Section 44(3) of the DPDP Act

Prelims Only | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Section 44(3)

Why in the News?

Opposition parties have raised concerns over the Digital Personal Data Protection (DPDP) Act, 2023, demanding the repeal of Section 44(3), claiming it could undermine the Right to Information (RTI) Act, 2005.

About DPDP Act and Section 44(3)

Recognizing the right to privacy as fundamental in India, the Supreme Court in Justice K.S. Puttaswamy vs. Union of India (2017) led to the introduction of the DPDP Act in 2023.
The Act regulates the processing of personal data, balancing individual privacy rights and lawful processing needs.
Key Provisions: It mandates informed consent, establishes a Data Protection Board of India (DPBI), and outlines the responsibilities of data fiduciaries in ensuring data protection.
Section 44(3) modifies Section 8(1)(j) of the RTI Act, which previously exempted personal information from disclosure unless public interest justified it.
The amendment broadens this exemption, stating that all personal information should be exempt from disclosure, without requiring a public interest justification.

Concerns Related to Section 44(3)

Reduced Transparency: Activists and critics argue that this section undermines the RTI Act, which has been a cornerstone of transparency and accountability in governance.
Limited Access to Public Information: The broad exemption allows government officials to shield information like asset disclosures, which are critical for public accountability.
Potential for Misuse: There are concerns that personal data protection could be used as an excuse to block vital information about government activities, weakening the public’s right to know.
Conflict Between Public Interest and Privacy: Critics argue that privacy protection should not override the principle of transparency.

Back2Basics: Right to Information (RTI) Act, 2005

The RTI Act, 2005 empowers Indian citizens to seek information from public authorities, ensuring transparency and accountability in governance.
RTI is considered a fundamental right under Article 19(1)(a) of the Indian Constitution, which guarantees freedom of speech and expression,
Key Features:
- Applicability: Covers all government bodies, including central, state, and local authorities.
- Public Information Officers (PIOs): Designated officials who are responsible for providing requested information within 30 days.
- Exemptions: Some categories of information are exempted, such as national security matters and personal privacy.
- Penalty: Officials can face fines for failing to provide information without valid reasons.

[UPSC 2018] Right to Privacy is protected as an intrinsic part of Right to Life and Personal Liberty. Which of the following in the Constitution of India correctly and appropriately imply the above statement?

(a) Article 14 and the provisions under the 42ndAmendment to the Constitution.

(b) Article 17 and the Directive Principles of State Policy in Part IV.

(d) Article 24 and the provisions under the 44thAmendment to the Constitution.

Get an IAS/IPS ranker as your 1: 1 personal mentor

Promoting Science and Technology – Missions,Policies & Schemes

India BioEconomy Report

Prelims Only | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important:

Prelims level: India BioEconomy Report

Why in the News?

The India BioEconomy Report has pegged the value of India’s bioeconomy in 2024 at more than $165 billion, accounting for over 4.2% of the country’s GDP.

What is Bioeconomy?

Bioeconomy refers to the industrial use of biological resources (plants, animals, and microorganisms) and the replication of natural biological processes to produce goods and services.
It incorporates sustainable methods to replace traditional, resource-intensive production systems.
Applications:
- Biofuels, bioplastics, medicines, synthetic biology, and agriculture are key sectors where bioeconomy is being applied.
  - Ex. Ethanol produced via microorganisms from crops like sugarcane and corn is a prime example of bioeconomy’s impact on reducing reliance on hydrocarbon-based fuels.

