CA-FC-Day-76-2020-iastoppers
Flash Card

Day#76 Current Affairs Flash Cards [PRELIMS 2020]

Electoral bonds; Official Secrets Act; Central Water Commission (CWC); ‘Regulatory Sandbox’; Inter-Governmental Agreement for exchange of Country-by-Country (CbC) report;
By IASToppers
October 21, 2019

 

 

India and the US has signed an Inter-Governmental Agreement for exchange of Country-by-Country (CbC) report. What is the objective behind this agreement?

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Answer:

This agreement ensure that all tax authority have access to similar information on multinational enterprises’ business activities and financial statement which reduce the compliance burden on their subsidiaries operating out of these countries.

Enrich Your Learning:

What is CbC Report?

  • The Base Erosion and Profit Shifting (BEPS) Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides template for MNE’s (multinational enterprises) to report annually and for each tax jurisdiction in which they do business the information set out therein. This report is called the Country-by-Country (CbC) Report.
  • A CbC Report has aggregated country-by-country information relating to the global allocation of income, the taxes paid, and certain other indicators of an MNE group. It also contains a list of all the constituent entities of an MNE group operating in a particular jurisdiction and the nature of the main business activity of each such constituent entity.

To facilitate the implementation of the CbC Reporting standard, the BEPS Action 13 report includes a CbC Reporting Implementation Package which consists of

  • Model legislation which could be used by countries to require the ultimate parent entity of an MNE group to file the CbC Report in its jurisdiction of residence including backup filing requirements and
  • Three model Competent Authority Agreements that could be used to facilitate implementation of the exchange of CbC Reports, respectively based on the:
    1. Multilateral Convention on Administrative Assistance in Tax Matters
    2. Bilateral tax conventions
    3. Tax Information Exchange Agreements (TIEAs)

Key facts:

  • India has already signed the Multilateral Competent Authority Agreement (MCAA) for exchange of CbC reports, which has enabled exchange with 62 jurisdictions.
  • For implementation of these standards in India and with a view to provide information to other countries, necessary legislative changes have been made through Finance Act, 2014, by amending section 285BA of the Income-tax Act, 1961. 

 

 

In economics parlance, what does the term ‘Regulatory Sandbox’ mean?

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Answer:

  • A regulatory sandbox is a controlled mechanism within which the sector will be able to experiment with solutions in a closely-monitored ecosystem so that the risks do not spread outside it, and the reasons for failure can be analysed.

Enrich Your Learning:

Significance of Regulatory Sandbox:

  • The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services. These companies will also be able to test the viability of the product without a wider and expensive rollout.
  • It will help fintech companies launch innovative products at a lower cost and in less time.
  • For the expansion of fintech sector, there are two main areas that required attention were:
    • How to improve the accessibility of financial platforms using fintech.
    • Analysis potential risks that may arise out of fintech adoption.
  • Systemic risks may arise from unsustainable credit growth, increased inter-connectedness, procyclicality, development of new activities beyond the supervisory framework and financial risks manifested by lower profitability. It will help companies to analyse the conquests of failure and provide solutions.
  • A sandbox acts as a layer between banks and their innovation initiatives and facilitates smooth collaboration between FinTech companies and incumbents.

 

 

Under the Electoral Bond Scheme, what is the eligibility criteria for political parties to avail the benefits?

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Answer:

Every party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one per cent of the votes polled in the most recent Lok Sabha or State election will be allotted a verified account by the Election Commission of India. Electoral bond transactions can be made only via this account.

Enrich Your Learning:

What are Electoral bonds?

  • Electoral bonds will be bearer instrument in nature of promissory note and an interest-free banking instrument.
  • These can be redeemed only through the registered accounts of a political party in a prescribed time frame.

Objective:

  • It aims at rooting out current system of largely anonymous cash donations made to political parties which lead to generation of black money in the economy.

Denominations: 

  • Electoral bonds can be purchased for any value in multiples of Rs.1,000, Rs.10,000, Rs.10 lakh, and Rs.1 crore from any of the specified branches of State Bank of India (SBI).

Who can purchase? 

  • A citizen of India or a body incorporated in India will be eligible to purchase the bond.
  • The purchaser is allowed to buy electoral bonds only on due fulfilment of all extant KYC norms and by making payment from a bank account. It will not carry the name of the payee.
  • In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who the donor is.

Validity: 

  • It will have a life of 15 days during which they can be used to make donations to registered political parties.

Availability:

  • The electoral bonds will be available for purchase for a period of 10 days each in months of January, April, July and October with additional 30 days to be specified by Central government in year of general election so that this does not become a parallel currency.

 

 

The task of conservation and utilization of water resources throughout the country is entrusted to which body?

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Answer:

  • Central Water Commission (CWC) 

Enrich Your Learning:

About Central Water Commission (CWC):

Central Water Commission (CWC) is a premier Technical Organization of India in the field of Water Resources.

  • It is presently functioning as an attached office of the Ministry of Water Resources, River Development and Ganga Rejuvenation, Government of India.
  • The Commission is entrusted with the general responsibilities of initiating, coordinating and furthering in consultation of the State Governments concerned, schemes for control, conservation and utilization of water resources throughout the country, for purpose of Flood Control, Irrigation, Navigation, Drinking Water Supply and Water Power Development.
  • It also undertakes the investigations, construction and execution of any such schemes as required.

 

 

In India, the Official Secrets Act was enacted during the tenure of which Viceroy?

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Answer:

  • The Official Secrets Act was first enacted in 1904, during the time of Lord Curzon, Viceroy of India from 1899 to 1905 and act was retained after Independence.

Enrich Your Learning:

More about the bill:

  • One of the main purposes of the Act was to muzzle the voice of nationalist publications.
  • The law, applicable to government servants and citizens, provides the framework for dealing with espionage, sedition, and other potential threats to the integrity of the nation.
  • The law makes spying, sharing ‘secret’ information, unauthorised use of uniforms, withholding information, interference with the armed forces in prohibited/restricted areas, among others, punishable offences. If guilty, a person may get up to 14 years’ imprisonment, a fine, or both.
  • The information could be any reference to a place belonging to or occupied by the government, documents, photographs, sketches, maps, plans, models, official codes or passwords.
Topics
Daily Current Flash Cards 2020 Prelims 2020
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