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GS Paper: GS3

  • CBDT’s crypto-asset reporting guidance and India’s alignment with OECD’s CARF

    Why in the News?

    The Central Board of Direct Taxes (CBDT) has released a 198 page guidance note aligning India’s crypto-asset tax reporting with the OECD’s Crypto-Asset Reporting Framework (CARF). The mandate operates under Section 509 of the Income-tax Act, 2025.

    How are crypto assets defined legally?

    1. Definition (Indian IT Legislation): India’s income tax legislation defines a “crypto-asset” as a digital representation of value that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions.
    2. Definition (OECD):The OECD Crypto-Asset Reporting Framework (CARF) defines crypto-assets similarly, but also includes “similar technology to validate and secure transactions, which includes cryptocurrencies, as well as cryptography- based tokens”.

    What is the Crypto-Asset Reporting Framework (CARF)?

    1. Definition: CARF is an international standard developed by the Organisation for Economic Co-operation and Development (OECD) requiring crypto-asset service providers to collect and report user transaction data to tax authorities.
    2. India’s mechanism: Section 509 of the Income-tax Act, 2025 gives CBDT the statutory basis to mandate this reporting domestically.
    3. Who reports: Exchanges and Reporting Crypto-Asset Service Providers (RCASPs) must collect and submit user transaction data.

    What are the Core Objectives Crypto-Asset Reporting Framework (CARF)?

    1. Automatic Information Exchange: Facilitates seamless cross-border sharing of taxpayer crypto transaction data between participating countries.
    2. Covered Entities: Mandates Reporting Crypto-Asset Service Providers (RCASPs), like exchanges and brokerages, to track and report user activity.
    3. Included Assets: Applies broadly to cryptocurrencies, stablecoins, certain non-fungible tokens (NFTs), and crypto derivatives.

    Why does this reporting mandate matter for crypto-asset holders?

    1. Visibility shift: Transactions previously visible only to the exchange become visible to the tax authority as well.
    2. Cross-border consistency: Aligning with CARF means data collected in India can be exchanged with other OECD-aligned tax jurisdictions.
    3. Compliance burden: Exchanges and RCASPs must build new data collection and reporting infrastructure to meet the mandate.
    4. Enforcement basis: The guidance gives CBDT a documentary basis to pursue undeclared crypto-asset income.

    What are the implications for taxpayers?

    1. No fresh reporting: The Guidance Note does not require taxpayers to make fresh disclosures directly to the Income-tax Department.
    2. Income reporting: Continue reporting crypto income under existing provisions of the Income-tax Act.
    3. Record keeping: Maintain records of purchases, sales, transfers, wallet movements, and exchange statements.
    4. Consistency: Ensure ITR disclosures match information reported by crypto exchanges (RCASPs).

    Conclusion

    The guidance closes a visibility gap that let crypto-asset transactions escape the reporting standard applied to conventional financial accounts. Its effectiveness now depends on how consistently exchanges and RCASPs implement the collection and reporting mechanics CBDT has mandated.

    PYQ Relevance

    [UPSC 2026] Which of the following statements regarding the features of blockchain technology are correct?

    1. Records stored in the database may be made visible to relevant stakeholders without risk of alteration.

    2. Copies of the entire database are stored on multiple computers on a network syncing within seconds.

    3. Consortium blockchain is a blend of public and private blockchains allowing selective data access.

    4. Mathematical algorithms make it impossible to change or delete any data once recorded and accepted.

    (a) 1 and 3 (b) 2 and 4 only (c) 1, 2 and 4 (d) 1 and 4 only

  • AI data centres’ power load to nearly double government’s earlier estimate

    Why in News

    The Ministry of Power informed Parliament that AI-driven data centres are expected to add 26.3 GW of electricity demand by 2031-32, nearly double the earlier estimate of 13.56 GW. The additional demand is proposed to be met primarily through renewable energy.

    Key Highlights

    • Revised estimate: Additional power load projected at 26.3 GW by 2031-32, up from 13.56 GW estimated earlier.
    • Renewable-powered growth: The government plans to meet most of this demand through renewable energy.
    • Rapid expansion: India’s data centre capacity is projected to increase from 2.2 GW (2025) to 12 GW by 2030 (Wood Mackenzie).
    • Digital economy: India’s digital economy is valued at around ₹32 lakh crore, contributing nearly 12% of GDP.
    • AI demand: Growth is being driven by Generative AI, cloud computing, big data analytics, fintech, e-commerce and digital public infrastructure.

