PYQ Relevance:
Q) Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017. (UPSC CSE 2019) |
Mentor’s Comment: UPSC mains have always focused on the Long-term Capital Gains Tax (2018) and indirect taxes (2019).
In February 2025, the Union Finance Minister introduced the Income-Tax Bill, 2025, to replace the Income-Tax Act, 1961. The government claims it will simplify tax laws and reduce disputes. However, despite some structural changes, many complexities remain, and the Bill grants even more authoritarian powers than the current law.
Today’s editorial discusses the newly introduced Income-Tax Bill, 2025, which is important for the GS III Mains paper.
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Let’s learn!
Why in the News?
Recently, Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025, in the Lok Sabha, while opposition parties protested against it.
What are the key objectives of the Income-Tax Bill, 2025?
- Simplifying Tax Laws: To make the tax code easier to understand for both taxpayers and professionals. Example: Replacing complex legal phrases like “notwithstanding anything contained to the contrary” with simpler terms like “irrespective of anything to the contrary”.
- Reducing Litigation and Ambiguity: To minimize legal disputes by providing clearer definitions and reducing interpretative confusion. Example: Consolidating compliance timelines into tables and schedules to avoid multiple interpretations of deadlines.
- Modernizing Tax Compliance: To align tax administration with technological advancements and changing business environments. Example: Allowing the use of a “risk management strategy” to identify tax evasion through data analysis.
- Ensuring Policy Continuity with Structural Reform: To retain core tax policies while improving the law’s structure for better efficiency. Example: Definitions like “income” still refer to the 1961 Act but are presented in a more structured format.
- Expanding Digital Oversight: To empower tax authorities to investigate digital transactions and virtual assets. Example: Permitting access to digital platforms (e.g., email servers and social media) during tax investigations.
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Why did the government previously amend the criteria for a reassessment of tax?
The government previously amended the criteria for reassessment of tax through the Finance Act, 2021, which came into effect on April 1, 2021. This marked a significant shift in the reassessment framework under the Income Tax Act, 1961.
- Shift from “Reason to Believe” to “Information”: The previous requirement for reassessment was based on the assessing officer having a “reason to believe” that income had escaped assessment. Example: After 2021, tax authorities could reopen assessments if they had “information” suggesting unreported income, including data from third-party reports.
- Introduction of Risk Management Strategy: The amendment introduced the use of a “risk management strategy” as a basis for reopening tax assessments. Example: Tax authorities can now reopen cases based on algorithm-driven data analysis without needing detailed justification.
- Time Limit Reduction for Reopening Assessments: The time limit for reassessment was reduced from 6 years to 3 years for most cases, with a 10-year limit for cases involving income above ₹50 lakh. Example: If concealed income exceeds ₹50 lakh, tax authorities can reopen cases up to 10 years later, enhancing scrutiny in high-value matters.
- Legal Challenges and Judicial Interpretations: The vague definition of “information” and the undefined “risk management strategy” led to concerns over arbitrary use of power. Example: Courts have intervened to limit reassessment powers, demanding stricter adherence to procedural safeguards to protect taxpayer rights.
What are the main concerns regarding their implementation?
- Increased Administrative Burden: The new system requires detailed procedures and prior approvals, leading to delays and increased workload for tax authorities. Example: Obtaining approval from senior officers before issuing notices can slow down reassessment, especially in cases involving large volumes of data.
- Ambiguity in “Information” Definition: The term “information” used to trigger reassessment is broad and vague, allowing subjective interpretations. Example: Data from social media activity or third-party reports can be used for reopening cases, raising concerns about the reliability and accuracy of such information.
- Risk of Harassment and Overreach: Despite safeguards, there is concern that taxpayers may still face unwarranted scrutiny under the new rules. Example: Cases where income exceeds ₹50 lakh can be reopened for up to 10 years, leading to prolonged uncertainty for taxpayers.
- Challenges in Data Privacy and Security: Accessing digital platforms and using technology-based triggers raises privacy concerns for individuals and businesses. Example: Tax authorities can now access electronic records from email servers and financial platforms, increasing the risk of data misuse.
