3. About Sales Tax

• Sales tax is a form of tax paid to a governing body for the sale of goods and services.
• Sales tax is an indirect tax and is generally charged at the point of buy or exchange of certain taxable goods, charged as a percentage of the value of the product.
• The sales tax depends on the government in power and the individual policies enforced by it, generally being simple to calculate and collect.
• In simple terms, the sales tax is an extra amount of money paid while purchasing goods or services.

3.1. Types of Sales Tax

The concept of sales tax depends on the governing principles followed by governments, but there are some universal sales taxes applicable in most countries.

1. Retail Sales Tax This is a tax charged on the sale of retail goods and is directly paid by the final consumer.
2. Manufacturers' Sales Tax This tax is levied on the manufacturers of certain goods.
3. Wholesale Sales Tax This tax is levied on individuals who deal with the wholesale distribution/sale of manufactured goods.
4. Use Tax This is a tax levied on the consumer for goods which are purchased without sales tax (generally from vendors who are not under the tax jurisdiction).
5. Value Added Tax (VAT) is an additional tax levied on all sales by certain governments.

4. Sales Tax in India

• A major reason for the growth and development of the country can be attributed to the taxes collected by the Government of India.
• India follows the system of a central union government at the Centre and state governments in each state.
• Each government chooses a taxation policy suited to its requirements.

4.1. Central Sale Tax Act, 1956

• This act governs the taxation laws in the country, extending to the entire country and contains the rules and regulations related to sales tax.
• This act allows the central government to collect sales tax on various products.
• The central sales tax is payable in the state where the particular goods are sold.

4.1.2. Objectives of the Central Sales Tax Act

The Central Sales Tax Act was formulated to make tax collection simpler and streamlined.

1. Provide provision for levying, collection and distribution of taxes collected from the sale of goods through interstate trade.
2. Frame principles to determine when the sale and purchase of goods occurs.
3. Classify certain goods as being of special importance for trade and commerce.
4. Be the competent authority to settle interstate trade disputes.

4.1.3. Sale Price

• Sale price refers to the amount payable to the dealer/trader instead of the goods sold. 
• It includes the cost of packing, insurance charges (if any), incentives to attract buyers and the sales tax paid by the dealer. 
• It does not include cash discounts, installation costs, delivery costs, or goods the buyer exchanges or returns.

5. Inter-State Sales

Interstate sales refer to sales which lead to the movement or transfer of goods from one state to another, achieved by transferring the title documents while the goods are being moved.

Example 1: If an individual in Karnataka sells goods to a person in Maharashtra.

Example 2:If Anil from Telangana delivers goods to Harish in Gujarat, who in turn sells them to Krishna in Bihar by transferring the documents of title during the transfer of goods from Telangana to Bihar.

6. State Government Taxes

7. Sales Tax Exemptions

• States offer tax emptions in certain cases, which can be humanitarian or to avoid double taxation.
• Sellers with genuine state resale certificates are exempted from tax when they resale products.
• Products sold to charities or schools are provided tax exemptions.
• There is a list of essential and local commodities which are exempted from sales tax.

8. Calculation of Sales Tax

For Example: If Mr Kumar purchases a box of chocolates which cost Rs. 100 and have a sales tax component of 10 per cent then the total sales tax paid by him becomes (100 ×0.10) = 10. Thus, he pays a sales tax of Rs 10 on the product.

For Example: If Mr Kumar purchases a box of chocolates which cost Rs. 100 and has a sales tax component of 10%, then the total sales tax paid by him becomes (100 x 0.10) = 10. Thus he pays a sales tax of Rs. 10 on the product.

1. Sales tax might vary from state to state and it pays to be informed of the rate in your particular state and city.
2. Sales tax is calculated as a percentage.
3. Add the prices for multiple items before calculating the sales tax.

9. Violation of Sales Tax Rules

Taxes can sometimes be complicated and an individual might not necessarily realise when he/she violates any provisions of the laws.

1. Providing false and misleading information in the forms.
2. Failing to obtain registration according to the CST Act.
3. Not following the security provisions mentioned in the CST Act.
4. Misappropriation of goods purchased at discounted rates.
5. Falsely impersonating a dealer or projection oneself as a dealer.
6. Unregistered dealers collecting sales tax from consumers is a violation.
7. Providing incorrect statements about purchased goods.

10. Central Board of Direct Taxes

• The Central Board of Direct Taxes is an apex body which is in charge of the administration of taxes in the country.
• It is a statutory authority and functions under the purview of the Central Board Revenue Act of 1963.
• It is a division of the Ministry of Finance, working under the ambit of the Department of Revenue.

10.1. Composition 

The Central Board of Direct Taxes is composed of the following members.

• Chairman
• Member (Income Tax)
• Member (Legislation and Computerisation)
• Member (Revenue)
• Member (Personnel and Vigilance)
• Member (Investigation)
• Member (Audit and Judicial)

10.2. Functions

• The Central Board of Direct Taxes looks after all issues and matters relating to the country's levy and collection of direct taxes.
• It provides necessary inputs to frame policies for direct taxes
• It is in charge of the administration of direct tax laws in collaboration with the Income Tax Department
• Processes and investigates complaints related to tax evasion.