    Why Do AI Data Centres Consume So Much Power?

    • AI model training requires high-performance GPUs and specialised chips.
    • Large-scale 24×7 computing and data processing significantly increase electricity demand.
    • Cooling systems account for a substantial share of total energy consumption.
    • Continuous operation requires high reliability and uninterrupted power supply.

    Significance

    • Strengthens India’s position as a global digital and AI hub.
    • Encourages investment in renewable energy, grid infrastructure and energy storage.
    • Supports growth of Digital India, semiconductor manufacturing and cloud services.
    • Creates employment in IT, engineering, power and infrastructure sectors.

    [2022, GS3, 15M] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.”

    [2020] With the print state of development, Artificial Intelligence can effectively do which of the following?
    1. Bring down electricity consumption in industrial units
    2. Create meaningful short stories and songs
    3. Disease diagnosis
    4. Text -to -Speech Conversion
    5. Wireless transmission of electrical energy
    Select the correct answer using the code given below:

    [A] 1, 2, 3 and 5 only

    [B] 1, 3 and 4 only

    [C] 2, 4 and 5 only

    [D] 1, 2, 3, 4 and 5

  • Western Ghats Eco-Sensitive Area notification remains deadlocked

    Why in News

    1. The Union Environment Ministry’s expert committee on Western Ghats Ecologically Sensitive Areas has had its tenure extended to July 2027.
    2. The 2024 draft notification covering 56,825 sq km remains unresolved across six states.

    Key Highlights

    1. Panel extension: Expert committee tenure extended to July 2027.
    2. Draft notification scope: 2024 draft notification covers 56,825 sq km across six states.
    3. Background dispute: The unresolved notification continues the divergence between the Gadgil Committee Report and the Kasturirangan Committee Report on how much of the Western Ghats should fall under Eco-Sensitive Area status.

    What is an Eco-Sensitive Area (ESA)?

    • Ecologically fragile areas notified under the Environment (Protection) Act, 1986.
    • Act as “shock absorbers” around protected ecosystems by regulating developmental activities.
    • Aim to balance environmental conservation with sustainable development.

    Gadgil Committee vs Kasturirangan Committee

    Gadgil Committee (Western Ghats Ecology Expert Panel, 2011)

    • Recommended about 64% of the Western Ghats as ESA.
    • Favoured strict conservation with a bottom-up, community-led approach.
    • Proposed a ban on mining, quarrying and highly polluting industries in sensitive zones.
    • Emphasised Gram Sabha participation in environmental governance.

    Kasturirangan Committee (High-Level Working Group, 2013)

    • Recommended about 37% of the Western Ghats (around 59,940 sq km) as ESA.
    • Used satellite imagery to identify ecologically sensitive landscapes.
    • Allowed greater flexibility for agriculture and human settlements.
    • Focused on balancing ecological protection with economic development.

    Significance of the Western Ghats

    • One of the world’s eight hottest biodiversity hotspots.
    • Recognised as a UNESCO World Heritage Site.
    • Origin of major peninsular rivers including Godavari, Krishna, Kaveri and Periyar.
    • Plays a crucial role in regulating the South-West Monsoon.
    • Supports rich biodiversity with a high proportion of endemic flora and fauna.
    • Provides vital ecosystem services, including water security and climate regulation.

    [2016] ‘Gadgil Committee Report’ and ‘Kasturirangan Committee Report’, sometimes seen in the news, are related to

    (a) constitutional reforms

    (b) Ganga Action Plan

    (c) linking of rivers

    (d) protection of Western Ghats

    “[2014] With reference to ‘Eco-Sensitive Zones’, which of the following statements is/are correct?

    1. Eco-Sensitive Zones are the areas that are declared under the Wildlife (Protection) Act, 1972.

    2. The purpose of the declaration of Eco-Sensitive Zones is to prohibit all kinds of human activities in those zones except agriculture.

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • What’s behind the vault of India’s gold exchange

    Why in the News?

    India’s gold exchange ecosystem, built on Electronic Gold Receipts (EGR), now sits at the centre of how Indians hold and trade gold. The shift exposes a tension between gold as a physical, trust based asset and a dematerialised, exchange traded instrument.

    What is an Electronic Gold Receipt?

    • Definition: An Electronic Gold Receipt (EGR) is a Securities and Exchange Board of India (SEBI) regulated digital security representing actual physical gold stored in secure, accredited vaults.
    • Purpose: EGRs let investors buy, sell, and trade gold on exchanges such as the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE), without holding physical metal at home.

