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Relevance: GS-III (Economy) | GS-II (Governance & Global Policies) | Source: The Indian Express

The Context: While India is making life easier for local businesses by stopping tax officers from harassing traders, Indian tech companies just got hit with bad news abroad. The US government has banned top IT firms like TCS, Infosys, and Wipro from sponsoring permanent Green Cards, leaving thousands of skilled Indian workers stuck in legal limbo.

1. GST Reforms

Running a business in India has often meant dealing with aggressive tax officers and sudden paperwork. The GST Council has stepped in to replace fear with trust.

  • No More Petty Notices: Tax officers can no longer drag small shopkeepers into trouble over tiny bookkeeping errors. They cannot issue legal warnings (Show-Cause Notices) unless the tax dispute is worth at least ₹10,000.
  • Stopping Early Arrests: In the past, tax officers could arrest a business owner before taking the case to court. The government has taken this early arrest power away so businesses are treated with respect, not suspicion.
  • Letting Trucks Move Freely: Officials can no longer randomly stop cargo trucks on highways to demand bribes or papers. Now, only officers from the state where the trip started or where the delivery ends are allowed to check the goods.

2. The Green Card Freeze in America

While India is relaxing its business rules, the US is tightening immigration under its “America First” policy to protect local jobs.

  • Shutting the Door (PERM): To help an employee get a permanent Green Card, a company must file a document called PERM to prove that no American worker is available for that role. The US government has now blocked major Indian IT firms from submitting new PERM applications.
  • The 6-Year Deadline: Temporary H-1B work visas have a strict six-year limit. The only legal way an Indian engineer can stay longer is if their company has already started their permanent Green Card paperwork.
  • The Big Problem: With the PERM door closed, employees approaching their six-year visa limit cannot get extensions. This could force thousands of Indian engineers to leave the country and fly back home.

Value Box: Key Concepts & Institutions
Article 279A (GST Council) A Constitutional body where Union and State finance ministers make tax decisions together. Passing these business-friendly reforms smoothly is a prime example of Indian “cooperative federalism.”
The PERM System Program Electronic Review Management. The mandatory US Department of Labor check where an employer proves that hiring a foreign worker permanently will not lower wages or take jobs away from American citizens.
Non-Tariff Barriers & IT Exports Instead of placing direct customs duties on software, the US uses visa restrictions as a “non-tariff barrier.” This forces Indian IT firms to hire much more expensive American workers, cutting into India’s export earnings.

Practice MCQ

Q. Consider the following statements regarding Indian tax institutions and international labor mobility:

  1. The Goods and Services Tax (GST) Council is a statutory body constituted under the provisions of the Central Goods and Services Tax (CGST) Act, 2017.
  2. Under US immigration regulations, temporary H-1B visa holders can generally obtain extensions beyond the standard six-year maximum limit only if a permanent residency process (like PERM) has been initiated.

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

Answer: (b) 2 only
Hint: Statement 1 is incorrect because the GST Council is a Constitutional body established under Article 279A, not merely a statutory one. Statement 2 is correct, as H-1B workers rely on an ongoing PERM labor certification process to legally extend their work permits past the six-year limit.

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