QUESTION 3
GS3
10 marks
What is the meaning of the term ‘tax expenditure’? Taking housing sector as an example, discuss how it influences budgetary policies of government.
WRITE IN
7 min
200 words
What the examiner wants
Define tax expenditure and show, using housing, how it shapes budget policy.
What; DiscussAnswer exactly what the question asks.
Demand-wise check
- 1Meaning: revenue forgone through exemptions, deductions and concessions; spending through the tax code≈35 words
- 2Housing examples: home-loan interest deduction (Section 24(b)), principal under 80C, tax holiday for affordable housing projects (80-IBA)≈35 words
- 3Budget effects: lower revenue, hidden subsidy outside expenditure scrutiny, tilts demand to ownership, benefits higher-income taxpayers≈35 words
- 4Policy response: annual Statement of Revenue Forgone; phasing out exemptions; new tax regime without most deductions≈35 words
Open in about 30 words and close in about 30.
Answer plan
DefinitionHousing incentivesEffect on revenue, equity, sectorTransparency measuresConclusion
Where marks usually go
- Confusing tax expenditure with government expenditure on housing schemes
- Not linking it back to budgetary policy
Draw this
- Flow: tax concession → revenue forgone → fiscal deficit / sector demand
Value addition
- BudgetThe Union Budget has carried a Statement of Revenue Forgone since 2006-07.Union Budget documents
- LawSection 24(b) allows deduction of up to ₹2 lakh interest on a self-occupied home loan.Income Tax Act, 1961
Mapped topper copies
Reviewed public-source references related to this PYQ. Same-syllabus references are labelled separately.
- Mayank Purohit · AIR 33 · Page 13 ↗Same syllabus reference
- Aniket Ranjan · AIR 48 · Page 26 ↗Same syllabus reference
- Shakti Dubey · AIR 1 · Page 23 ↗Same syllabus reference
- Mayank Purohit · AIR 33 · Page 15 ↗Same syllabus reference
Links open original public sources. MainsBuddy does not host these answer sheets.
Next: plan for one minute, write it in 7 minutes, then get it checked.