    How does an Electronic Gold Receipt actually work?

    • Vaulting: A depositor delivers physical gold to a SEBI accredited vault manager, who verifies purity and weight.
    • Dematerialisation: The vault manager issues an EGR, a dematerialised instrument representing the deposited gold. It is credited to the depositor’s demat account.
    • Exchange trading: The EGR then trades on the gold exchange like a security, separating the instrument’s liquidity from the physical gold’s custody.
    • Fungibility: Standardised purity and weight bands let EGRs from different depositors trade interchangeably, making the exchange function like a market rather than a set of individual claims.

    What problem does this solve that physical gold trading could not?

    • Price discovery: A centralised exchange produces a transparent, real time domestic gold price instead of fragmented jeweller quotes.
    • Storage risk: Vault custody by regulated managers removes the theft and storage burden from individual holders.
    • Import dependence: A liquid domestic exchange gives India a reference price less dependent on London or Dubai benchmarks.
    • Quality assurance: Mandatory purity verification and standardised weight bands remove the adulteration risk common in unorganised physical gold trade.
    • Two way convertibility: An EGR can convert back into physical gold and back again, allowing arbitrage that keeps the receipt aligned with physical gold prices.

    Challenges to Electronic Gold Receipts

    • Ecosystem complexity as due diligence burden: The EGR ecosystem distributes responsibility across vault managers, depositories, exchanges, clearing corporations, and brokers. An investor’s risk assessment must span multiple entities.
    • Early stage caution: Informed participation requires investors to understand this multi institutional framework before adoption.
    • Liquidity constraints: EGR trading volumes remain well behind Gold Exchange Traded Funds (ETF), resulting in thinner markets and wider bid ask spreads.
    • Ongoing holding costs: Vaulting, storage, and withdrawal fees continue as long as the gold remains deposited, unlike Gold ETFs and Sovereign Gold Bonds (SGB).
    • Vault manager risk: SEBI mandates minimum net worth, insurance, and a financial security deposit for every vault manager, but residual operational and financial risk remains.

    Conclusion

    The EGR system converts gold from an asset held on trust in a locker into a regulated, tradeable instrument. Its long term success depends on depositor confidence, vault managers, and depositories performing as certified.

  • Insurers seek first third party premium hike in four years

    Why in News?

    Non life insurers are pressing for their first motor third party premium hike in four years, citing a Supreme Court judgment recognising the economic value of homemakers’ unpaid domestic work.

    Key Highlights

    • In its 11 June 2026 judgment, the Supreme Court held that unpaid domestic work performed by homemakers has measurable economic value and must be fairly considered while awarding compensation under the Motor Vehicles Act, 1988.
    • Insurers argue that the ruling is likely to increase compensation payouts, adding to existing underwriting losses.
    • They have requested an upward revision in motor third party insurance premiums, the first such increase in four years.
    • The Central Government, in consultation with the Insurance Regulatory and Development Authority of India (IRDAI), notifies third party premium rates.

    Motor Third Party (TP) Insurance

    • Mandatory under the Motor Vehicles Act, 1988 for all motor vehicles operating in India.
    • Covers death, bodily injury, or property damage caused to a third party due to the insured vehicle.
    • Does not cover damage to the insured vehicle; that requires comprehensive motor insurance.
    • Premium rates are regulated by the Central Government, based on recommendations from IRDAI.

    Value Addition

    • IRDAI: Statutory regulator established under the Insurance Regulatory and Development Authority Act, 1999.
    • Motor Accident Claims Tribunal (MACT): Adjudicates compensation claims arising from road accidents under the Motor Vehicles Act, 1988.
    • Significance of the Supreme Court ruling: Strengthens recognition of the economic contribution of unpaid care work, advancing substantive gender equality and ensuring more equitable compensation in accident claims.

    [2026] With reference to different Committees in India, consider the following details :

    Sl. No.CommitteeObjectiveOrganization under which it was formed
    1R.N. Malhotra CommitteeComprehensive reforms of Insurance sector in IndiaInsurance Regulatory and Development Authority of India
    2L.C. Gupta CommitteePreparing a roadmap for the introduction of derivatives trading in IndiaSecurities and Exchange Board of India
    3Urjit R. Patel CommitteePreparing a roadmap for reforming bank lending to the Housing sectorReserve Bank of India
    4Y.H. Malegam CommitteePreparing a roadmap for reforms in Microfinance sector in IndiaReserve Bank of India


    In which of the above rows are all the details correctly matched ?

