QUESTION 2
GS3
10 marks
Comment on the important changes introduced in respect of the Long-term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019.
WRITE IN
7 min
150 words
What the examiner wants
Explain and assess the changes in long-term capital gains tax and dividend distribution tax made in the Union Budget 2018-19.
CommentGive your own view on the statement and back it with facts and examples.
Demand-wise check
- 1LTCG: exemption under Section 10(38) withdrawn; listed equity gains above ₹1 lakh taxed at 10% without indexation≈30 words
- 2Grandfathering: gains accrued up to 31 January 2018 protected≈30 words
- 3DDT: 10% DDT introduced on distributions by equity-oriented mutual funds, to give a level field between growth and dividend options≈30 words
- 4Assessment: revenue, fairness between capital and labour income; concerns of double taxation and market sentiment; later changes≈30 words
Open in about 20 words and close in about 20.
Answer plan
Old regimeLTCG change with grandfatheringDDT changeRationaleCriticismLater reformsConclusion
Where marks usually go
- Missing the grandfathering clause and the ₹1 lakh threshold
- Confusing the DDT on mutual funds with the existing DDT on company dividends
Draw this
- Before/after table for LTCG and DDT
Value addition
- ReformBudget 2020-21 abolished DDT; dividends are now taxed in the hands of shareholders.Union Budget 2020-21
- ReformBudget July 2024 raised LTCG on listed equity to 12.5% and the exemption to ₹1.25 lakh.Union Budget 2024-25
Mapped topper copies
Reviewed public-source references related to this PYQ. Same-syllabus references are labelled separately.
- Mayank Purohit · AIR 33 · Page 3 ↗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 13 ↗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.