L17 15th April 11 AM B-1 To 5

CA - 240415
1) TAX BUOYANCY
 As per CBDT, a taxpayer is a person who either has filed a return of income for the relevant
assessment year (AY) or in whose case tax has been deducted at source in the relevant
financial year but the taxpayer has not filed the return of income.
 The direct tax-to-GDP ratio, which reflects the share of taxes in the overall output
generated in the country, rose to a 15-year high of 6.11% in the financial year 2022-23, as per
CBDT under the Ministry of Finance
 This was accompanied by an increase in the income tax return filers in India to 7.4 crores in
FY23, up 6.3% from FY22, even as the tax buoyancy — the growth rate of taxes in relation to
the economy’s nominal growth rate — declined to 1.18 in 2022-23 from 2.52 in 2021-22 and
1.29 in the pre-Covid year of 2018-19.
2) STATE’S BORROWING POWERS

 Kerala moved the Supreme Court accusing the Union govt of arbitrarily imposing a Net
Borrowing Ceiling (NBC) on the State, which brought it to the brink of a financial crisis
 NBC imposes a limitation on borrowings of a State from all sources including open market
borrowings. The Union government decided to deduct liabilities arising from the public
account of the States to arrive at such a cap. Additionally, borrowings by State-owned
enterprises, where the principal and/or interest are serviced out of the Budget or through
assignment of taxes, cess or any other State revenue, are also deducted from the NBC.
 NBC for States is fixed at 3% of the Gross State Domestic Product (GSDP) for the Financial
Year (FY) 2023-24 as recommended by the 15th Finance Commission.
 Article 293 of the Constitution permits States to borrow only from within the territory of
India on a guarantee from the consolidated fund of the State and within such limits as
outlined by the legislatures of each State.
 Under Article 293(3), the State has to obtain the consent of the Centre to raise “any loan,” if
“any part of the previous loan” extended by the Centre is outstanding. The NBC has been
imposed by invoking the powers of the Centre under this provision.
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3) STATE’S FISCAL HEALTH
 The State fiscal deficit was 4.1% of
GDP in 2020-21. It declined to 3.24%
of GDP in 2022-23 (RE).
 The reduction in fiscal deficit is a
combination of expenditure-side
adjustments, improved GST
collection and higher tax devolution
due to buoyant central revenues.
Fifth, non-GST revenues are also
showing signs of recovery after the
pandemic in most States.
 GST has led to increased tax buoyancy for the states
 States revenue deficit fell to nearly zero
 States’ total outstanding liabilities are budgeted to fall to 27.6 % of GDP for 2023-24 from the
peak of 31.0 % in 2020-21
4) CESS AND SURCHARGE

 The Karnataka government has urged the Centre to bring cess and surcharges collected
from states under the divisible pool. If it is included, the state will get a greater share under
the devolution of funds from the Centre’s net proceeds to meet infrastructure
commitments.
 Cess and Surcharge
 Major cesses currently in place include health and education cess, on domestic production
of crude oil and natural gas; road and infrastructure cess; agriculture infrastructure and
development cess; and GST compensation cess
 Major surcharges levied are on personal income tax for those with taxable income more than
₹50 lakh and surcharge on corporate income tax for those companies whose net income
exceeds ₹1 crore.
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5) ANGEL TAX
 Angel tax – which is income tax at the rate of 30.6 % – is levied when an unlisted company
issues shares to an investor at a price higher than its fair market value. Earlier, it was
imposed only on investments made by a resident investor. However, the Finance Act 2023
proposed to extend angel tax even to non-resident investors from April , 2023
 The DPIIT-recognised startups were excluded from the angel tax levy.
 Angel tax’ was first introduced in 2012
6) GOVERNMENT DEBT
 The IMF, in a recent report, states that India’s general government debt, including the
Centre and States, could be 100% of GDP under adverse circumstances by fiscal 2028.
 There are no two arguments on the fact that government borrowings can play a vital role in
accelerating development, as governments can use it to finance their expenditures and
invest in people to pave the way for a better future. However, the weight of debt can act as a
drag on development due to limited access to financing, rising borrowing costs, currency
devaluations and sluggish growth.
 Global public debt has increased more than fourfold since 2000, outpacing global GDP,
which tripled over the same period.
 Further, the burden of debt is asymmetric between developed and developing countries as
the latter — even without considering the costs of exchange rate fluctuations — have to pay
higher interest rates than the former.
 Apart from managing public debt deftly to ensure that it does not breach sustainable levels,
India faces challenges in enhancing its credit ratings.
 The central government’s debt was 57.1% of GDP, at the end of March 2023 and the debt of
State governments was about 28% of GDP. As stated by the Finance Ministry, India’s public
debt-to-GDP ratio has barely increased from 81% in 2005-06 to 84% in 2021-22, and is back
to 81% in 2022-23.
 This, however, is way higher than the levels specified by the Fiscal Responsibility and Budget
Management Act (FRBMA). The 2018 amendment to the Union government’s FRBMA
specified debt-GDP targets for the Centre, States and their combined accounts at 40%, 20%
and 60%, respectively.
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7) GST
 The Centre in Jan 2024 notified the creation of the principal bench of the Goods and
Services Tax Appellate Tribunal (GSTAT). In 2023, the GST Council had recommended
setting up GSTAT with one Principal Bench ( New Delhi) and a number of State Benches, to
provide a unified structure for resolution of disputes under GST
 Parliament passed the CGST Bill, 2023 which seeks to raise age limits for the president and
members GSTAT from 67 and 65 years, respectively, to 70 years
 Delhi HC upholds anti-profiteering provisions under GST law
 The Directorate General of GST Intelligence (DGGI), is primarily concerned with curbing the
evasion of GST
8) RBI
 The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions
of the Reserve Bank of India Act, 1934. Though originally privately owned, since
nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.
 Surplus transfer
 RBI transferred Rs 87,416 crore as surplus to the Union Government for the year 2022-23,
providing a major boost to the latter’s fiscal position. This is a 188 % jump from last year’s
(2021-22) surplus transfer of Rs 30,307 crore, which was also the lowest in 10 years
 The central bank has comfortably overshot this figure owing to higher earnings on sale of
forex during the year, better returns on forex investments in US treasuries, revaluation of
forex assets and adjustments in reserves as per the Bimal Jalan Committee
recommendations
9) INCREMENTAL CRR - ICRR

