- Learning to let go
- Are children being introduced to coding too early in life?
Editorial: Learning to let go
- The international tribunal also ruled that India’s demand of $1.2 billion in retrospective tax was “in breach of the guarantee of fair and equitable treatment”.
- GS Paper 3: Indian Economy (issues re: planning, mobilisation of resources, growth, development, employment); Inclusive growth and issues therein.
- What is retrospective taxation? Assess the consequences of retrospective taxation on foreign investment in India. 15 Marks
Dimensions of the Article:
- What is the Case?
- What is the recent judgement?
- What is Retrospective Taxation?
- What is the Bilateral Investment Treaty?
- Way Forward
What is the Case?
The assets held by Cairn India Holdings had to be transferred to a company registered in India, which was done by Cairn India (an Indian entity) buying the entire stake in Cairn India Holdings from Cairn U.K. Holdings.
- The case involve a transfer of ownership of an Indian entity by way of an overseas transaction involving parties which did not fall under Indian tax jurisdiction.
- The tax authorities argued that though the deal was between two overseas entities, the shares derived their value from assets held in India, and hence were liable for capital gains tax.
- The Supreme Court struck down the demand in the Vodafone case.
- The government then retrospectively amended the law to allow indirect transfers which derive substantial value from assets located in India to be subjected to tax.
What is the recent judgement?
- The Permanent Court of Arbitration at The Hague on Wednesday ruled in favour of energy firm Cairn Plc over a retrospective tax demand worth ₹24,500 crore pursued by India’s taxmen since 2014.
- It has ruled that the tax levy, pertaining to a corporate reorganisation exercise undertaken in 2006-07, falls foul of the India-U.K. bilateral investment pact.
- The judgment has asked the government to pay $1.2 billion to Cairn Energy Plc — this, at a time when its revenues are strained due to the economic slowdown in the aftermath of the Covid-19 pandemic.
- On September 25, the Singapore seat of the Permanent Court of Arbitration had unanimously decided that India’s retrospective demand of Rs 22,100 crore as capital gains and withholding tax imposed on British telecommunication company Vodafone Plc for a 2007 deal was “in breach of the guarantee of fair and equitable treatment”.
- The tribunal also said that India must not make any more attempts to recover “the alleged tax liability or any interest and or penalties arising from this alleged liability through any other means”
What is Retrospective Taxation?
As the name suggests, retrospective taxation allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed.
- Countries use this route to correct any anomalies in their taxation policies that have, in the past, allowed companies to take advantage of such loopholes.
- While governments often use a retrospective amendment to taxation laws to “clarify” existing laws, it ends up hurting companies that had knowingly or unknowingly interpreted the tax rules differently.
- Apart from India, many countries including the US, the UK, the Netherlands, Canada, Belgium, Australia and Italy have retrospectively taxed companies, which had taken the benefit of loopholes in the previous law.
What is the Bilateral Investment Treaty?
Bilateral investment treaties (BITs) are treaties between two countries aimed at protecting investments made by investors of both countries.
- These treaties impose conditions on the regulatory behaviour of the host state and limit interference with the rights of the foreign investor.
- There is International Centre for Settlement of Disputes (ICSID) under investor-state dispute settlement (ISDS) mechanism for dispute redressal between international investors.
- An investment-friendly business environment would increase economic activity and help raise more revenue over time for the government. It is to be hoped that tax officials’ desire to deny their defeat and to try and hang on to legally untenable revenue finds an unsympathetic hearing from politicians in the finance ministry.
- India needs to craft meaningful and clear dispute resolution mechanisms in cross-border transactions to prevent the disputes from going to international courts, and save the cost and time expenditure. Improving the arbitration ecosystem will have a positive impact on the ease of doing business.
About Permanent Court of Arbitration
- It was established in 1899 and is headquartered in The Hague, Netherlands.
- Purpose: It is an intergovernmental organization dedicated to serve the international community in the field of dispute resolution and to facilitate arbitration and other forms of dispute resolution between States.
- It has a three-part organizational structure consisting of:
- Administrative Council – to oversee its policies and budgets,
- Members of the Court – a panel of independent potential arbitrators, and
- International Bureau – its Secretariat, headed by the Secretary-General.
- Funds: It has a Financial Assistance Fund which aims at helping developing countries meet part of the costs involved in international arbitration or other means of dispute settlement offered by the PCA.
