Daily Current Affairs 27 September 2023 – IAS Current Affairs
Current Affairs 27 September 2023 focuses on Prelims-Mains perspective. Major events are :
Angel Tax Rules
Source: The Hindu
GS II: Economy
Overview
- News in Brief
- What is angel tax?
Why in the News?
The Indian government has eased certain provisions of the angel tax introduced in the recent Budget, specifically targeting investments into startups by non-resident investors at a premium over their fair market value.
News in Brief
- It has introduced five different valuation methods for shares and offered a 10% tolerance for deviations from the accepted share valuations.
- As per a notification issued by the Central Board of Direct Taxes on Monday, Rule 11UA under the Income Tax Act has been amended, with some changes to the draft norms released in May, bringing some relief to prospective foreign investors in startups.
- The amended rule brings in more clarity for both investor and investee, basis which an appropriate valuation method can be adopted, reducing the chances of any future litigation.
What is angel tax?
- Angel tax refers to the taxation of capital raised by unlisted companies, primarily startups, through the issuance of shares at a premium over their fair market value.
- The tax authorities in India have been concerned about startups issuing shares at a premium that exceeds their fair value, viewing such premiums as taxable income for the startups.
- This taxation practice has led to disputes and challenges for startups and investors, as valuing early-stage companies can be subjective and complex.
- To address this issue, the Indian government has introduced various measures and changes to the angel tax regulations over the years.
- These measures aim to provide relief to startups and investors by raising the threshold for exemptions and introducing valuation guidelines to reduce tax disputes.
- The goal is to create a more favourable environment for startup growth and investment, making it easier for innovative companies to raise capital without facing heavy taxation.
China Declines CPEC Terms With Pakistan
Source: Indian Express
GS II: Important International institutions, agencies and fora- their structure, mandate
Overview
- News in Brief
- Features
Why in the News?
China has refused to further expand cooperation in the areas of energy, water management, and climate change under the multibillion dollar China-Pakistan Economic Corridor (CPEC), signalling a strain in the friendship between the two all-weather allies
News in Brief
- Cash-strapped Pakistan also gave up its opposition to setting up a new imported coal-fired power plant in Gwadar in Balochistan province and agreed to a number of Chinese demands to address Beijing’s concerns.
Features
- After the proposal from Chinese President Li Keqiang in 2013, the preliminary study on this project was done in 2014 which acknowledged the hostile environment and complicated geographic conditions but prioritized the importance of having a China-run port near the Gulf of Oman.
- Post this corridor is functional, existing 12,000 km journey of oil transportation to China will be reduced to just 2,395 km.
This is estimated to save China $2 billion per year. - China had already acquired control of Gwadar Port in 2013.
- Originally valued at $46 billion, the value of CPEC projects was worth $62 billion as of 2020.
- China refers to this project as revival of the Silk Road.
Indian objections
- India’s objections to Chinese activity in Pakistan-administered Kashmir dates back to the 1970s, when the People’s Liberation Army built the Karakoram Highway that linked China’s far-western province of Xinjiang with northern Pakistan.
- The GoI, which shares tense relations with Pakistan, objects to the CPEC project as upgrade works to the Karakoram Highway are taking place in Gilgit-Baltistan, territory that India claims as its own.
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