Key Highlights of the India Bioeconomy Report:

Growth in Market Value:
- India’s bioeconomy has nearly doubled in value from $86 billion in 2020 to $165 billion in 2024.
- There has been a 90% increase in the number of companies in the bioeconomy sector, from 5,365 in 2021 to 10,075 in 2024, with projections to double again by 2030.
Key Sectors:
- Industrial Sector: Contributes nearly $78 billion, driven by biofuels and bioplastics.
- Pharmaceuticals: Accounts for 35% of the total bioeconomy value, primarily driven by vaccines.
- Research and IT: The fastest-growing segment, especially in biotech software development and clinical trials.
Regional Contribution:
- Maharashtra, Karnataka, Telangana, Gujarat, and Andhra Pradesh account for over two-thirds of the bioeconomy value.
- The Eastern and Northeastern regions contribute less than 6%.
Global Comparison:
- India’s bioeconomy share in GDP (4.2%) is comparable to countries like the US and China.
- However, countries like Spain and Italy have bioeconomy contributing more than 20% of their GDP.
Policy Direction:
- The BioE3 policy (Biotechnology for Economy, Environment, and Employment), launched in 2024, aims to establish India as a global hub for bio-manufacturing and a major center for biotech R&D.
- The policy targets growth in areas such as bio-based chemicals, functional foods, precision biotherapeutics, marine and space biotechnology, and climate-resilient agriculture.

India BioEconomy Report

[UPSC 2024] Consider the following materials:

1. Agricultural residues

2. Corn grain

3. Wastewater treatment sludge

4. Wood mill waste

Which of the above can be used as feedstock for producing Sustainable Aviation Fuel?

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

Get an IAS/IPS ranker as your 1: 1 personal mentor

International Space Agencies – Missions and Discoveries

GAIA Mission

Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

Note4Students

From UPSC perspective, the following things are important:

Prelims level: GAIA Mission

Why in the News?

The European Space Agency (ESA) officially shut down its Global Astrometric Interferometer for Astrophysics (GAIA) Mission, which had been operational for over a decade.

About the GAIA Mission

It was launched in December 2013 with the primary goal to create the most accurate three-dimensional map of the Milky Way galaxy.
It sought to measure the positions, distances, and movements of stars and other celestial bodies.
Gaia was designed for astrometry, focusing on precise measurements of celestial object locations and motions.
Positioned at Lagrange Point 2 (L2), 1.5 million kilometres behind Earth (as viewed from the Sun), Gaia was able to observe the universe without interference from Earth, the Sun, or the Moon.
Gaia was equipped with two telescopes and a camera with nearly 1 billion pixels, the largest camera ever sent to space. Key instruments include:

Astrometer: Measured the location and motion of stars.
Photometer: Measured brightness of celestial objects.
Spectrometer: Analyzed the composition and movement of stars.

Discoveries and Achievements:
- Gaia mapped the Milky Way in 3D, uncovering its shape, structure, and movement. It also detected warping and wobbling in the galaxy.
- Gaia identified new types of black holes by observing their gravitational effects and tracked over 150,000 asteroids, contributing insights on their orbits and future impacts on Earth.
- Additionally, it provided new understanding of stellar evolution and the formation of stars, including the Sun.
Gaia accumulated over 3 trillion observations, contributing to more than 13,000 scientific papers, revolutionizing knowledge about the Milky Way, the solar system, and galactic dynamics.

Why is Gaia being Decommissioned?

After more than a decade of operations, the Gaia mission reached the end of its operational lifespan, making it unsustainable to continue its activities.
After over 10 years in space, Gaia’s technology showed signs of wear, and continuing operations became unfeasible.
On March 27, 2025, Gaia was successfully passivated, draining all internal energy sources. This means it can no longer be restarted or resumed for future operations.

[UPSC 2023] Consider the following pairs: Objects in space Description

1. Cepheids : Giant clouds of dust and gas in space

2. Nebulae : Stars which brighten and dim periodically

3. Pulsars : Neutron stars that are formed when massive stars run out of fuel and collapse

How many of the above pairs are correctly matched?

(a)Only one (b) Only two (c)All three (d) None

Get an IAS/IPS ranker as your 1: 1 personal mentor

Modern Indian History-Events and Personalities

How Sir Syed reconciled Faith with Reason?

