI) and stayed out of a joint statement on SCO Economic Development Strategy 2030.
• The agreements signed included:

1. New Delhi Declaration outlining areas of cooperation between SCO countries
2. a joint statement on countering radicalization
3. a joint statement on digital transformation where India offered to share expertise on digital payment interfaces such as UPI.

• SCO members jointly criticised non-UN sanctions as “incompatible with the principles of international law”, which have a “negative impact” on other countries.
• SCO members also agreed to explore the use of “national currencies” for payments within the grouping, which would circumvent international dollar-based payments.

SCO Economic Development Strategy 2030:

• The document had not got universal endorsement as India didn’t sign on with the rest of the SCO member states who approved the document.
• India has refrained from signing the document as it is injected with too many references to Chinese diplomatic catchphrases and policies that reflected the pet policies of Chinese government.
• Since the SCO Economic Development Strategy has not yet been made public, it is not clear what it entails.
• The New Delhi Declaration indicates that the strategy document could involve areas of
• Digital economy
• High technology and innovation
• Modernisation of existing international routes for road and rail transport
• Multimodal transport corridors and logistics centres
• Finance and investment
• Energy and food security
• Diversified supply chains
• Industrial cooperation

Delhi Declaration:

• The Indian government coined the New Delhi Declaration and proposed at the SCO Summit, aiming to fight against terrorism.
• The Declaration also proposes four other joint statements on de-radicalisation, sustainable lifestyle to tackle climate change, production of millets and digital transformation.
• It listed a number of global challenges, including new and emerging conflicts, turbulence in the markets, supply chain instability, climate change and the COVID-19 pandemic.

Shanghai Cooperation Organisation (SCO)

• The grouping came into existence in Shanghai in 2001 with six members, minus India and Pakistan.

• Its primary objective was to enhance regional cooperation for efforts to curb terrorism, separatism, and extremism in the Central Asian region.
• The SCO grouping now comprises China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan.
• Afghanistan, Belarus, Iran, and Mongolia enjoy Observer status in the SCO, while six other countries Azerbaijan, Armenia, Cambodia, Nepal, Turkey and Sri Lanka have Dialogue Partner status.

4. GIFT NIFTY

TAG: GS 3: ECONOMY

THE CONTEXT: The Singapore Stock Exchange Nifty (SGX) Nifty, which has been used by traders and investors for years to anticipate Nifty’s opening, has been rebranded as the Gujarat International Finance Tech (GIFT) Nifty. It started trading from GIFT City in Gujarat executing over 30,000 trades in a single session.

EXPLANATION:

• Recently, trading on SGX NIFTY ceased in Singapore and the entire trading volume and liquidity fully switched to GIFT IFSC. Therefore, it was renamed as GIFT Nifty.

Deal between SGX and NSE (National Stock Exchange):

• According to a five-year contract between the two, business will largely be shared on a 50:50 basis.
• Initially, for the business generated by Singapore, SGX will get 75 per cent of the revenue, while NSE will get the remaining 25 per cent.
• As per this deal, NSE IX will not be able to enter into similar arrangements with any other exchange. This contract can be extended for an additional two years after the five-year period concludes.

What is GIFT NIFTY?

• GIFT NIFTY is the first cross-border initiative in connecting India and Singapore’s capital markets.
• Currently, four products are being offered under the umbrella brand of GIFT Nifty GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services and GIFT Nifty IT derivatives contract.
• The NSE IX says any trading member be it Indian or foreign, registered or non-registered setting up its office through subsidiary/branch model can start trading in the GIFT Nifty products by taking membership of NSE IX.

Benefits for India:

• GIFT Nifty is an important milestone for GIFT IFSC and its outreach towards foreign investors and enhancing the capital market ecosystem in GIFT City.
• It has linked two of the fastest growing economies of the world.
• This is the first of its kind trading link, with trading and matching in India and clearing and settlement in Singapore.

The GIFT International Financial Services Centre (GIFT IFSC)

• It is a financial centre and special economic zone in Gujarat International Finance Tec-City (GIFT City) established in April 2015.
• It aims to provide world-class infrastructure and services for financial institutions and companies operating in areas such as banking, insurance, capital markets, and asset management.
• GIFT IFSC is regulated by the International Financial Services Centres Authority, an independent regulator exclusive to the zone.

The International Financial Services Centres Authority (IFSCA)

• It is the regulatory body for the Indian special economic zones such as the GIFT International Financial Services Centre for International Financial Services and commodity markets under the ownership of the Government of India.
• It was established in 2020, under the International Financial Services Centres Authority Act, 2019.
• The International Financial Services Centre (IFSC) is located in Gujarat International Finance Tec-City (GIFT City).

National Stock Exchange of India Limited (NSE):

• It is one of the leading stock exchanges in India, based in Mumbai.
• NSE is under the ownership of various financial institutions such as banks and insurance companies.
• It is one of the largest stock exchanges in the world by market capitalization.
• The NSE’s flagship index, the NIFTY 50, a 50 stock index is used extensively by investors in India and around the world as a barometer of the Indian capital market.
• The NIFTY 50 index was launched in 1996 by NSE.

5. DARK PATTERNS

TAG: GS 3: ECONOMY

THE CONTEXT: The Centre has asked e-commerce companies to not use “dark patterns” on their platforms that may deceive customers or manipulate their choices. The government has set up a 17-member task force to prepare guidelines to protect consumers.

EXPLANATION:

• The Ministry of Consumer Affairs, Food and Public Distribution has started classifying complaints received on the National Consumer Helpline 1915 to compile information on dark patterns.
• This information can be used by the Central Consumer Protection Authority to initiate action under the Consumer Protection Act, 2019.

Dark Patterns:

• Dark patterns which are also known as deceptive patterns, is a term used to describe ways or tricks implemented by websites or apps to discourage and manipulate user’s behavior.
• The term dark patterns were coined by Harry Brignull, a London-based user experience (UX) designer, in 2010.

The Consumer Affairs Ministry has identified nine types of dark patterns being used by e-commerce companies:

• False urgency:Creates a sense of urgency or scarcity to pressure consumers into making a purchase or taking an action.
• Basket sneaking:Dark patterns are used to add additional products or services to the shopping cart without the user’s consent.
• Confirm shaming:Uses guilt to make consumers adhere; criticizes or attacks consumers for not conforming to a particular belief or viewpoint.
• Forced action:Pushes consumers into taking an action they may not want to take, such as signing up for a service in order to access content.
• Nagging:Persistent criticism, complaints, and requests for action
• Subscription traps:Easy to sign up for a service but difficult to quit or cancel; option is hidden or requires multiple steps.
• Bait & switch:Advertising a certain product/ service but delivering another, often of lower quality.
• Hidden costs:Hiding additional costs until consumers are already committed to making a purchase.
• Disguised ads:Designed to look like content, such as news articles or user-generated content.

Regulation in other countries:

• In March 2021, California passed amendments to the California Consumer Privacy Act, banning dark patterns that made it difficult for consumers to exercise some of the rights that the law provides, like opting out of the sale of their data.
• In April 2019, the UK issued a set of guidelines under its Data Protection Act, 2018 which prohibited companies from using nudges to draw underage users into options that have low privacy settings.

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