Editorial: Are children being introduced to coding too early in life?
- The COVID outbreak has altered the traditional teaching-learning mechanisms with the distinctive rise of e-learning.
GS Paper 2: Social Sector & Social Services (health, education, human resources – issues in development, management);
- Online education has a mountain of problems in India but it can become accessible, inclusive if states are more proactive. Explain. 15 Marks
- What are the repercussions of increasing screen time for young children?
Dimensions of the Article:
- What is E-learning?
- Advantages of e-learning
- Disadvantages of e-learning
- Issues related e-learning in India
- Way Forward
What is E-learning?
Online learning or e-learning is a whereby teaching is undertaken remotely and on digital platforms through live platforms. It is based on formalised teaching but is electronically supported and relies on the Internet for teacher/student interaction and the distribution of class materials.
Advantages of e-learning
- Flexibility to plan schedule o Ease of Access
- More Affordable as online programs are cheaper when compared to the ones held in a traditional campus.
- Solves teacher scarcity
- Environmentally friendly as it consumes less energy and emits fewer CO2 emissions than traditional university courses. In addition, as E-Learning is a paperless learning method
Disadvantages of e-learning
- Student Feedback is weak as compared to face-to-face feedback in traditional classrooms
- Social Isolation due to the absence of human communication in physical classrooms.
- Requires strong self-motivation
- Lack of communicational skill development due to the lack of face-to-face communication between peers, students and teachers in an online setting
- Cheating prevention during online assessments is complicated.
Issues related e-learning in India
- Digital Divide: According to the Indicators of Household Social Consumption on Education in India report, less than 15% of rural Indian households have Internet connection (as opposed to 42% urban Indian households). Those with no access to the internet are still excluded from quality learning. Further, classes at times get disturbed due to connectivity issues.
- As per NSSO data, only 4.4% of rural households and 23.4% of urban households have computer/laptop. Thus 75% of students are using smartphones to watch online classes. Teachers are apprehensive about students using smartphones because of distracting apps.
- Difficult for parents to adjust: Parents complain of increased screen time for children, aren’t comfortable with technology themselves and increased pressure from the added household work due to the absence of domestic help adds to their problem.
- Gender divide: Increased domestic responsibilities especially for girls is impairing the atmosphere of learning. According to a recent UN report, only 29% of all internet users are female, which indicates that transitions to digital learning may compound the gender gap in education.
- Lack of vernacular content: Most of the content and existing lectures on internet are in English. In India, the Ministry of HRD data shows that there are only 17% English medium schools.
- Creating new inequality: Only a handful of private schools, universities and IITs could adopt online teaching methods. Their low-income private and government counterparts, on the other hand, have completely shut down for not having access to e-learning solutions.
- Difficulties for teachers:
- Without adequate training, many teachers are not comfortable with using technology.
- Also, with reduced interaction, it is difficult for teachers to develop a rapport with the children for effective teaching.
- Teachers are also under tremendous pressure due to interference by overenthusiastic parents.
- Lack of institutions’ autonomy: Existing rules have constrained Indian education institutions to take advantage. Till now, the UGC has licensed only seven universities to offer online courses.
- Conducting large-scale, high-stakes examinations will be more complicated. Most board and entrance examinations have been either postponed or suspended, causing disruptions in the academic calendar.
- Ensuring continuity of learning in government schools and universities. Open-source digital learning solutions and Learning Management Software should be adopted so teachers can conduct teaching online. The DIKSHA platform, with reach across all states in India, can be further strengthened to ensure accessibility of learning to the students.
- Deployment of ed-tech applications which takes into account the low internet bandwidth and patchy connections. The applications can focus on offline content which can be reviewed without a stable internet connection by the learners in the remote corners of India.
- Improve content in regional language. The existing EdTech solutions can prioritize the translation of key modules into regional dialects and deliver educational content with the help of grassroots organizations.
- Leveraging community owned tablets and smart devices for education can also aid learners. Also, the services of Bharatnet and Wi-Fi Choupal (Wi-Fi hotspots) can be used to access the educational modules by the students in remote villages.
- Establishing quality assurance mechanisms and quality benchmark for online learning as well as e-learning platforms. Many e-learning players offer multiple courses on the same subjects with different levels of certifications, methodology and assessment parameters. So, the quality of courses may differ across different e-learning platforms.