UPSC CSE Prelims
SEBI Previous Year Questions (PYQs)

Detailed Explanation:

Correct Answer: ✅ Option 2 (II only)

The Business Responsibility and Sustainability Report (BRSR) is an ESG (Environmental, Social, and Governance) disclosure framework introduced by Securities and Exchange Board of India to improve transparency regarding a company's sustainability practices and social responsibility.

❌ Statement I is Incorrect: BRSR reporting is mandated by SEBI, not by the Reserve Bank of India. It is applicable to the top 1,000 listed companies by market capitalization.

✅ Statement II is Correct: BRSR mainly contains non-financial disclosures related to environmental performance, social responsibility, employee welfare, governance practices, and sustainability initiatives.

Short Notes: Business Responsibility and Sustainability Report (BRSR)

• BRSR was introduced by SEBI to strengthen ESG disclosures.

• It is mandatory for the top 1,000 listed companies by market capitalization.

• It replaced the earlier Business Responsibility Report (BRR) framework.

• BRSR focuses on Environmental, Social, and Governance (ESG) parameters.

• Most disclosures are non-financial in nature.

• It is based on the National Guidelines on Responsible Business Conduct (NGRBC).

• The framework improves corporate transparency and sustainability reporting.

Detailed Explanation:

Answer: Option 4 — Statement-I is incorrect but Statement-II is correct

This question tests knowledge about the taxation and legal framework governing Infrastructure Investment Trusts (InvITs) in India. Statement-I contains outdated information about tax exemptions, while Statement-II correctly identifies the legal status of InvITs under SARFAESI Act.

❌ Statement-I – Incorrect: The Union Budget 2023 eliminated the tax exemption on interest income from InvITs. Currently, all income distributed by InvITs (interest, dividends, and rental income) is taxable in the hands of unitholders as per their applicable income tax slab rates.

✅ Statement-II – Correct: InvITs are recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), which enables them to access diverse financing options and enforce security interests in case of loan defaults.

📝 Short Notes: Infrastructure Investment Trusts (InvITs)

• Definition: InvITs are investment vehicles that pool funds from investors to invest in income-generating infrastructure assets like roads, power transmission lines, and pipelines.
• Regulation: Regulated by SEBI (Infrastructure Investment Trusts) Regulations, 2014; mandatory listing on stock exchanges for public InvITs.
• Structure: Consists of Sponsor (minimum 15% holding for 3 years), Trustee, Investment Manager, and Project Manager.
• Taxation (Post-Budget 2023): All distributions (interest, dividend, rental income) are taxable in hands of unitholders; no tax exemption on interest income anymore.
• Minimum Investment: ₹10-15 lakh for retail investors in public InvITs, making them suitable for institutional and HNI investors.
• SARFAESI Act Status: Recognized as borrowers under SARFAESI Act, 2002, providing legal framework for debt recovery and enforcement of security interests.
• Revenue Model: Generate income through tolls, lease rentals, and usage charges from infrastructure assets; distribute at least 90% of net cash flows to unitholders.