Prelims Only | History | Mains Paper 1: Modern Indian History

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Sir Syed Ahmad Khan (1817-1898)

Why in the News?

March 27 is the death anniversary of Sir Syed Ahmad Khan, a prominent 19th-century reformer and educationist who significantly advanced the social and educational development of Muslims.

How Sir Syed reconciled Faith with Reason?

About Sir Syed Ahmad Khan (1817-1898)

Sir Syed Ahmad Khan was born in 1817 in Delhi, into a renowned Muslim family.
He received education in Persian and Arabic and was well-versed in Islamic studies from an early age.
Public Service and Recognition:
- He joined the British government’s judicial service in 1876 and was exposed to Western education and ideas, significantly influencing his later reforms.
- He served as a member of the Viceregal Council (1878-1883), the Lieutenant Governor’s Council of the North-Western Province (1887), and was involved in educational reforms as part of the Imperial Education Commission (1888) and the Royal Public Service Commission (1886).
- He was knighted by the British in 1888 for his contributions to social and educational reforms.
Role During British Rule:
- After the 1857 revolt, Sir Syed helped change the British perception of Muslims, utilizing British support to improve Muslim progress.
- He focused on education and cultural reform within the British framework to improve Muslim society.

Key Contributions:

Educational Reforms:
- Sir Syed founded Madrasatul Uloom in 1875, which later became Muhammadan Anglo-Oriental (MAO) College in 1877, laying the foundation for Aligarh Muslim University (AMU).
- He encouraged English education, believing it was essential for India’s progress. His visit to England in 1869-1870 further convinced him of its importance.
Promotion of Critical Thinking and Modernity:
- Sir Syed advocated for the reconciliation of Islamic faith with modern scientific thought and believed Islamic principles could coexist with modernity and science.
- He emphasized reason and critical thinking, opposing blind tradition.
Social and Religious Reforms:
- He supported women’s education, opposed purdah and polygamy, and advocated for easier divorce laws.
- He criticized the Piri and Muridi System and promoted self-discipline and independent thought.
Political Views:
- While involved in governance, Sir Syed was cautious about direct political engagement to avoid hostility from the British.
Literary Contributions:
- Sir Syed launched 3 bilingual periodicals — The Loyal Mohammedans of India (1860), The Aligarh Institute Gazette (1866), and Tehzibul Akhlakh (1870) — to promote modernity, rational thought, and cultural pluralism, combating sectarianism and bigotry.
Hindu-Muslim Unity:
- He once famously described Hindus and Muslims as “two eyes of the beautiful bride, that if any of the eyes hurt, made the bride ugly.” He had declared in 1884 at Gurdaspur that the Hindus and Muslims should try to become one heart and soul and act in unison.
The Aligarh Movement:
- It aimed to modernize the Muslim community by promoting modern education while preserving Islamic values.
- It led to social reforms such as the abolition of purdah and polygamy, and the promotion of widow remarriage and women’s education.

[UPSC 2000] Consider the following pairs:

Institution – Founder

1. Sanskrit College at Benaras – William Jones

2. Calcutta Madarsa – Warren Hastings

3. Fort William College – Arthur Wellesley

4. Muhammedan Anglo-Oriental College at Aligarh – Syed Ahmad Khan

How many of the above are correctly matched?

(a) Only one (b) Only two (c) Only three (d) All four

Get an IAS/IPS ranker as your 1: 1 personal mentor

Government Budgets

What is Finance Bill?

Prelims Only | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Finance Bill

Why in the News?

Initiating the debate on the Finance Bill in the Lok Sabha, Shashi Tharoor said south Indian States have been the engines of growth and revenue but don’t get their due share from the Central pool of revenue.

