Daily Current Affairs (MCQ) | Date 18.02.22

Daily Current Affairs (MCQ) | Date 18.02.22

Daily Current Affairs (MCQ) | Date 18.02.22

Q1. Consider the following statements

1. The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of GDP
2. The Fiscal Deficit has been increasing consistently over the last decade

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

The revised Fiscal Deficit in the current year is estimated at 6.9 percent of GDP as against 6.8 per cent projected in the Budget Estimates. The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by me last year to reach a fiscal deficit level below 4.5 per cent by 2025-26. While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable.

Q2. Consider the following statements about the MINIMUM ALTERNATE TAX (MAT) and Alternative Minimum Tax (AMT)

1. The Minimum Alternate Tax (MAT) was created to bring ‘zero-tax paying companies’ within the ambit of income tax
2. These are applicable to companies only

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

Companies can reduce their tax liability through various provisions of the Income-Tax Act, such as exemptions, deductions, depreciation, etc. There have been instances of some companies even managing to show nil taxable income despite making substantial profits and paying out dividends, thanks to the various tax concessions and incentives. The tax provision known as Minimum Alternate Tax (MAT) was created to bring these ‘zero-tax paying companies’ within the ambit of income tax and make them pay a minimum amount in tax to the government.
To improve accountability, and to ensure that no company avoided paying taxes, the Government of India in 1988 came up with the concept of MAT, which facilitates the taxation of zerotax companies. Introduced by the Finance Act, 1987, MAT came into effect from assessment year 1988-89. According to MAT, such companies are liable to pay to the government by deeming a certain percentage of their book profit as taxable income.

Budget 2022-2023:
Currently, cooperative societies are required to pay Alternative Minimum Tax at the rate of eighteen and one half per cent. However, companies pay the same at the rate of fifteen per cent. To provide a level playing field between co-operative societies and companies, I propose to reduce this rate for the cooperative societies also to fifteen per cent. 124. I also propose to reduce the surcharge on co-operative societies from present 12 per cent to 7 per cent for those having total income of more than ` 1 crore and up to ` 10 crores. 125. This would help in enhancing the income of cooperative societies and its members who are mostly from rural and farming communities.

Q3. The National Pension Scheme is a social security initiative by the Central Government. Who is eligible for participation in this scheme?

1. Public sector employee
2. Private sector employee
3. Workers in the unorganised sectors

Select the correct answer using the codes given below

a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

Answer : d

Why is the Question ?

Budget 2022-2023
At present, the Central Government contributes 14 per cent of the salary of its employees to the National Pension System (NPS) Tier-I. This is allowed as a deduction in computing the income of the employee.
However, such deduction is allowed only to the extent of 10 percent of the salary in case of employees of the State government. To provide equal treatment to both Central and State government employees, I propose to increase the tax deduction limit from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees as well. This would help in enhancing the social security benefits of the state government employees and bring them at par with central government employees.

Background:
The National Pension Scheme is a social security initiative by the Central Government. This pension programme is open to employees from the public, private and even the unorganised sectors except those from the armed forces.

The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement.
Earlier, the NPS scheme covered only the Central Government employees. Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis.
NPS scheme holds immense value for anyone who works in the private sector and requires a regular pension after retirement. The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD.

Q4. Consider the following statements

1. Crypto currency are now held as legitimate medium of exchange in India
2. Any income from transfer of any virtual digital asset will be taxed at the rate of 30 percent

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital assets cannot be set off against any other income. Further, in order to capture the transaction details, I also propose to provide for TDS on payment made in relation to transfer of virtual digital assets at the rate of 1 percent of such consideration above a monetary threshold.
Gift of virtual digital assets is also proposed to be taxed in the hands of the recipient.

Q5. Gain arising on transfer of capital asset is charged to tax under the head “Capital Gains”. Income from capital gains is classified as “Short Term Capital Gains” and “Long Term Capital Gains”. Which of the following assets can be considered as Capital assets to calculate the capital gains?

1. Shares
2. Bonds
3. Jewellery
4. Any work of art

Select the correct answer from the codes given below

a. 1 and 2 only
b. 1, 2 and 3 only
c. 2, 3 and 4 only
d. 1, 2, 3 and 4

Answer : d

Why is the Question ?

Budget 2022-23
The long-term capital gains on listed equity shares, units etc. are liable to maximum surcharge of 15 per cent, while the other long term capital gains are subjected to a graded surcharge which goes up to 37 per cent. I propose to cap the surcharge on long term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the start up community and along with my proposal on extending tax benefits to manufacturing companies and startups re affirms our commitment to Atma Nirbhar Bharat.
Capital asset is defined to include:
(a) Any kind of property held by an assessee, whether or not connected with business or profession of the assessee.
(b) Any securities held by a FII which has invested in such securities in accordance with
the regulations made under the SEBI Act, 1992.
However, the following items are excluded from the definition of “capital asset”:

(i) any stock-in-trade (other than securities referred to in (b) above), consumable stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is, movable property (including wearing apparel and furniture) held for personal use by the taxpayer or any member of his family dependent on him, but excludes—
(a) jewellery;
(b) archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures; or
(f) any work of art.