For Prelims & Mains

Previous Year questions

 

Source: Bankbazzar.com

DRAFT RESOLUTION (A/77/L.58)

1. Context

The United Nations General Assembly passed a resolution that asked the International Court of Justice at The Hague to provide an opinion on what kind of obligations countries have towards climate change reduction, based on the promises they have made to the UN Framework Convention for Climate Change (UNFCCC).

2. Background

The resolution passed by consensus had been pushed through by one of the smallest countries in the world, the Pacific Island of Vanuatu, an island that was devastated in 2015 by the effects of Cyclone Pam, believed to have been spurred by climate change, that wiped out 95% of its crops and affected two­thirds of its population.

 

Image Source: The Hindu

3. What does the resolution seek?

• The draft resolution (A/77/L.58) invoked article 96 of the UN Charter to ask the ICJ to deliberate on two questions.
• What are the obligations of states under international law to ensure the protection of the climate system for present and future generations?
• What are the legal consequences under these obligations for states where they, by their acts and omissions, have caused significant harm to the climate system, particularly for Small Island Developing States (SIDS) and for people who are harmed?
• The resolution refers to several international protocols including the Paris Agreement (2015), the United Nations Convention on the Law of the Sea, and even the Universal Declaration of Human Rights.
• The entire process is expected to take about 18 months for the ICJ to deliberate and deliver its opinion.

4. Role of ICJ and its Jurisdiction

Contentious

Contentious jurisdiction refers to the ICJ’s authority to resolve legal disputes between consenting states. Decisions made under contentious jurisdiction are binding.

Advisory

• Advisory jurisdiction allows the UN General Assembly (UNGA), the Security Council (SC), and other specialized bodies of the organization to request the ICJ’s opinion on a legal question.
• The ICJ’s advisory opinions are non-binding. However, they hold significant normative weight and serve to clarify international law on relevant issues.
• The ICJ’s advisory opinion on climate change can be useful in climate-related litigation at the national level

5. What is India's Opinion?

• India has thus far been cautiously silent about the move, although it is generally supportive of the need for climate justice, and holding the developed world accountable for global warming.
• It has referred the resolution to legal authorities in the country who will look into the implications and international ramifications of the ICJ opinion.
• India did not co-sponsor the draft resolution.
• India did not join the overwhelming majority of countries that co-sponsored the draft resolution.
• In the neighborhood, the list of co­sponsors included Bangladesh, Maldives, Nepal, Sri Lanka, and a number of island countries in the Indian Ocean Region (IOR).
• India is also watching how global powers like the U.S. and China respond to the resolution, as without their support, it will be hard to implement.
• During the discussion on the resolution, the U.S. representative voiced concerns about whether launching a judicial process was the best way to reach shared goals.
• Indian officials have also said that the ICJ process can only speak about climate change issues and problems broadly and that it cannot name or profile any one country in the process.
• Pointing to the Paris agreement as a landmark shift towards a “bottom­up” approach, where states themselves determine their ability to mitigate climate change, they also said any attempt to impose an opinion in a “top­down” manner would be resisted.
• Many other countries are likely to voice their opinion as the process gathers momentum in the months ahead.

6. What sparked the idea for the resolution?

• The original idea for taking the case for climate obligations to the highest legal court came from a group of 27 Pacific Island law students, who set up a campaign and brought it to the Pacific Islands Forum.
• Since 2019, the Vanuatu government, with the support of an 18­member “core group” of countries, has been promoting the idea of an Advisory Opinion from the ICJ.
• It prepared the draft resolution that was eventually co­sponsored by 132 countries at the UNGA and went through without a vote.
• While the U.S. was among a few countries that expressed some reservations, no country opposed the resolution.

7. Is the Advisory Opinion of ICJ binding?

• The ICJ is being asked for an advisory opinion, which by definition would not be legally binding as an ICJ judgment.
• However, its clarification of international environmental laws would make the process more streamlined, particularly as the COP (Conference of the Parties) process looks at various issues like climate finance, climate justice, and the most recently agreed “loss and damages” fund at the COP27 in Sharm El­Sheikh last year.
• The ICJ carries legal weight and moral authority”, said the sponsors of the resolution, and gave as examples advisory opinions given in the past on the Palestinian issue (Construction of the Wall) and nuclear threats that have been respected.

For Prelims

For Prelims: UN Framework Convention for Climate Change (UNFCCC), the International Court of Justice, Small Island Developing States (SIDS), the Paris Agreement (2015), the United Nations Convention on the Law of the Sea, the Universal Declaration of Human Rights and COP27.

