24 August 2025 Current Affairs for UPSC

Why in News?

The Group of Ministers (GOM) appointed by the Goods and Services Tax (GST) Council to look into the rationalisation of rates in GST says it has accepted the Union government’s proposals on how to go about the process.

UPSC Relevance

Prelims, GS3, Budgeting

PYQ :

2018 Prelims

With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct?

1. It is introduced as a part of the Income Tax Act.
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements”.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

2024

Consider the following items:

1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material

Which of the above items is/are exempted under GST (Goods and Services Tax)?

1 only

2 and 3 only

1, 2 and 4 only

1, 2, 3 and 4

Mains 2020 – Explain the rationale behind the Goods and Services Tax (Compensation to States) Act of 2017. How has COVID-19 impacted the GST compensation fund and created new federal tensions?

Why Next-generation Reforms to GST?

Suggested Reforms 

Group of Ministers (GoM) on Rate Rationalization

• To move from the current four-tier structure (5%, 12%, 18%, and 28%) to a simpler two-rate structure. This would typically include a 5% rate for essential goods and an 18% rate for all other standard goods and services.
• It has also recommended a new higher rate, potentially 40%, for “sin goods” and ultra-luxury items.

Group of Ministers (GoM) on System Reforms

• To implement pre-filled GST returns to reduce manual errors and mismatches.
• They also recommended seamless, tech-driven, and time-bound registration for businesses, especially MSMEs, and automated refunds for exporters and those with an inverted duty structure.

Public Accounts Committee (PAC)

• They have also raised concerns about the decline in indirect tax revenue and recommended a more efficient refund system with clear timelines and a dedicated grievance redressal mechanism.

Other Reforms

• Correcting the inverted duty structure : In some cases, the tax on raw materials is higher than the finished product. This needs to be corrected. This reform would reduce the accumulation of Input Tax Credit (ITC) for businesses and boost domestic manufacturing.
• Inclusion of Petroleum and Other Products: One of the long-standing recommendations is to bring petroleum products, electricity, and real estate under the GST ambit to ensure a more comprehensive and seamless tax system. While a politically sensitive issue, committees have consistently advocated for it to remove the cascading effect of taxes on these vital sectors.

Recent Proposed Reforms

Reducing the Slabs and Rates

• The GST currently has at least 7 different rates: 0.25%, 3%, 5%, 12%, 18%, 28%, and a compensation cess levied on the items in the 28% slab.
• The Union government proposed to reduce these to 4:
  • a rate of less than 1% for the items currently in 0.25% and 3% (diamonds, semi-precious stones, jewellery, and precious metals), 5%, 18%, and 40%.
• As per the proposal, 99% of the items currently in the 12% slab would move to 5%, and 90% of the items in the 28% slab would move to 18%.
• A higher tax rate of 40% for ‘sin’ goods and services such as tobacco, cigarettes, and online gaming.
• Vast majority of items would be in just the two slabs of 5% and 18%.

What does this mean for the common consumer?

• According to a calculation by the State Bank of India’s economic research wing, if the proposals are accepted by the GST Council, the average tax rate under GST is expected to fall to 9.5% by 2026-27, from a notional rate of 14.4% in May 2017 and 11.6% as of September 2019.

Impact on Revenues

• According to economists, the loss of GST revenues could range between 21.1 lakh crore and 21.8 lakh crore, to be half borne by the Centre, and half divided across the States.
• To put this amount in context, the Reserve Bank of India (RBI) transferred a record dividend of ₹2.69 lakh crore to the government for 2024-25. Thus, the Union government will be able to quite comfortably absorb the revenue hit from the GST rate cuts.
• States’ Concerns – Kerala Finance Minister K.N. Balagopal, a member of the GoM on rate rationalisation, said the GoM has suggested to the GST Council that if the States incur any losses due to this rationalisation, there should be a mechanism to compensate them.

About GST

Constitutional Provisions

• 101st Constitutional Amendment Act, 2016: Enabled the introduction of GST in India, effective July 1, 2017.
• Article 246A: Empowers both Parliament and State Legislatures to make laws on GST, Parliament has special powers for inter-state supplies.
• Article 269A: Provides for the levy and collection of GST on inter-state trade and revenue sharing. IGST is levied on inter-state transactions, including imports.
• Article 279A: Establishes the GST Council, outlines its composition, powers, and procedures for operation including recommendations on tax rates, exemptions, and other matters.
• Article 265: No tax can be levied or collected except by authority of law.

Features of Goods and Services Tax (GST)

• Single Indirect Tax: GST is a comprehensive indirect tax replacing various Central and State taxes like VAT, excise duty, service tax, luxury tax, entry tax, etc. It brought a unified tax system for the whole country.