 The Reserve Bank of India (RBI) decided to discontinue the I-CRR in a phased manner,
 It has been announced that banks will need to maintain a 10 % incremental cash reserve
ratio (ICRR) starting from August 12. 2023. This will be applicable on the increase in net
demand and time liabilities (NDTL) of banks between May 19 and July 28, 2023. RBI has taken
this temporary measure to drain excess liquidity from the banking system. RBI had earlier
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withdrawn Rs 2,000 banknotes from circulation and gave people the option to either deposit
or exchange them by September 30, 2023
 Unlike CRR, which applies to the total deposit base, ICRR specifically targets new deposits.
 RBI earlier used this tool in 2016, when the system was flooded with higher liquidity due to
demonetisation. That was the time when Rs 2,000 banknotes, which are now being
withdrawn from the system, were first introduced.
10) SOCIAL STOCK EXCHANGE

 The Social Stock Exchange (SSE) is a segment of the existing stock exchange, designed to
help non-profit organizations (NPOs) and for-profit social enterprises raise funds. It's a new
approach to impact investing, where financial investments are made with the intent to
generate social impact alongside financial returns.
 The Social Stock Exchange (SSE) also provides a solution to the common dilemma of donors
who wish to help but are uncertain about the legitimacy of NPOs. SSE addresses this by
acting as a trusted intermediary, connecting willing donors with verified NPOs with the
required expertise and engaged in genuine social work.
 Investors can buy Zero Coupon Zero Principle (ZCZP) instruments through the application
form which will be available on website of Social Stock Exchange
11) SOCIAL IMPACT BONDS

 National Bank for Agriculture and Rural Development (Nabard) raised Rs 1,041 crore through
its social impact bond, which matures in five years, at a coupon of 7.63 %.
 This is the first externally certified AAA-rated INR social bond in the country.
12) BOND YIELD

 There is a certain amount of capital that you shall invest in a bond. The return on that
invested capital is the bond yield.
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13) ALTERNATE INVESTMENT FUND
 AIF is any fund established in India which is a privately pooled investment vehicle that
collects funds from sophisticated investors, both Indian or foreign, for investing. This fund
can deploy its money in accordance with a defined investment policy for the benefit of its
investors
 Those wishing to form an AIF can seek registration in three categories.
 Category I AIFs can invest in start-ups, early stage ventures, social ventures, SMEs and
sectors which the government or regulators consider as socially or economically desirable
 Category II AIFs are those which are not classified under Category I or Category III
 Category III AIFs are funds which employ complex or diverse trading strategies, eg hedge
funds
14) CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF)

 The Union Budget of 2021-22, had announced the creation of a permanent institutional
framework to enhance secondary market liquidity in the Corporate Bond market during
stressed and normal times, thereby instilling confidence amongst participants in the
corporate bond market. It is manifested in the form of the CDMDF
 CDMDF, an alternative investment fund, will act as a backstop for purchase of investment-
grade corporate debt securities. It will enhance secondary market liquidity by creating a
permanent institutional framework for activation in times of market stress
15) GIFT-IFSC
 The GIFT International Financial Services Centre (GIFT IFSC) is a financial centre and special
economic zone in Gujarat International Finance Tec-City (GIFT City) established in April
2015 as a financial hub 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
 Over the last few years, various initiatives taken by the government have opened up new
avenues and opportunities for capital market players. Setting up and operationalising India’s
maiden IFSC in GIFT City is the most important one.
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 Globally, International Financial Centres (IFCs) have assumed prominence in the financial
services ecosystem primarily because they have contributed enormously to the growth of
international financial transactions
16) TRADE
 As per COmmerce Ministry, India’s merchandise trade deficit widened to $18.71 billion in
February from $17.49 billion in the previous month, as imports oustripped exports in value
terms against the backdrop of the Red Sea conflict
 Goods imports rose to $60.11 billion in February against $54.41 billion in January, commerce
ministry data showed while exports came in at $41.40 billion in February, up from $36.92
billion in January.
 Trade deficit is the difference between a country's imports and exports.
 Meanwhile, in services, exports were flat in February -- $32.15 billion in February, compared
with $32.80 billion a year ago -- while imports declined to $15.39 billion from $16.05 billion.
 Overall trade deficit, including merchandise and services, stood at $72.24 billion during the
April 2023-February 2024 period, down from $116.13 billion in the year-ago period.
 India's trade surplus with the US - its largest trading partner - was $19.59 billion in the April-
October period, show data from the commerce and industry ministry. However, with China,
the second largest partner, the deficit was a whopping $51.11 billion, followed by a $33.56
billion gap with Russia, the fourth largest trade partner of India. The deficit with the third
largest trade partner, the UAE, was $6.83 billion.
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CA - 240415

2) STATE’S BORROWING POWERS

4) CESS AND SURCHARGE

9) INCREMENTAL CRR - ICRR

10) SOCIAL STOCK EXCHANGE

11) SOCIAL IMPACT BONDS

12) BOND YIELD

14) CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF)

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