Prelims 03-05-2024
Inheritance Tax
Why in news?
- The chairman of Indian Overseas Congress, Sam Pitroda’s comments on the inheritance tax, have raised the specter of wealth redistribution.
Inheritance tax
- Inheritance tax, also called estate tax,is imposed on the total value of money and property left behind by a deceased individual before it is passed on to their legal heirs.
- This tax is usually determined by considering the value of the assets minus any eligible exemptions or deductions.
- The main goals of inheritance tax are to raise government revenue and facilitate wealth redistribution.
- In India, there is no tax on inheritance as the Inheritance or Estate Tax. It was eliminated in
Pulicat Lake
Why in news?
- Recently, there was a concern arising from the fact that the State government plans to denotify a sizable area of the Pulicat wetland and sanctuary.
About the Pulicat Wetland
- It is located in the northern part of Tamil Naduand the southern part of Andhra Pradesh, is the second-largest brackish water ecosystem in India.
- The Pulicat Ecosystemsupports a very rich and diverse biota and acts as a breeding ground for several species of bird and marine life.
- Pulicat Lake is abiodiversity hotspot that hosts around 250 species of birds, 50 of which are intercontinental species.
- The lake’s unique hydrologyand the presence of more mangrove plantations in its eco-sensitive zone (ESZ) make it a significant habitat for wildlife.
- It plays a crucial role in the Central Asian Flywayfor birds.
Asset Reconstruction Companies (ARCs)
Why in news?
- The Reserve Bank of India (RBI) released a ‘Master Direction’ for Asset Reconstruction Companies (ARCs).
About
- According to the directions, to commence the business of securitisation or asset reconstruction, an ARC is required to have a minimum net owned fund (NOF) of Rs 300 croreand thereafter, on an ongoing basis.
- An ARC shall apply for registration and obtain a certificate of registration (CoR) from the RBI, before commencing the business.
- No ARC shall invest in land or building, except for investment for its own use up to 10% of its owned funds.
- ARCs are prohibited from raising money by way of deposit. They are also mandated to maintain a capital adequacy ratio of a minimum of 15% of its total risk-weighted assets.
Asset Reconstruction Company (ARC)
- In the Union Budget 2021-22, the Finance Minister announced the setting up of Asset Reconstruction Companies in India to take care of Non-Performing Assets (NPAs) of stressed banks.
- It is a financial institution that buys the NPA or bad assets from banks and financial institutionsso that the latter can clean up their balance sheets.
- ARCs in India have been set up by state-owned and private-sector banks. Also, there is no equity contribution from the government.
- ARCs play a critical role in the resolution of stressed financial assets of banks and financial institutions, thereby enhancing the overall health of the financial system.