- Legal Uncertainty and Litigation: Despite reforms, there is still a risk of judicial challenges due to the interpretive flexibility in the law. Example: Taxpayers may challenge reassessment notices on the grounds of insufficient evidence or procedural lapses, leading to further litigation.
Way forward:
- Enhancing Clarity and Transparency: Clearly define terms like “information” and “risk management strategy” to prevent subjective interpretation and ensure uniform application. Example: Establish detailed guidelines on acceptable data sources and the procedure for using digital evidence.
- Strengthening Safeguards and Oversight: Implement independent reviews for high-value reassessments and ensure data privacy through robust security protocols. Example: Mandate third-party audits to monitor the use of digital platforms and safeguard taxpayer rights.
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Role of UAE;
Why in the News?
The UAE’s potential role in supporting India’s ambition to become a global aviation powerhouse has been highlighted due to increasing collaboration between the two nations in the aviation sector.
What are the key challenges faced by the India-UAE aviation sector?
- Restricted Bilateral Air Service Agreements: Limited flight frequencies and destination access for both Indian and UAE carriers. Example: UAE airlines can operate flights to only 15 Indian cities, excluding key growth centers like Surat and Indore despite high passenger demand.
- Capacity Constraints and Rising Airfares: Limited flight slots lead to insufficient capacity, causing increased ticket prices. Example: During peak travel seasons, such as festivals or school holidays, airfares between India and the UAE surge due to restricted airline capacity.
- Limited Connectivity to Emerging Cities: Many Tier-2 and Tier-3 Indian cities lack direct UAE connections. Example: Business hubs like Visakhapatnam and Patna face limited or no direct international flights to the UAE, restricting trade and tourism.
- Inability to Meet Growing Passenger Demand: Rapid growth in Indian outbound travel is unmet by the current aviation framework. Example: Despite 4.5 million Indian tourists visiting the UAE in 2023, airlines struggle to increase operations due to bilateral restrictions.
- Missed Economic and Strategic Opportunities: Limited flight options restrict business engagement, investment, and tourism growth. Example: The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE aims to boost trade, but insufficient air connectivity hinders the free flow of goods and professionals.
Why is there a need for a modernized aviation strategy between India and the UAE?
- Meeting Rising Passenger Demand: A revised aviation strategy is crucial to handle the increasing flow of Indian travelers to the UAE. Example: For every 1% increase in passport holders, approximately 10 million additional Indian travelers are expected, which the current framework cannot accommodate.
- Lowering Airfares and Improving Access: Expanding bilateral agreements can boost flight availability, foster competition and reduce travel costs. Example: During peak seasons, limited flights cause sharp increases in ticket prices, making travel between India and the UAE expensive.
- Expanding Connectivity to Regional Cities: Modernising aviation policies can facilitate direct flights from Tier-2 and Tier-3 Indian cities to the UAE, enhancing regional growth. Example: Cities like Surat, Patna, and Visakhapatnam remain disconnected from the UAE, hindering trade, tourism, and cultural exchanges.
- Boosting Trade and Economic Cooperation: Improved air services can strengthen business ties and enhance trade between India and the UAE. Example: Despite the CEPA agreement aimed at fostering economic collaboration, restricted flight options limit the movement of professionals and goods.
- Advancing Aviation Infrastructure and Innovation: A modernized strategy encourages collaboration in aviation technology and infrastructure development. Example: UAE investments in India’s UDAN scheme can improve regional connectivity and support India’s goal to become a leading aviation hub.
Which Indian cities are currently excluded from UAE airline operations despite growing demand?
- Cities Not Fully Integrated: Emirates has not yet expanded its services to cities like Amritsar, Lucknow, and Goa Mopa, despite growing demand. These cities are not explicitly excluded but rather await service expansion due to current operational limitations and bilateral agreements.
- Bilateral Restrictions: The current bilateral agreements between India and the UAE limit the number of seats available for UAE airlines, which can restrict the expansion of services to new cities. While there are no specific cities excluded, the capacity constraints under these agreements affect the ability of UAE airlines to meet demand in various Indian cities.
What initiatives can the UAE undertake to support India’s ambition to become a global aviation powerhouse?