About Financial Bills:

Article 117 of the Constitution governs financial bills. It stipulates special provisions for the introduction of financial bills, outlining their requirements and procedures.
According to Rule 219 of the Rules of Procedure of the Lok Sabha, a Finance Bill is typically introduced to give effect to the financial proposals for the next financial year or to address supplementary financial proposals.
A Finance Bill is introduced in the Lok Sabha after the annual budget has been presented.
The Bill does not include provisions as per Article 110 but still involves expenditure from the Consolidated Fund of India.
It follows the same legislative process as an ordinary bill, where:
- Rajya Sabha can reject or amend it.
- In case of a deadlock, a joint sitting of both Houses may be convened.
The President can either assent to the Bill or return it for reconsideration.
All money bills are financial bills, but not all financial bills are money bills.
Only bills that exclusively deal with matters listed in Article 110 (such as taxes, borrowing, or the management of Consolidated Fund of India ) qualify as money bills.

Types of Financial Bills:

Type-I: Financial Bills under Article 110
- These bills contain provisions related to matters specified in Article 110(1)(a) to (f), which include taxation, borrowing, and the expenditure of funds from the Consolidated Fund of India (CFI).
- These bills are a combination of both money bills and ordinary bills. They are treated like money bills but also include non-financial matters that do not strictly fit into Article 110.
Type-II: Financial Bills under Article 117(3)
- These bills involve expenditure from the Consolidated Fund of India but do not fall under the money bill category.
- They follow the same legislative procedure as an ordinary bill and may be amended or rejected by the Rajya Sabha. In the case of disagreement between the two Houses, the President can call a joint sitting to resolve the deadlock.

[UPSC 2022] With reference to Finance Bill and Money Bill in the Indian Parliament, consider the following statements:

1. When the Lok Sabha transmits Finance Bill to the Rajya Sabha, it can amend or reject the Bill.

2. When the Lok Sabha transmits Money Bill to the Rajya Sabha, it cannot amend or reject the Bill, it can only make recommendations.

3. In the case of disagreement between the Lok Sabha and the Rajya Sabha, there is no joint sitting for Money Bill, but a joint sitting becomes necessary for Finance Bill.

How many of the above statements are correct?

(a) Only one (b) Only two (c) All three (d) None

Get an IAS/IPS ranker as your 1: 1 personal mentor

Indian Missile Program Updates

DRDO tests Vertically Launched Short-Range Surface-to-Air Missile (VLSRSAM)

Prelims Only | Security Issues | Mains Paper 3: Indigenization Of Technology

Note4Students

From UPSC perspective, the following things are important:

Prelims level: VLSRSAM

Why in the News?

The DRDO has successfully tested the Vertically- Launched Short-Range Surface-to-Air Missile (VLSRSAM) for the Indian Navy.

About VLSRSAM

The VLSRSAM is a ship-borne surface-to-air missile designed to counter various aerial threats, particularly at short ranges.
The missile is intended for neutralizing airborne threats at close ranges, including aircraft, helicopters, drones, and other incoming missiles, which are critical for naval defence operations.
The VLSRSAM weighs around 170 kg and is powered by a solid propellant.
The missile can reach a maximum speed of Mach 4.5.
The missile can reach altitudes of 16 km and has a range sufficient to engage high-speed targets.
Guidance System:
- Mid-course phase: The missile uses a fibre-optic gyroscope-based inertial guidance system, ensuring stable flight towards the target.
- Terminal phase: It switches to active radar homing for precise target acquisition and guidance, ensuring that it can engage targets with high accuracy even at low altitudes.

Strategic Significance

With advanced guidance systems, the VLSRSAM demonstrates agility and precision in targeting, ensuring it is highly effective even against fast-moving, low-flying aerial threats.
The missile has been tested for reliability and accuracy, successfully engaging targets at close range and low altitudes.
It is seen as a force multiplier for the Indian Navy, significantly enhancing its air defence capabilities, particularly in protecting high-value assets in the maritime domain.

[UPSC 2018] What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news ?