    [A] 2 only

    [B] 2 and 3

    [C] 1, 3 and 4

    [D] 2 and 4

  • 3 Great Indian Bustard Chicks Placed in Rewilding Tunnel

    Why in News?

    Three Great Indian Bustard (Godawan) chicks bred at the Godawan Conservation Centre, Jaisalmer, have been placed in a specially designed rewilding tunnel to prepare them for release into the Desert National Park under India’s captive breeding and species recovery programme.

    Background

    • The initiative is part of the Great Indian Bustard Recovery Programme, implemented by the Ministry of Environment, Forest and Climate Change (MoEFCC) in collaboration with the Wildlife Institute of India (WII), Rajasthan Forest Department and international conservation partners.

    Great Indian Bustard (Ardeotis nigriceps)

    • One of the heaviest flying birds in the world and endemic to the Indian subcontinent.
    • Locally known as Godawan in Rajasthan.
    • Inhabits arid grasslands, scrublands and semi-desert ecosystems.
    • Rajasthan’s Desert National Park holds the largest surviving wild population.

    Conservation Status

    • IUCN Red List: Critically Endangered
    • Wildlife (Protection) Act, 1972: Schedule I (highest protection)
    • CITES: Appendix I
    • CMS (Bonn Convention): Appendix I

    Major Threats

    • Collision with overhead power transmission lines (largest cause of mortality).
    • Habitat loss and fragmentation due to agriculture, infrastructure and renewable energy projects.
    • Predation of eggs and chicks by feral dogs and other predators.
    • Low reproductive rate (typically one egg per breeding season).

    Conservation Measures

    • National Conservation Action Plan for Great Indian Bustard (2013).
    • Species Recovery Programme under the Integrated Development of Wildlife Habitats (IDWH) scheme.
    • Captive Breeding Centre at Jaisalmer for population augmentation.
    • Undergrounding or bird diverters on power lines in priority habitats following Supreme Court directions.
    • Habitat protection and predator management in key breeding areas.

    [2012] Which one of the following groups of animals belongs to the category of endangered species?
    (a) Great Indian Bustard, Musk Deer, Red Panda and Asiatic Wild Ass
    (b) Kashmir Stag, Cheetal, Blue Bull and Great Indian Bustard
    (c) Snow Leopard, Swamp Deer, Rhesus Monkey and Saras (Crane)
    (d) Lion tailed Macaque, Blue Bull, Hanuman Langur and Cheetal

  • Drawing parallels between A.P., TN airport projects

    Why in News?

    With the Prime Minister set to inaugurate the Bhogapuram Greenfield International Airport in Andhra Pradesh on August 1, an analysis compared its execution with Tamil Nadu’s stalled Parandur airport project.

    Key Highlights

    • Bhogapuram Greenfield International Airport is scheduled for inauguration on 1 August 2026.
    • Parandur Greenfield Airport in Tamil Nadu continues to face delays due to land acquisition and rehabilitation concerns.
    • Land acquisition, compensation, and rehabilitation of affected families remain the principal bottlenecks in large greenfield infrastructure projects.
    • The comparison highlights the importance of timely clearances, stakeholder consultation, and fair compensation for successful infrastructure development.

    Greenfield Airport

    • A new airport developed from scratch on previously undeveloped land, unlike a brownfield airport, which expands or upgrades an existing airport.
    • In India, greenfield airports are approved under the Greenfield Airports Policy, 2008.
    • Approval is granted by the Ministry of Civil Aviation after assessing:
      • Demand and traffic potential
      • Site suitability
      • Environmental and statutory clearances
      • Financial viability
    • Airports are generally developed through public, private, or Public-Private Partnership (PPP) models.

    Value Addition

    • Nodal Ministry: Ministry of Civil Aviation.
    • Airport Development Agency: Airports Authority of India (AAI) provides technical support and develops many airports.
    • Constitutional Basis for Land Acquisition: Governed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013, which mandates fair compensation, rehabilitation, and social impact assessment.
    • Significance: Greenfield airports improve regional connectivity under the UDAN (Ude Desh ka Aam Nagrik) scheme, promote tourism, attract investment, and support balanced regional economic development.

    [2024] Consider the following airports:

    1. Donyi Polo Airport

    2. Kushinagar International Airport

    3. Vijayawada International Airport.

    In the recent past, which of the above have been constructed as Greenfield projects?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3.