• Multi-Stage & Destination-Based: GST applies at every stage of value addition—from production to the point of consumption. Tax is collected at the final point where goods/services are consumed, not their origin.
• Dual Structure: GST is levied as Central GST (CGST) and State GST (SGST) for intra-state supplies and Integrated GST (IGST) for inter-state supplies. IGST is collected by the center and distributed between center and state.
• Input Tax Credit: Businesses can claim credit for the tax paid on inputs, preventing double taxation and reducing overall tax liability.
• Threshold Exemption: Small businesses with turnover below ₹20 lakh (₹10 lakh for special states) are exempted from GST.
• Composition Scheme: Simplifies tax compliance for small businesses, allowing them to pay tax at a fixed rate of turnover on an annual basis.
• Online Compliance: All GST filings and payments are done via the GSTN portal, enhancing transparency and digital record-keeping.
• Anti-Profiteering Measures: The National Anti-Profiteering Authority (NAA) ensures businesses pass on GST benefits to consumers.
• Sector-Specific Exemptions: Sectors like health, education, and food grains are exempt or taxed at lower rates and a few items (like petroleum and alcohol) are currently excluded.

GST Council: Role & Structure

Composition

• Chairperson: The Union Finance Minister of India.
• Members:
  • The Union Minister of State in charge of Revenue or Finance.
  • The Minister in charge of Finance or Taxation, or any other Minister nominated by each state and union territory with a legislature.
• Permanent Invitee (non-voting): The Chairperson of the Central Board of Indirect Taxes and Customs (CBIC).

Voting

• Decisions are made by a majority of not less than three-fourths of the weighted votes of the members present and voting. The voting weights are strategically assigned to balance the power between the Centre and the states:
  • Central Government: The Centre’s vote has a weight of one-third (⅓) of the total votes cast.
  • State Governments: The combined votes of all state governments have a weight of two-thirds (⅔) of the total votes cast.
• A quorum for a meeting is one-half of the total number of members. This voting structure ensures that no single entity can make a decision independently, promoting a sense of cooperative federalism.

Powers and Functions

• Tax Rates: Recommending the GST rates, including the floor rates with bands, for various goods and services.
• Exemptions: Deciding which goods and services should be subjected to or exempted from GST.
• Laws and Principles: Formulating Model GST Laws, principles of levy, and the principles that govern the place of supply.
• Threshold Limits: Setting the turnover threshold below which businesses are exempt from GST registration.
• Special Provisions: Recommending special provisions for certain states or categories of goods and services, such as a special rate to raise additional resources during a natural calamity or disaster.
• Dispute Resolution: Recommending a mechanism for resolving disputes between the Centre and states arising out of the recommendations of the GST Council. Indias has constituted GSTAT – GST Appellate Tribunal for the same.

These recent reforms planned for Deepavali as announced by PM Modi from Red Fort, seek to strengthen the “One Nation, One Tax” vision, improve GST efficiency, reduce litigation, help businesses grow, and support India’s economic ambitions.

Why in News?

Officials at the Indian Space Research Organisation (ISRO) said here on Sa-turday that they were looking to launch at least three satellites before 2026 end to replenish the defunct satellites that are part of the “Indian GPS”, or the Navic (Navigation with Indian Constellation) system.

UPSC Relevance

Prelims, Mains – GS3, Achievements of Indians in Science & Technology; Indigenization of Technology and Developing New Technology.Awareness in the fields of IT, Space, Computers, Robotics, Nano-technology, Bio-technology and issues relating to Intellectual Property Rights.

PYQ

Q. With reference to the Indian Regional Navigation Satellite System (IRNSS), consider the following statements: (2018)

1. IRNSS has three satellites in geostationary and four satellites in geosynchronous orbits.
2. IRNSS covers entire India and about 5500 sq. Km beyond its borders.
3. India will have its own satellite navigation system with full global coverage by the middle of 2019.

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) None

Q. Why is Indian Regional Navigational Satellite System (IRNSS) needed? How does it help in navigation? (2018)

NaVIC System

• The Navigation with Indian Constellation (NaVIC) system, also known as the Indian Regional Navigation Satellite System (IRNSS), is India’s indigenous satellite navigation system.
• It is designed to provide accurate location services, primarily within a 1,500 km radius of India.
• The system has enhanced accuracy over the Indian subcontinent, due to its unique orbital design.
• NaVIC serves as a fallback system in case access to foreign constellations like the American GPS, Russian GLONASS, or Chinese BeiDou is denied during conflicts.