(a) An Israeli radar system

(b) India’s indigenous anti-missile programme

(d) A defence collaboration between Japan and South Korea

Get an IAS/IPS ranker as your 1: 1 personal mentor

Festivals, Dances, Theatre, Literature, Art in News

Revival of Vikramshila University

Prelims Only | History | Mains Paper 1: Arts & Culture

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Vikramshila University

Why in the News?

A decade after the resurgence of Nalanda University, the Government of Bihar is now focusing on the revival of Vikramshila University.

About Vikramshila University

Vikramshila University was founded by King Dharmapala of the Pala Dynasty in the 8th-9th century AD in Bhagalpur district, Bihar, near the Ganges River.
It was established to address the decline in academic standards at Nalanda University.
The university specialized in Tantric Buddhism and Vajrayana Buddhism. Subjects taught included philosophy, grammar, metaphysics, logic, and tantras.
Notable scholars like Atisa Dipankara and Naropa were associated with Vikramshila.
It housed over 1,000 students and employed more than 100 teachers.
- The university had 208 monastic cells, where monks studied and meditated.
Administration was managed by a Kulpati, or Mahasthavir, overseeing both academics and operations.
Key Features:
- The university’s iconic cruciform brick stupa stood at 15 meters.
- It also had a library with a unique cooling system to preserve manuscripts.
- The architecture included a square layout with gates at four cardinal directions and surrounding votive stupas.
Decline and Destruction:
- It thrived for about 400 years before being destroyed by Muhammad Bakhtiyar Khalji in 1193 AD.
- The decline was due to the rise of Hinduism, the fall of Buddhism, and foreign invasions.

Cultural Significance of Vikramshila University

Vikramshila was a major centre for Tantric and Vajrayana Buddhism, focusing on esoteric practices and rituals.
The Cakrasamvara Tantra was developed here, with scholars like Buddhajnanapada contributing to its spread.
The teachings from Vikramshila spread Buddhism across the Himalayas, Central Asia, and the Far East.
Vikramshila represented the zenith of Buddhist scholarship in India and contributed significantly to Buddhist texts, some of which survived through Tibetan manuscripts.

[UPSC 1998] Which of the following pairs are correctly matched?

I. Lothal: Ancient dockyard

II. Sarnath: First Sermon of Buddha

III. Rajgir: Lion capital of Asoka

IV. Nalanda: Great seat of Buddhist learning

Select the correct answer using the codes given below:

(a) I, II, III and IV (b) III and IV (c) I, II and IV (d) I and II

Get an IAS/IPS ranker as your 1: 1 personal mentor

Banking Sector Reforms

RBI revises Priority Sector Lending (PSL) guidelines

Prelims Only | Economics | Mains Paper 3: Mobilization Of Resources

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Priority Sector Lending (PSL)

Why in the News?

The RBI has issued revised guidelines for Priority Sector Lending (PSL), effective from April 1, 2025, to improve the targeting of bank credit to key sectors of the economy.

About Priority Sector Lending (PSL)

What is it?	PSL refers to the portion of bank lending that must be directed to specific sectors identified as priorities for national development. The RBI mandates that banks must allocate a specified portion of their credit to these sectors to ensure inclusive growth. Origin of PSL: PSL was introduced in India in the late 1960s. The term “*priority sector” was first used in 1967* by Morarji Desai, then Deputy Prime Minister, and it led to legislative measures for social control over banks. In 1972, the RBI formally defined priority sectors, focusing initially on agriculture and small-scale industries.
Which Banks are Covered Under PSL?	1. Domestic Scheduled Commercial Banks, Cooperative Banks, and Foreign Banks: 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBSE), whichever is higher. 2. Small Finance Banks and Regional Rural Banks (RRBs): 75% of ANBC or CEOBSE, whichever is higher. 3. Payment Banks: NOT subject to PSL targets.
Priority Sector Categories	• Agriculture • Micro, Small, and Medium Enterprises (MSMEs) • Export Credit • Education • Housing • Social Infrastructure • Renewable Energy • Others, including Scheduled Castes, Scheduled Tribes, and Persons with Disabilities. • Micro Finance Institutions (MFIs) offering loans to individuals and Self-Help Groups (SHGs) are also eligible for PSL classification.
Consequences of Failing to Meet PSL Norms	1. Investment in Rural Infrastructure Development Fund (RIDF): Banks falling short of PSL targets may be required to invest in the Rural Infrastructure Development Fund (RIDF), managed by NABARD, or other designated funds like those managed by SIDBI and NHB. 2. Purchase of PSL Certificates: Banks can purchase Priority Sector Lending Certificates (PSLCs) to meet their PSL targets.
Priority Sector Lending Certificates (PSLCs)	Tradable certificates issued against priority sector loans by banks. Banks can purchase PSLCs to meet PSL targets if they fall short, while incentivizing surplus banks to lend more to these sectors.

