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Insights Daily Current Events, 05 June 2015

Insights Daily Current Events, 05 June 2015

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New demand by States could hit GST rollout

The States have demanded that the Centre compensate them fully for any loss of revenue during the first five years of transition to the new GST tax regime. This is a setback to the government’s plan of rolling out the Goods and Services Tax (GST) by April 1, 2016.

  • While, the Centre has proposed to compensate the States, fully for the first three years, followed by three-fourths of the losses in the fourth year and half during the fifth.

Other demands by the states:

  • They want the power to levy additional sales tax over and above the GST on tobacco and tobacco products.
  • Some States want the purchase tax be not subsumed in the GST. However, if it were to be merged, then they should be awarded compensation for 15 years.
  • The States have also raised concerns over the proposed provision of an additional 1% tax over and above the GST, which the Centre offered as an assurance against apprehensions of loss of revenue.

GST:

The goods and services tax (GST) is a comprehensive value-added tax (VAT) on goods and services. It is an indirect tax levied on manufacture, sale and consumption of goods as well as services at a national level.

  • Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain.
  • The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain.
  • Experts say that GST is likely to improve tax collections and boost India’s economic development by breaking tax barriers between States and integrating India through a uniform tax rate.

What are the benefits of GST?

  • Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.
  • It is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets).
  • Currently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.

How will it benefit the Centre and the States?

It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.

What are the benefits of GST for individuals and companies?

  • In the GST system, both Central and State taxes will be collected at the point of sale. Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.

The bill on GST, which will be the biggest tax reform after 1947, was introduced in the Lok Sabha in December last year. A single rate of GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.

Sources: The Hindu, gstindia.com.

 

Law unclear if celebrities endorsing food products can be prosecuted

The Maggi controversy has given rise to a new debate on the legal liability of celebrities who endorse food products.

What the law says?

  • There is no specific word in the Food Safety and Standards Act (FSSA) about the extent, or lack, of liability or duty of care of the brand ambassador, who signs on to promote the brand as its ‘face’ and takes on the role of a marketing representative. Sections 24 and 53 of the 2006 Act deal specifically with advertisements.
  • Section 24 (1) says in general terms that “no advertisement shall be made of any food which is misleading or deceiving or contravenes the provisions of this Act, the rules and regulations made thereunder.” Here, it does not explain whether the term “made” is only confined to commissioning the advertisement or its actual making. In the latter case, a brand ambassador does play a part.
  • Subsection (2) of the same section says “no person shall engage himself in any unfair trade practice for the purpose of promoting the sale…” This clause does not specify who the “person” mentioned in it is, thus, making the ambit of the provision pliable.
  • Clauses (a) (b) and (c) of subsection (2) holds this “person” legally responsible for falsely representing the standard and quality of the food product, its need and usefulness and also for giving the public “any guarantee of the efficacy that is not based on an adequate or scientific justification.”

Food Safety and Standards Act 2006:

It was enacted in 2006 and the Ministry of Health & Family Welfare has been designated as the nodal Ministry for administration and implementation of the Act.

  • Act established an independent statutory Authority – the Food Safety and Standards Authority of India with head office at Delhi.

FSSAI has been mandated by the FSS Act, 2006 for performing the following functions:

  • Framing of Regulations to ‘lay down the Standards and guidelines’ for articles of food and specifying ‘appropriate system of enforcing’ various standards so laid.
  • Laying down mechanisms and guidelines for accreditation of certification bodies engaged in certification of food safety management system for food businesses.
  • Laying down procedure and guidelines for accreditation of laboratories and notification of the accredited laboratories.
  • To provide scientific advice and technical support to Central Government and State Governments in the matters of framing the policy and rules in areas which have a direct or indirect bearing of food safety and nutrition.
  • Collect and collate data regarding food consumption, incidence and prevalence of biological risk, contaminants in food, residues of various, and contaminants in foods products, identification of emerging risks and introduction of rapid alert system.
  • Creating an information network across the country so that the public, consumers, Panchayats etc. receive rapid, reliable and objective information about food safety and issues of concern.
  • Provide training program for persons who are involved or intend to get involved in food businesses.
  • Contribute to the development of international technical standards for food, sanitary and phyto-sanitary standards.
  • Promote general awareness about food safety and food standards.