- Expanding Aviation Agreements: The UAE-India Comprehensive Economic Partnership Agreement (CEPA) aims to improve air travel and cargo transport between the two countries. Increasing the current limits to 134,000 weekly passenger seats and 4,000 tonnes of cargo through relaxed rules can boost trade and improve connectivity.
- Using UAE’s Logistics Strength: The UAE’s major airports, like Dubai International and Al Maktoum International, can help meet India’s growing air cargo needs.
- Working together can make cargo transport faster and more efficient between the two nations.
- Improving India’s Aviation Sector: India, as the third-largest domestic aviation market, can learn from the UAE to improve international flights and upgrade airport facilities.
Way forward:
- Enhancing Policy Frameworks: India can revise its aviation policies to allow greater flexibility in bilateral agreements, enabling increased flight frequencies and better access for UAE carriers.
Example: Updating the Open Sky policy for Gulf nations can promote competition, reduce airfares, and improve passenger services.
- Strengthening Aviation Infrastructure:India can invest in upgrading airport capacity, regional connectivity, and advanced Maintenance, Repair, and Overhaul (MRO) facilities to accommodate increased traffic.
Mains PYQ:
Q How will I2U2 (India, Israel, UAE and USA) grouping transform India’s position in global politics? (UPSC IAS/2022)
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Gender Budget;
Why in the News?
The Union and State governments often express their commitment to women’s empowerment. One of the four main pillars of Viksit Bharat 2047 is women’s development.
What are the three components of the gender budget?
- Part A: Schemes with 100% allocation for women and girls. Example: Beti Bachao Beti Padhao – a scheme focused entirely on improving the welfare of girls.
- Part B: Schemes with 30% to 99% allocation for women and girls. Example: National Rural Health Mission (NRHM) – where a significant portion is directed toward maternal and child healthcare.
- Part C: Schemes with less than 30% allocation for women and girls (introduced in 2024-25). Example: Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) – where a small portion benefits women, though the primary beneficiaries are land-owning farmers.
Why is the agricultural sector’s allocation under the gender budget considered ineffective for women?
- Land Ownership Inequality: Most agricultural schemes, like PM-Kisan, are land-linked, and since agricultural land is typically owned by men, women are excluded from direct benefits. Example: Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) provides ₹6,000 per year to land-owning farmers, but women who work on the land without ownership do not qualify.
- Limited Focus on Women Farmers: There is insufficient funding for programs addressing the specific needs of women farmers, such as access to credit, training, and technology. Example: Schemes like the Mahila Kisan Sashaktikaran Pariyojana (MKSP), which focus on empowering women in agriculture, receive a smaller share of the gender budget.
- Exclusion from Decision-Making: Women in agriculture often lack legal and institutional representation, limiting their ability to influence policy decisions and resource allocation. Example: Despite women forming a significant share of the agricultural workforce, they are underrepresented in farmer producer organizations (FPOs) and cooperatives.
Who benefits the most from the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) scheme?
- Land-Owning Farmers: The primary beneficiaries of the PM-Kisan scheme are small and marginal land-owning farmers who receive ₹6,000 per year in three equal installments. Example: A male landowner with 2 hectares of cultivable land is eligible for the financial assistance under the scheme.
- Male Family Members: Since land ownership in India is predominantly male, the male head of the household typically receives the direct cash transfer, even when women contribute equally to agricultural work. Example: In patriarchal households, the registered male family member receives the PM-Kisan payments, excluding women working on the same land.
- Joint Landholders (Primarily Men): In cases of joint land ownership, the payment is usually disbursed to the registered owner, who is more often a man, rather than women co-owners. Example: If a piece of farmland is jointly owned by a husband and wife, the husband is more likely to be listed as the primary beneficiary.
Why are women often excluded from its advantages?
- Lack of Land Ownership: Women often do not hold legal ownership of agricultural land, making them ineligible for PM-Kisan benefits, as the scheme is limited to landowners. Example: A woman working on her family’s farmland cannot receive PM-Kisan payments if the land is registered in her husband’s name.
