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Insights Daily Current Events, 11 May 2016

Insights Daily Current Events, 11 May 2016

Paper 2 Topic: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Capital gains on FDI from Mauritius to be taxed

India and Mauritius have signed a landmark protocol to amend the Double Taxation Avoidance Agreement (DTAA) treaty.


The move is expected to prevent misuse of the three-decade-old pact from paying taxes, curb round tripping of funds, prevent double non-taxation, streamline investments and lift tax uncertainty.

  • With this, India, for the first time will be allowed to tax capital gains (profit from the sale of property or an investment) arising out of Mauritius. The protocol can tax capital gains between April 1, 2017 and April 1, 2019 at 50% of domestic rates in India. However, investments made prior to April 1, 2017 will not be liable to capital gains tax. Further, all past share sale transactions from Mauritius would be safeguarded.
  • Also, the benefit of 50% reduction in tax rate during the transition period from 2017 to 2019 shall be subject to Limitation of Benefits. This means a resident of Mauritius will have to pay the full rate if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell or conduit company, if its total expenditure on operations in Mauritius is less than Rs 27 lakh in the immediately preceding 12 months.


India and Mauritius had signed a Double Taxation Avoidance Agreement in 1983. The pact allowed only Mauritius to tax capital gains. However, the island nation generally doesn’t impose a capital gains tax. This meant that companies gaining from investments made in Indian companies via Mauritius-based entities managed to avoid paying taxes in both countries.

The tax treaty made Mauritius the biggest source of foreign direct investment into India. According to data from the Department of Industrial Policy and Promotion, India received about $93.6 billion of FDI from Mauritius between April 2000 and December 2015. This is 34% of the total FDI inflows into India. Many private equity and venture capital firms also invest in India through funds registered in Mauritius.


While this is a historic feat for the government, which initiated the dialogue with the island nation in 2006, analysts say, the move could affect foreign investments. Currently, Mauritius and Singapore together contribute 50% of the total FDI inflows into India.

Sources: the hindu.

Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

India fails to get Mallya deported

Britain has told India that it cannot deport Vijay Mallya, who is facing money laundering charges in the country, but could consider an extradition request for him.

  • Britain has clarified that deportation can’t be allowed if someone entered UK through valid passport and then its cancelled.


India made a request for the deportation of Mallya, whose Indian passport was revoked in a bid to secure his presence for investigations against him under the Prevention of Money Laundering Act 2002.

  • The UK Government has informed that under the 1971 Immigration Act, the UK does not require an individual to hold a valid passport in order to remain in the UK if they have extant leave to remain as long as their passport was valid when leave to remain or enter the UK was conferred.

What can be done?

Considering the seriousness of allegations, the UK has asked the government to consider requesting mutual legal assistance or extradition.

Difference between deportation and extradition:

  • As deportation is an executive action, it is considered to be a quicker process than extradition, in which investigating agencies have to establish prima facie culpability of the person. Besides, the accused has recourse to several defences under the extradition treaty.
  • Also, the extradition of Mr. Mallya from the U.K. will be possible only when he is accused, or convicted, of an act recognised as criminal offence in both the countries. The extradition treaty empowers the U.K. authorities to make provisional arrests in urgent cases.

The 1992 MLAT has been signed for extending assistance in the investigation and prosecution of crime and the tracing, restraint and confiscation of proceeds and instruments of crime (including crimes involving currency transfers) and terrorists.

Sources: the hindu.

Paper 3 Topic: Science and Technology- developments and their applications and effects in everyday life Achievements of Indians in science & technology.

National Technology Day

National Technology is being celebrated on May 11 across India.

Key facts:

  • National Technology Day is a very special day for Indian Technology since 1999. The event is marked with great pride as the country achieved a huge technological progression on this particular day.
  • It was on this day that the first, indigenous aircraft “Hansa-3” was test flown at Bangalore.
  • India also performed successful test firing of the Trishul missile on the same day, May 11 and executed three successful nuclear tests, carried out at Pokhran, in Rajasthan.
  • The theme for this year’s Technology Day is ‘Technology enablers of Startup India’.
  • On this day, the President of India gives National Technology Award to companies and also to individuals for their great contributions to science.

Sources: the hindu.

Paper 3 Topic: Security challenges and their management in border areas; linkages of organized crime with terrorism.

Underwater vigil system

The Indian Navy has launched the state-of-the-art harbour defence systems, viz., integrated underwater harbour defence and surveillance system and mine warfare data centre, which would enhance the Navy’s surveillance capability and response to security threats at the naval dockyard in Visakhapatnam.

  • The IUHDSS is a multi-sensor system capable of detecting, identifying, tracking and generating warnings for all types of surface and underwater threats to Visakhapatnam harbour.
  • The MWDC will collate, analyse and classify data collected by the Navy’s Mine Hunting Ships from various ports along the East coast. This state-of-the-art facility will be the nodal centre for maintaining an underwater database of harbours along the coast.

Sources: the hindu.


Facts for Prelims:

  • Fearing Chinese support in the unrest at Tawang, the government has decided not to go ahead with the planned hydroelectric projects in the district without consulting the local people and the monks, who have been protesting against the dams. Tawang is a town on India-China border in Arunachal Pradesh. It is the smallest of the 16 administrative districts of Arunachal Pradesh in northeastern India and with a population of 49,977 it is the eighth least populous district in the country. The area is historically part of Tibet and is claimed by both the People’s Republic of China and the Republic of China (Taiwan). It is inhabited by the Monpa people. Visitors to Tawang district require a special Inner Line Permit from the government. The district has two main rivers, the Tawang Chhu and the Naymjang Chhu, that together have 10 main tributaries. These two rivers meet each other before exiting the district in a southwesterly direction. There are two major religious festivals of the Monpas viz “LOSAR” and “TORGYA“. Both festivals are celebrated once annually. The LOSAR s celebrated to the commencement of New year. Every third year of Torgya, the festival of Dungyur is celebrated.


  • Barack Obama will shortly visit Hiroshima. With this, he will become the first U.S. President to visit Hiroshima, the first target of an atomic bomb 70 years ago.