Source: The Hindu

Previous year Question

1. The Island Nation situated in the South Pacific Ocean which suffered huge loss due to the earthquake-generated Tsunami on February 6, 2013. (UPPSC 2013) A. Soloman Island B. Tuvalu C. Marshal Island D. Vanuatu Answer: A

MICROPLASTICS IN OCEANS

 

 

1. Context

An estimated 170 trillion plastic particles weighing about 2 million metric tons are currently afloat in the oceans across the world, according to a new study, which added that if no urgent action is taken then this number could nearly triple by 2040

2. About Microplastics

• Microplastics are tiny plastic particles that result from commercial product development and the breakdown of larger plastics.
• They are fragments of any type of plastic less than 5mm(0.20 in) in length.
• Plastic pollution is big evil and can help viruses alive and infectious in fresh water for days
• Microplastics are particularly harmful to the oceans as they don’t readily break down into harmless molecules and adversely affect the health of marine organisms, which mistake plastic for food. Moreover, these particles can trigger loss of biodiversity and threaten ecosystem balance

3. Key Findings

• Researchers examined surface-level plastic pollution data from nearly 12,000 ocean stations in six major marine regions, from 1979 to 2019
• Finally, by using computer modelling, the researchers were able to come up with a global time series to estimate not only how much microplastic is currently in the oceans but also how their concentration has changed over the years
• They found that from 1990 to 2005, the number of plastic particles more or less fluctuated
• One of the reasons for this could be due to the effective implementation of important policy measures at the time
• In the 1980s and 90s, some international policies, like MARPOL Annex 5, enforced laws against dumping trash at sea. They were powerful laws that were enforceable and were preventative
• However, things went downhill soon after as the world began producing much more plastic than ever before
• Therefore, as the study pointed out, the concentration of plastic particles including microplastics in the ocean has skyrocketed in the oceans since the mid-2000s, and it continues to increase
• Researchers further mentioned that if the world fails to take any drastic action about the issue, there will be a 2.6-fold increase in plastic flowing into aquatic environments by 2040

4. Impacts of Microplastics on Ocean and Marine life

• Several recent studies have detected microplastics in marine organisms, from phytoplankton to whales and dolphins, which might prove hazardous for them
• The ingestion of such particles can cause “mechanical problems, such as lacerations and blockages to internal systems.”
• Ingested plastics can cause chemical problems by leaching absorb chemicals into organisms
• We know that microplastics absorb many hydrophobic compounds, like DDT, PCBs and other industrial chemicals, and evidence shows they can be released when ingested
• Microplastics can also disrupt the carbon cycle of the oceans
• Normally, phytoplankton absorbs carbon and are eaten by zooplankton, who excrete the carbon in the form of faecal pellets that sink to the sea floor
•  Once these carbon-containing pellets reach there, “the carbon can be remineralized into rocks  preventing it from escaping back into the atmosphere,”
• If zooplanktons consume microplastics, their faecal pellets sink at a much slower rate, which means they are more likely to break apart or be eaten by other animals
• Making it less likely that the carbon will reach the seafloor and become permanently sequestered

5. How to limit plastic pollution in oceans

 

• Researchers of the latest study suggested that there is an urgent need to implement a global resolution to limit the production of single-use, throwaway plastic
• We need cities to be responsible for managing their waste so it does not leave their territory
• We need to reduce the amount of chemical additives in new plastic products
•  If we talk about recycling, there have to be requirements that recycled plastic be used in new products
•  The industries that make plastic like to talk about how technically we can recycle all of it. But they don’t like to commit to buying recycled plastic, therefore recycling fails

 

 

 

Source: indianexpress

COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS PACIFIC PARTNERSHIP (CPTPP)

1. Context

Britain on Friday agreed to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact based around the Pacific rim, as it seeks to build ties around the world after leaving the European Union

 

2. What is CPTPP

• CPTPP is a free trade agreement (FTA) that was agreed in 2018 between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam
• Britain will become the 12th member, and the first to join since the partnership since its inception
• According to UK "CPTPP countries will have a combined GDP of 11 trillion pounds ($13.6 trillion) once Britain joins, or 15% of global GDP"
• It does not have a single market for goods or services, and so regulatory harmonisation is not required, unlike the European Union, whose trading orbit Britain left at the end of 2020

 

3. Key Takeaways

• Britain says that exports to CPTPP countries were worth 60.5 billion pounds in the twelve months to end-Sept. 2022
• Membership of the grouping will add another 1.8 billion pounds each year in the long run, and possibly more if other countries join
• In an impact assessment of the deal when negotiations started in 2021, Britain said the agreement is estimated to deliver an increase of just 0.08% to GDP over the long term
• Only Malaysia and Brunei weren’t covered by existing FTAs, and they only account for 0.33% of UK trade

4. Sectoral Impact

• Britain has agreed on a quota on beef imports but did not agree to lower food standards, under which hormone-treated beef is banned
• Tariffs on palm oil from Malaysia will be liberalised, and Britain also agreed on tariff reductions on bananas, rice and crab sticks following requests from Peru, Vietnam and Singapore respectively
• Britain highlighted that 99% of exports to CPTPP would be eligible for zero tariffs, including cheese, cars, chocolate, machinery, gin and whisky

5. Geopolitical factors

• While the long-term benefit for Britain’s economy is set to be modest, Britain has other reasons for joining the bloc
• China has applied to join CPTPP, and Morita-Jaeger cited Britain’s pivot towards the Indo-Pacific, where it has highlight China as an “epoch-defining challenge.”
• The CPTPP could enable the UK to enhance strategic ties with like-minded countries to protect a free and open Indo-Pacific region