  • Rajasthan farmers object to GI tag for Unjha jeera and saunf

    Why in News?

    Rajasthan’s cumin and fennel farmers have objected to Geographical Indication tags granted to Gujarat’s ‘Unjha Jeera’ and ‘Unjha Fennel’ (saunf), arguing Unjha is a trading hub, not the growing region.

    Key Highlights

    1. The GI tags for ‘Unjha Jeera’ and ‘Unjha Fennel’ were registered in the name of Gujarat’s Agricultural Produce Market Committee (APMC), Unjha.
    2. Farmers from Rajasthan contend that a significant share of the crops is cultivated in Rajasthan, making the GI registration misleading.
    3. The Unjha APMC has defended the GI registrations, citing over 1,000 pages of scientific, historical, and commercial evidence submitted during the registration process.
    4. The dispute raises questions over the criteria for GI registration, particularly the link between a product’s reputation, production area, and marketing centre.

    Geographical Indication (GI) Tag

    • A Geographical Indication (GI) identifies goods that possess qualities, reputation, or characteristics essentially attributable to their geographical origin.
    • Governed by the Geographical Indications of Goods (Registration and Protection) Act, 1999.
    • Registration is granted by the Geographical Indications Registry, Chennai, under the Department for Promotion of Industry and Internal Trade (DPIIT).
    • Validity: 10 years, renewable indefinitely.
    • GI protection applies to agricultural products, natural products, handicrafts, manufactured goods, and foodstuffs.

    Value Addition

    • First GI tag in India: Darjeeling Tea (2004-05).
    • Benefits of GI: Protects producers from misuse, preserves traditional knowledge, enhances product value, promotes exports, and supports rural livelihoods.
    • Difference from Trademark: A GI belongs collectively to eligible producers from a specific region, whereas a trademark is an exclusive right owned by an individual or company.

    [2018] India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to

    (a) ILO

    (b) IMF

    (c) UNCTAD

    (d) WTO

  • Maritime sector posts remarkable growth

    Why in News?

    An analysis of India’s port sector found capacity utilisation at about 60%, against a global benchmark of 70%, as Sagarmala 2.0 continues to expand port linked infrastructure.

    Key Highlights

    1. Port capacity utilisation stands at roughly 60%, below the 70% global benchmark.
    2. Sagarmala 2.0 is the next phase of the Sagarmala Programme, aligned with the Maritime Amrit Kaal Vision (MAKV) 2047.
    3. MAKV 2047 targets positioning India as a global maritime innovation hub.

    Sagarmala Programme

    • Launched in 2015 by the Ministry of Ports, Shipping and Waterways.
    • Vision: Port-led development to accelerate economic growth and reduce logistics costs.
    • Four key pillars:
      • Port modernisation and new port development
      • Port connectivity enhancement
      • Port-led industrialisation
      • Coastal community development

    [2026] Consider the following statements with reference to the Sagarmala Programme of the Government of India:

    I. The Sagarmala Programme seeks to achieve port led economic growth through cost effective and sustainable coastal infrastructure.

    II. The success of the Sagarmala Programme is reflected in significant growth in coastal and inland waterway shipping, along with improved global port rankings.

    III. Sagarmala 2.0 aims to position India as a global maritime innovation hub aligned with Atmanirbhar Bharat and Viksit Bharat 2047 visions.

    Which of the following relationships among the above statements is/are correct?

    (a) 1 only

    (b) 1 and 2

    (c) 2 and 3

    (d) 3 only

  • CBDT issues crypto asset reporting note aligned with OECD framework

    Why in News?

    The Central Board of Direct Taxes (CBDT) issued a 198 page guidance note on crypto asset reporting under the Income tax Act, 2025, aligned with the OECD’s Crypto Asset Reporting Framework (CARF).

    Key Highlights

    1. The guidance note runs to 198 pages and is issued under the Income tax Act, 2025.
    2. It aligns India’s crypto asset reporting with the OECD’s Crypto Asset Reporting Framework (CARF).
    3. The framework enables automatic global information exchange on crypto asset holdings starting next year.

     [2016] With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct?
    1. Bitcoins are tracked by the Central Banks of the countries.
    2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
    3. Online payments can be sent without either side knowing the identity of the other.
    Select the correct answer using the code given below.

    [A] 1 and 2 only

    [B] 2 and 3 only

    [C] 3 only

    [D] 1, 2 and 3