Daily Current Affairs – 2020
Topic: For Prelims and Mains
Global Climate Strike Movement
23rd September 2019
Why in news ?
Students in more than 2,000 cities across the world are holding demonstrations under the #FridaysforFuture movement.
- The #FridaysforFuture movement, also known as the ‘Youth Strike for Climate Movement’, started in August 2018.
- It was started by Swedish student ‘Greta Thunberg’, who skipped school to protest outside parliament for more action against climate change.
- ‘Thunberg’ called for a strike every Friday until the Swedish parliament revised its policies towards climate change.
- Gradually, students and adults from across the world started mobilising and demonstrating in front of parliaments and local city halls in their respective countries.
- Thousands of events are planed from September 20th to 27th,
- Millions of students to walk out of classrooms, workplaces and homes,
- To join together in the streets and demand climate action and climate justice.
- The strikes are registered to take place in over 2,350 cities.
- In India, strikes have been scheduled in New Delhi, Chennai, Pune, Mumbai, Phagwara (Punjab), Nagercoil (Tamil Nadu), Kishangarh (Rajasthan) and several other places.
- Students are demanding ‘urgent’, ‘decisive’ action to keep global average temperatures from rising above 5 degree Celsius.
- The global strikes will commence just as the “UN Climate Action Summit 2019” set to take place in New York on September 23, where Thunberg has been invited.
- These global school movements have been supported by scientists as well.
The sentiments behind these school student movements are –
- The “broken promises” of older generations,
- Members of which continue to extract and use fossil fuels,
- leading to increased CO2 emissions and
- Subsequently, increasing average global temperatures.
- Thunberg sailed through transatlantic, from Britain to the United States to take part in a United Nations climate summit.
Corporate Income Tax :
Why in news ?
Finance Minister Nirmala Sitharaman has recently announced major changes in corporate income tax rates to revive growth in the broader economy. This has been achieved through an ordinance– the Taxation Laws (Amendment) Ordinance 2019.
What has the government done?
- Corporate tax rate to be 22 per cent without exemptions.
- No Minimum Alternate Tax (MAT) applicable on such companies.
- Effective corporate tax rate after surcharge and cess to be 17 percent.
- To attract investment in manufacturing, local companies incorporated after October 2019 and till March 2023, will pay tax at 15 percent.
- That effective tax for new companies shall be 01 percent, including cess and surcharge. Companies enjoying tax holidays would be able to avail concessional rates post the exemption period.
- Will give MAT relief for those opting to continue paying surcharge and cess. MAT has been reduced to 15 percent from 18.5 percent for companies who continue to avail exemptions and incentives.
- To stabilise flow of funds into the market the enhanced surcharge announced in Budget 2019 will not apply on capital gains arising on sale of any security, including derivatives by foreign portfolio investors (FPI).
- For listed companies which made announcement for public buyback before July 2019 it is provided that tax on buyback on shares of such companies will not be charged.
How do these rates compare globally?
The new corporate income tax rates in India will be lower than USA (27 percent), Japan (30.62 percent), Brazil (34 percent), Germany (30 percent) and is similar to China (25 percent) and Korea (25 percent).
New companies in India with an effective tax rate of 17 percent are equivalent what corporates pay in Singapore (17 percent).
Need for and significance of the latest move:
The goal is to turn India into an investors’ darling, demonstrate the government’s intent to walk the talk on economic management, restore investors’ confidence and boost sentiments and demand.
- Alter the profitability dynamic of the Indian corporate ecosystem.
- Given the substantially lower rates would imply that many corporates will break even much ahead than what would have been the case with the earlier rates.
- Lower taxes should, ideally, result is higher profit margins. This should bolster their books, and some of these companies should be able to pass on the higher margins in the form of lower product prices to consumers.
- Lower corporate income tax rates and the resultant change in profitability will likely prompt companies to invest more, raising their capital expenditure (capex).
- Additional capacities will, eventually, through a secondary round effect, prompt these companies to hire more employees.
Why has the government brought an ordinance to bring in these changes?
Changes in income tax rates (both corporate and individual) require legislative amendments. These require Parliamentary ratification. When the Parliament is not in session, the government can bring these changes through an Ordinance and later bring a Bill when Parliament convenes.