Sources: The Hindu, fssai.gov.in.

 

Half of mammals face habitat loss: ZSI

Zoological Survey of India (ZSI) recently published a book containing a consolidated documentation and listing of all the scheduled or protected species of mammals found in India.

  • The book, An Identification Manual for Scheduled Mammals of India, provides detailed information on scheduled mammals, their status as per IUCN (International Union for Conservation of Nature) Red list of Threatened Species.

Mammalian fauna of India:

  • India is home to 428 species of mammals out of which more than 60%— about 251 species — are under protected or scheduled categories of the Indian Wildlife (Protection) Act, 1972.
  • 428 species of mammals in India contribute to about 8% of the total mammal species found in the World.
  • About 50% of mammalian fauna of India have shrunk in their distributional range due to various anthropogenic pressures.
  • Four mammal species — Cheetah, Banteng, Sumatran Rhinoceros and Javan Rhinoceros — are extinct in India.
  • Out of the 251 Schedule mammals species listed under the India Wildlife (Protection) Act, 1972, about 180 fall under the “lesser-known” category, and very little information is available about their habitat, behaviour, and population.
  • Around 78 species of mammals are included in Schedule I of Indian Wildlife (Protection) Act, 1972, implying that highest priority is placed on the conservation of these animals in the country.
  • While the Schedule I mammals constitute well known species like tiger, elephant and Indian rhinoceros, “lesser known” species such as clouded leopard, snow leopard, gaur, desert cat, Niligiri tahr, swamp deer, sloth bear and Tibetan, sand fox are also included in the list.
  • The mammals that fall in the “Critically Endangered” category of the IUCN, according to the book are: pygmy hog, Malabar civet, large rock rat and kondana rat.
  • As per the IUCN status 29 mammals (such as, Chinese Pangolin, fishing cat, Gangetic dolphin, golden langur, hispid hare etc.) in the country come under the “endangered” category.

About ZSI:

Established in 1961, it is a premier organisation in zoological research and studies. It was established to promote the survey, exploration and research of the fauna in the region.

  • The activities of the ZSI are coordinated by the Conservation and Survey Division in the Ministry of Environment and Forests, Government of India.

Main objectives:

  • Exploration and Survey of Faunal Resources
  • Taxonomic Studies
  • Status Survey of Endangered Species
  • Publication of Results through Departmental Journals
  • Publication of Fauna of India
  • Maintenance and Development of National Zoological Collections

Red Data Book:

  • Similar to the Red Data Book produced by IUCN, ZSI also releases a Red Data Book on Indian Animals. It was first published in 1983.

The ZSI also participates in the Indian Antarctic Program, since its inception in 1989.

Sources: The Hindu, ZSI.gov.in.

 

India Signs Legal Agreement with the World Bank

The Loan and Project Agreements for World Bank (IBRD) assistance of US$ 400 million for Tamil Nadu Sustainable Urban Development Project were signed between the Government of India/ Government of Tamil Nadu and World Bank recently.

  • The objective of the project is to improve urban services in participating Urban Local Bodies (ULBs) in a financially sustainable manner and to pilot improved urban management practices in selected cities.
  • The total project size is US$ 600 million, out of which World Bank support is US$ 400 million.

The project consists of following three main components:

  • Investment in Urban Services: The project will support improvement in range of urban services, including water, sewerage, municipal solid waste, urban transportation, sewerage management and storm water drainage. The project also envisages creation of a reserve fund to provide credit enhancements for municipal bonds and other market based Loan instruments issued by ULBs.
  • Result Based Grants for Urban Governance: The project will provide results-based grants to eligible ULBs to implement new urban-management models that strengthen governance and financial sustainability.
  • Urban Sector Technical Assistance: The project will support strengthening the capacity of ULBs and urban sector officials.

Sources: PIB.

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