Revised PSL Guidelines for 2025:

Revised PSL guidelines for 2025 will enhance the targeting of bank credit to priority sectors.
Loan limits for housing have been increased, with differentiated limits based on population size: ₹50 lakh (population ≥ 50 lakh), ₹45 lakh (population 10-50 lakh), and ₹35 lakh (population < 10 lakh).
Renewable energy loans: Up to ₹35 crore for power generators and public utilities, and ₹10 lakh for individual households.
Urban Cooperative Banks (UCBs) have a revised PSL target of 60% of Adjusted Net Bank Credit (ANBC).
Weaker Section borrowers expanded and the cap on loans to individual women beneficiaries has been removed.

[UPSC 2012] The basic aim of Lead Bank Scheme is that the –

(a) big banks should try to open offices in each district

(b) there should be stiff competition among the various nationalized banks

(d) all the banks should make intensive efforts to mobilize deposits

Get an IAS/IPS ranker as your 1: 1 personal mentor

Differentiated Banks – Payment Banks, Small Finance Banks, etc.

NPCI Launches BHIM 3.0 with Enhanced Features

Prelims Only | Economics | Mains Paper 3: Indian Economy

Note4Students

From UPSC perspective, the following things are important:

Prelims level: BHIM 3.0

Why in the News?

NPCI BHIM Services Ltd. (NBSL), a subsidiary of the National Payments Corporation of India (NPCI), launched BHIM 3.0 with new features aimed at enhancing the user experience and providing new offerings for businesses and banks.

About BHIM (Bharat Interface for Money):

BHIM is a mobile payment app developed by NPCI, based on the Unified Payments Interface (UPI), aimed at promoting cashless transactions and digital payments directly through banks.
Launched on December 30, 2016, BHIM facilitates instant money transfers between over 170 member banks using IMPS infrastructure.
Unlike mobile wallets, BHIM transfers money directly between bank accounts, ensuring quick transactions at any time, including holidays.
BHIM now supports Aadhaar-based authentication for easier digital payments.
BHIM is available in more than 20 Indian languages and is designed to work effectively in areas with low or unstable internet connectivity.
BHIM employs a robust three-factor authentication (3FA) process to ensure the security of transactions:

1. Device ID and Mobile Number: The app binds with the user’s device ID and mobile number to verify the device.
2. Bank Account Link: Users must sync their bank account (UPI-enabled or non-UPI-enabled) to the app for transactions.
3. UPI PIN: A unique UPI PIN is required for completing transactions, which adds an extra layer of security.

NPCI does not charge any fee for transactions between ₹1 and ₹100,000.
- Banks may charge fees for UPI or IMPS transfers, but there is no official information on BHIM-specific charges.