- Patriarchal Inheritance Practices: Customary inheritance laws and patriarchal norms often prevent women from inheriting land, limiting their access to direct agricultural benefits. Example: In many rural areas, agricultural land is passed down to sons, excluding daughters from ownership and thus from PM-Kisan benefits.
- Administrative and Documentation Barriers: Women face challenges in providing legal documents (such as land records or identity proof) required to register as beneficiaries under the scheme. Example: Widowed or single women who cultivate land but lack formal ownership documents are excluded from receiving financial assistance.
Way forward:
- Ensure Gender-Inclusive Land Reforms: Promote joint land titles for spouses and simplify the land registration process to increase women’s eligibility for schemes like PM-Kisan.
- Design Women-Centric Agricultural Programs: Introduce exclusive subsidies, credit access, and training for women farmers while increasing the allocation under gender-responsive schemes like Mahila Kisan Sashaktikaran Pariyojana (MKSP).
Mains PYQ:
Q Women empowerment in India needs gender budgeting. What are requirements and status of gender budgeting in the Indian context? (UPSC IAS/2016)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Wallace Line
Why in the News?
In the 19th century, English naturalist Alfred Russel Wallace observed a sharp shift in biodiversity as he moved from Asia to Australia, leading him to propose the Wallace Line—an imaginary boundary separating species from both regions.
About the Wallace Line:
- It is a bio-geographical boundary separating Asia and Australia’s eco-zones.
- It was identified by Alfred Russel Wallace in 1863 during his explorations.
- It is an imaginary line running through the Lombok Strait (between Bali and Lombok) and the Makassar Strait (between Borneo and Sulawesi).
- Distinct evolutionary histories:
- West of the line (Asia): Tigers, elephants, and orangutans.
- East of the line (Australia): Kangaroos, marsupials, and cockatoos.
- A very few species cross the line, particularly birds and mammals.
- This is a barrier for land species but not marine life.
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- Continental drift: Australia separated from Antarctica and moved toward Asia (~35 million years ago). This created a deep-water channel, preventing species migration.
- Pleistocene Epoch Influence: Lower sea levels exposed land bridges but deep waters maintained the boundary.
Scientific Relevance:
- Wallace Line is more of a gradient than a strict boundary.
- Understanding biogeography helps predict species adaptation to climate change.
Note:
Weber Line more accurately defines the balance point where the influence of Asian and Australian species is nearly equal, whereas the Wallace Line marks a sharper divide. |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Navratna Status
Why in the News?
The Indian Railway Catering and Tourism Corporation (IRCTC) and the Indian Railway Finance Corporation (IRFC) have been granted Navratna status, making them the 25th and 26th Navratna companies in India.
Other Navratna Companies in Indian Railways
- Container Corporation of India (CONCOR): Multimodal logistics.
- Rail Vikas Nigam Ltd (RVNL): Infrastructure expansion.
- RITES Ltd: Transport consultancy.
- IRCON International Ltd: Railway and highway construction.
- RailTel Corporation of India Ltd: IT & communication services.
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What is Navratna Status?
- Introduced in 1997, the Navratna scheme identifies high-performing CPSEs and grants them financial and operational independence.
- It allows selected companies to compete globally while maintaining public sector ownership.
- Categories of PSUs in India:
- Maharatna: Largest CPSEs with highest financial powers.
- Navratna: Mid-tier CPSEs with strategic autonomy.
- Miniratna: Emerging CPSEs with limited independence.
Eligibility Criteria for Navratna Status:
A CPSE must-
- Be a Miniratna-I company with an Excellent or Very Good rating in its MoU performance in three out of five years.
- Achieve a composite score of 60+ based on:
- Net Profit to Net Worth
- Manpower Cost to Total Cost of Production
- Profitability Ratios (PBDIT & PBIT)
- Earnings Per Share
- Inter-Sectoral Performance
Benefits of Navratna Status:
- Investment Autonomy: Can invest ₹1,000 crore or 15% of net worth in a single project without government approval.
- Strategic Expansion: Freedom to form joint ventures, subsidiaries, and acquisitions.
- Operational Flexibility: Can make independent business and investment decisions.
- Enhanced Market Position: Attracts more investors and improves stock performance.
PYQ:
[2011] Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?
1. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
2. The Government no longer intends to retain the management control of the CPSEs.
Which of the statements given above is/ are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) neither 1 nor 2 |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Cities Coalition for Circularity (C-3)
Why in the News?
India launched the Cities Coalition for Circularity (C-3), a multi-nation alliance for city-to-city collaboration, knowledge-sharing, and private sector partnerships for sustainable urban development.
What is the Cities Coalition for Circularity (C-3)?
- The C-3 is a multi-nation alliance launched by India at the 12th Regional 3R and Circular Economy Forum in Asia and the Pacific in Jaipur.
- It aims to facilitate city-to-city collaboration, knowledge-sharing, and private sector partnerships to promote circular economy principles and sustainable urban development.
- It is led by the Ministry of Housing and Urban Affairs (India), United Nations Centre for Regional Development (UNCRD), and the Institute for Global Environmental Strategies (IGES).
- The forum will adopt the Jaipur Declaration (2025-2034), which is a non-political, non-binding commitment that will guide efforts towards resource efficiency and sustainable urban growth in the next decade.
Key Features of C-3:
- Supported by International Organizations: Backed by UNESCAP, Japan’s Ministry of Environment, and other global partners.
- Circular Economy Focus: Encourages reuse, recycling, remanufacturing, and composting to reduce waste.
- Global Collaboration: Involves local governments, private sector actors, and academia to drive policy and innovation.
- Integration with SDGs: Aligns with Sustainable Development Goals (SDGs), particularly those related to climate action and responsible consumption.
PYQ:
[2018] “Access to affordable, reliable, sustainable and modern energy is the sine qua non to achieve Sustainable Development Goals (SDGs)”. Comment on the progress made in India in this regard. |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Marbled Cat
Why in the News?
The elusive marbled cat (Pardofelis marmorata) has been spotted in Dehing Patkai National Park in Assam’s Tinsukia district.
About Marbled Cat
- The marbled cat is a small wild cat species native to South and Southeast Asia.
- It belongs to the Felidae family and is closely related to the clouded leopard (Neofelis nebulosa) and the bay cat (Catopuma badia).
- The species was first described in 1836 by British zoologist William Charles Linnaeus Martin.
- It is characterised by brown, gray, or yellowish fur with distinctive black spots, marbled patterns, and stripes for camouflage.
- It is found in dense tropical and subtropical forests at elevations up to 2,500 meters.
- It primarily inhabits rainforests, evergreen forests, and mountainous terrain.
- It is arboreal, spending a significant amount of time in trees.
- It is nocturnal and crepuscular, meaning it is most active at dawn and dusk.
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- IUCN Red List Status: Near Threatened (NT) due to habitat loss and fragmentation.
- CITES: Appendix I
About Dehing Patkai National Park
- Dehing Patkai NP is located in the Dibrugarh and Tinsukia districts of Assam, India, near the border with Arunachal Pradesh.
- It spans an area of 231.65 km² and is part of the Dehing Patkai Elephant Reserve. It was upgraded to a national park in 2020 and officially notified in 2021.
- The park features the largest stretch of lowland rainforests in India, including Dipterocarp trees, orchids, and medicinal plants like Rauvolfia serpentina and Acorus calamus.
- The park is home to diverse wildlife, including Bengal tigers, leopards, clouded leopards, Asian elephants, and Hoolock gibbons.
- It is unique for hosting seven species of wild cats.
- The Dehing River flows through the park, nourishing its forests and contributing to the biodiversity.
- Indigenous communities such as the Tai Phake, Khamti, and Singpho tribes have lived in the area for generations, maintaining a close relationship with the forest.
- The park is situated in the Patkai Hills region, part of the Indo-Myanmar biodiversity hotspot, known for its rich biodiversity.
- Known as the Amazon of the East, Dehing Patkai National Park is famous for its pristine rainforest ecosystems and significant biodiversity.
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PYQ:
[2015] Which one of the following National Parks has a climate that varies from tropical to subtropical, temperate and arctic?
(a) Khangchendzonga National Park
(b) Nandadevi National Park
(c) Neora Valley National Park
(d) Namdapha National Park |
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