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Insights Daily Current Events, 04 May 2016

Insights Daily Current Events, 04 May 2016

Paper 2 Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Lok Sabha passes CAF Bill

Lok Sabha has unanimously passed the much awaited Compensatory Afforestation Fund (CAF) Bill, 2015.

  • The Bill aims to ensure expeditious utilization of accumulated unspent amounts to the tune of around Rs 40,000 crore for increasing forest cover in India. The amount has been lying idle with an ad-hoc central body for over 10 years.

Highlights of the bill:

  • The Bill establishes the National Compensatory Afforestation Fund under the Public Account of India, and a State Compensatory Afforestation Fund under the Public Account of each state.
  • These Funds will receive payments for: (i) compensatory afforestation, (ii) net present value of forest (NPV), and (iii) other project specific payments. The National Fund will receive 10% of these funds, and the State Funds will receive the remaining 90%.
  • These Funds will be primarily spent on afforestation to compensate for loss of forest cover, regeneration of forest ecosystem, wildlife protection and infrastructure development.
  • The Bill also establishes the National and State Compensatory Afforestation Fund Management and Planning Authorities to manage the National and State Funds.

Sources: toi.

Paper 2 Topic: Important International institutions, agencies and fora, their structure, mandate.

UN selects Mexican diplomat Patricia Espinosa as next chief of its climate change body

Former Mexican Foreign Minister Patricia Espinosa has been nominated to be the new U.N. climate chief, helping to bolster a 2015 Paris Agreement to shift the world economy from fossil fuels.

  • The appointment needs to be approved by an 11-member U.N. bureau, whose members represent groups of governments worldwide and is now led by French Environment Minister Segolene Royal.


The UNFCCC has been in existence since 1994. With 196 countries and European Union (EU) as its members, it has near universal membership. It is the parent treaty of the 1997 Kyoto Protocol. The Kyoto Protocol has been ratified by 192 of the UNFCCC Parties. The ultimate objective is to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system. The framework set no binding limits on greenhouse gas emissions for individual countries and contains no enforcement mechanisms.

Sources: toi.

Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Tips are not salary income, still taxable: SC

In a major relief to the hospitality industry, the Supreme Court has held that tips paid by customers to staff for availing services in restaurants do not constitute salary, and therefore, the employer is not liable to deduct tax at source on such payments under income-tax laws.

  • However, the court observed that such tips at the hands of employees would be chargeable as “income from other sources”.
  • With this, the Supreme Court has set aside the Delhi High Court’s May 2011 judgment, which held that the receipt of such tips constitutes income at the hands of the recipient and is chargeable to income tax under the head “salary” under Section 15 of the Income-Tax Act.

What else the Court said?

According to the court, the employer merely acts in a fiduciary capacity as a trustee for payments that are received from customers, which they disburse to their employees for services rendered to the customer. The employer, therefore, has no obligation to withhold tax on such payments made to employees, regardless of whether the tips are received directly in cash, or collected through credit card by employer, and subsequently disbursed to employees.


The Delhi High Court in 2011 had ruled that when a tip is paid by way of a credit card by a customer—since such a tip goes into the account of the employer, after which it is distributed to employees—the receipt of such money from the employer would amount to “salary” within the extended definition contained in Section 17 of the Act. However, the High Court had also held that when tips are received by employees directly in cash, the employer has no role to play and would therefore be outside the purview of Section 192 of the Act.

Challenging the High Court judgment before the Supreme Court, ITC and others had argued that tips by customers are paid out of their own volition and discretion, and are in the nature of gratuitous payment made directly to the waiters/staff as a reward in appreciation of services rendered to them. ITC further added that employees cannot claim any vested right thereto, since the employer neither pays nor is bound to pay any amount to the employee as a tip.

Sources: the hindu.

Facts for Prelims:

  • After the landmark Supreme Court judgment in April 2014 recognising transgender as third gender, the Delhi government has now decided to introduce the ‘transgender’ category in forms for registration of birth and death certificates. In the first move perhaps to recognise the third gender on official papers, the Delhi government has issued a notification asking all Registrar offices to duly make the changes in the forms.