Key Features of BHIM 3.0

Split Expenses: Users can now divide bills for shared expenses (e.g., rent, dining, group purchases) and settle payments instantly.
Family Mode: Users can onboard family members, track shared expenses, and assign specific payments for better financial management.
Spends Analytics: A new dashboard provides a detailed breakdown of monthly expenses, automatically categorizing them for easier budgeting.
Action Needed Alerts: BHIM 3.0 includes reminders for pending bills, activation of UPI Lite, and low Lite balance alerts to help users stay updated.
BHIM Vega: This feature allows merchants to accept in-app payments directly within the BHIM app, streamlining transactions without needing third-party apps.

[UPSC 2018] With reference to digital payments, consider the following statements:

1.BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.

2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

Which of the statements given above is/are correct?

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

Get an IAS/IPS ranker as your 1: 1 personal mentor

Tax Reforms

Govt proposes to abolish Equalization Levy

Prelims Only | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

Note4Students

From UPSC perspective, the following things are important:

Prelims level: Equalization Levy

Why in the News?

The Centre is considering the withdrawal of the 6% Equalization Levy on online advertisement services provided by offshore digital economy firms to Indian businesses.

What is Equalization Levy?

The Equalization Levy was introduced in 2016 under Section 165A of the Finance Act, primarily to tax digital transactions conducted by foreign e-commerce companies with Indian businesses.
It was designed to ensure that foreign companies, particularly in the digital economy, pay taxes for benefiting from Indian markets without a physical presence in the country.
It was primarily aimed at business-to-business (B2B) transactions, which is why it is often referred to as the “Google Tax”.
The levy mechanism involves withholding the tax at the time of payment made by the Indian service recipient to a non-resident service provider.
The annual payment threshold for the levy is ₹1,00,000 for a single service provider in a financial year.
Services covered under the levy:
- Online advertisement services (effective from June 1, 2016).
- Provision of digital advertising space or sale of goods to Indian residents (effective from April 1, 2020).
Tax Rates:
- 6% of the gross consideration is levied on online advertisement services.
- 2% of the gross consideration is levied on e-commerce transactions like the sale of goods or services.
Exclusions:
- The levy does not apply if the non-resident has a permanent office in India related to the service.
- The payment for the service is below ₹1 lakh.
Tax Withholding: The tax is withheld by the Indian service recipient at the time of payment.

Why it is being Abolished?

This move is part of India’s attempt to reduce tensions with the US, which raised concerns over such taxes.
- Similarly, the UK is considering the abolition of its digital services tax by April 2025.
In August 2024, the Indian government removed the 2% levy applied to offshore tech firms (e.g., cloud services, e-commerce).
- The 6% levy on online advertisements remained, impacting companies like Google and Meta.
The Finance Bill 2025 proposes a sunset clause to phase out the 6% levy on online advertisements by April 1, 2025.

[UPSC 2012] What is/are the recent policy initiative(s)of Government of India to promote the growth of manufacturing sector? Setting up of:

1. National Investment and Manufacturing Zones

2. Providing the benefit of ‘single window clearance’

3. Establishing the Technology Acquisition and Development Fund

Select the correct answer using the codes given below:

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

Get an IAS/IPS ranker as your 1: 1 personal mentor

Type: Prelims Only

Why in the News?

About DPDP Act and Section 44(3)

Concerns Related to Section 44(3)

Back2Basics: Right to Information (RTI) Act, 2005

Why in the News?

What is Bioeconomy?

Key Highlights of the India Bioeconomy Report:

Why in the News?

About the GAIA Mission

Why is Gaia being Decommissioned?

Why in the News?

About Sir Syed Ahmad Khan (1817-1898)

Key Contributions:

Why in the News?

About Financial Bills:

Types of Financial Bills:

Why in the News?

About VLSRSAM

Strategic Significance

Why in the News?

About Vikramshila University

Cultural Significance of Vikramshila University

Why in the News?

About Priority Sector Lending (PSL)

Revised PSL Guidelines for 2025:

Why in the News?

About BHIM (Bharat Interface for Money):

Key Features of BHIM 3.0

Why in the News?

What is Equalization Levy?

Why it is being Abolished?