Importance – contribute to India’s self-reliance (“Atmanirbhar Bharat”)

National Security and Defense

• NavIC is a direct response to a past vulnerability. During the 1999 Kargil War, the U.S. denied India access to GPS data, highlighting the risk of relying on foreign-controlled systems. NavIC prevents this from happening again by providing a secure and uninterrupted supply of precise location and timing data. It’s a key part of the military’s strategic operations, including missile guidance, troop movements, and border surveillance. The system has a dedicated, encrypted service for authorized military users to ensure its resilience against jamming or spoofing.

Economic and Civilian Applications

• Logistics : The Indian government has mandated NavIC-enabled trackers on commercial vehicles, improving efficiency in logistics, transportation, and fleet management.
• Mobile Devices: The integration of NavIC into modern smartphones and other consumer devices is boosting the development of location-based services and apps, fostering domestic innovation in the tech sector.
• Disaster Management: NavIC provides vital, real-time location data for relief and rescue operations during natural disasters like floods and earthquakes. It also provides a dedicated safety-of-life alert dissemination service for fishermen.
• Agriculture and Surveying: Farmers can use NavIC for precision farming, while surveyors can use it for high-precision mapping and land-use planning.

Current Status of the NaVIC Constellation

• Operational Satellites: Nine satellites have been launched since 2013, but only eight reached their intended orbit.
• Defunct Satellites: Based on a Right to Information (RTI) request, five satellites are completely defunct, with all three of their onboard atomic clocks not working.
• Partial Functionality: In one of the three satellites with some functionality, two out of its three atomic clocks have failed.
• Fully Functional Satellites: Only two satellites in the entire constellation have fully functional atomic clocks.
• Recent Launches: ISRO launched NVS-01 in May 2023, which successfully reached its designated orbit. However, NVS-02, launched in January 2025, failed to reach the required orbit.

The Atomic Clock Problem

• Imported Clocks: The atomic clocks in the current constellation were imported from the firm SpectraTime.
• Critical Failure: A significant number of these imported clocks have failed, rendering five satellites completely defunct.
• High-Precision Requirement: These clocks are crucial for providing the accurate timing and location services that are the very purpose of the navigation system. Each satellite is equipped with five such clocks.

What is an Atomic Clock?

An atomic clock is a super-accurate timepiece that works by measuring the “ticking” of atoms. Think of a grandfather clock that uses a swinging pendulum to keep time. An atomic clock uses atoms as its “pendulum.”

Each type of atom vibrates at a specific, constant frequency when it is in the right energy state. The atomic clock counts these vibrations. For example, a second is defined as the time it takes for a cesium-133 atom to vibrate exactly 9,192,631,770 times.

Examples of Atomic Clocks

• Cesium Atomic Clocks: These are the most common type and are used to define the international standard for time, Coordinated Universal Time (UTC). The NIST-F2, a cesium fountain clock at the National Institute of Standards and Technology (NIST) in the U.S., is a primary time standard.
• Rubidium Atomic Clocks: These are simpler and more compact than cesium clocks. They are often used in commercial applications where a balance between accuracy and size is needed, such as in telecommunications.
• Hydrogen Maser Clocks: These clocks offer excellent short-term stability and are used in scientific research and for applications like radio astronomy.
• Optical Atomic Clocks: A newer generation of atomic clocks, optical clocks use atoms like strontium or ytterbium. They operate at much higher frequencies than traditional atomic clocks.

Global Navigation Satellite Systems

• GPS is the oldest and most widely used GNSS, developed and operated by the United States. It’s a key part of daily life for most people, powering navigation apps, fitness trackers, and in-car GPS units. It consists of over 30 satellites in medium Earth orbit (MEO) that transmit signals to receivers on Earth to determine a precise location.
• GLONASS is the GNSS of the Russian Federation. It was developed to provide an alternative to GPS and is widely used within Russia and other countries. The system has 24 satellites in MEO and is particularly effective for navigation in high-latitude regions due to its orbital design.
• Galileo is a GNSS created by the European Union. Unlike GPS and GLONASS, Galileo was designed specifically for civilian use. It aims to provide highly accurate and reliable positioning, navigation, and timing services to users worldwide. The system has 26 satellites in orbit, with a plan for a full constellation of 30.
• BeiDou is China’s GNSS. It started as a regional system but has since expanded to provide global coverage. It is now a key part of China’s technological and military strategy. The system includes satellites in various orbits, including geostationary and MEO, giving it a unique architecture.

Regional Navigation Systems

In addition to the global systems, several countries operate regional navigation satellite systems (RNSS) that provide coverage over a more limited geographic area.

• NaVIC (Navigation with Indian Constellation): Operated by India, this system provides coverage over India and a surrounding area of approximately 1,500 km.
• QZSS (Quasi-Zenith Satellite System): Operated by Japan, this system is primarily designed to augment GPS signals in the Asia-Oceania region, improving accuracy in urban and mountainous areas.