{"id":27846,"date":"2024-02-17T10:12:50","date_gmt":"2024-02-17T10:12:50","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=27846"},"modified":"2024-02-17T10:12:52","modified_gmt":"2024-02-17T10:12:52","slug":"what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/","title":{"rendered":"What is the meaning of the term tax expenditure? Taking the housing sector as an example, discuss how it influences budgetary policies of the government. (150 Words, 10 Marks)"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-gs-advance-and-mentorship-program-ampcsat?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=GS+Advanced\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png\" alt=\"\" class=\"wp-image-43397\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure><\/div>\n\n\n<p>Tax expenditure refers to government policies that forego revenue through preferential tax treatment or subsidies in order to achieve certain social or economic objectives. Unlike direct spending, tax expenditures are implemented through the tax code, granting benefits to specific groups or activities by reducing their tax liabilities.<\/p>\n\n\n\n<p>In the housing sector, tax expenditures play a significant role in shaping government budgetary policies. For instance, mortgage interest deductions and property tax deductions are common tax expenditures aimed at incentivizing homeownership and stimulating the housing market. These tax breaks effectively reduce the cost of housing for homeowners, thereby influencing consumer behavior and investment decisions within the housing sector. Additionally, government subsidies for affordable housing projects can be considered tax expenditures, as they represent forgone tax revenue in support of housing initiatives. The magnitude and allocation of tax expenditures in the housing sector reflect governmental priorities, impacting budgetary decisions and fiscal policy objectives related to housing affordability, economic growth, and social welfare.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>Tag: <\/strong>Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.\u00a0\u00a0<\/p><\/blockquote>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69d2f45375fc8\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d2f45375fc8\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#Decoding_the_Question\" title=\"Decoding the Question:&nbsp;&nbsp;\">Decoding the Question:&nbsp;&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#In_intro_try_to_define_tax_expenditure\" title=\"In intro try to define tax expenditure&nbsp;&nbsp;\">In intro try to define tax expenditure&nbsp;&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#In_Body\" title=\"In Body,&nbsp;&nbsp;\">In Body,&nbsp;&nbsp;<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#Answer\" title=\"Answer:&nbsp;&nbsp;&nbsp;\">Answer:&nbsp;&nbsp;&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#Impact_of_Tax_Expenditure_on_Budgetary_Policies_in_Housing_Sector\" title=\"Impact of Tax Expenditure on Budgetary Policies in Housing Sector:&nbsp;&nbsp;\">Impact of Tax Expenditure on Budgetary Policies in Housing Sector:&nbsp;&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/what-is-the-meaning-of-the-term-tax-expenditure-taking-the-housing-sector-as-an-example-discuss-how-it-influences-budgetary-policies-of-the-government-150-words-10-marks\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decoding_the_Question\"><\/span><strong>Decoding the Question:<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_intro_try_to_define_tax_expenditure\"><\/span><strong>In intro try to define tax expenditure<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_Body\"><\/span><strong>In Body,<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>In first part discuss various tax expenditure or tax exemptions given in budgets\u00a0<\/strong>\u00a0\u00a0<\/li><li><strong>In the second part, discuss how tax expenditure influences budgetary policies.\u00a0<\/strong>\u00a0\u00a0<\/li><li><strong>Try to\u00a0 Conclude, answer with contextual conclusive remarks.\u00a0<\/strong>\u00a0\u00a0<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Answer\"><\/span><strong>Answer:&nbsp;<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Tax expenditure<\/strong> is not related with governments expenditure or expenditure incurred by the government while collecting taxes. But it includes opportunity tax at concessional rates or as opportunity cost of giving exemptions, rebates, deductions, credits, and any other concessions given on actual rate of taxes. The tax expenditure measures how much collection of taxes would have taken if concessions are not given. In 2006-07, for the first time the Government laid before Parliament a detailed report on tax forgone or tax expenditure.&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>Tax expenditures affect<\/strong>: the budget balance, budget prioritization in allocation, the effectiveness and efficiency of fiscal resources, and&nbsp; the scope for abuse by taxpayers, government officials and legislators&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Impact_of_Tax_Expenditure_on_Budgetary_Policies_in_Housing_Sector\"><\/span><strong>Impact of Tax Expenditure on Budgetary Policies in Housing Sector:<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Exemption on Principal Amount:<\/strong> Exemption allowed on principal repayments and exemptions given on <strong>interest rates on housing loans<\/strong>.&nbsp;&nbsp;&nbsp;<\/li><li><strong>Extensions on Tax Incentives by a Year upto the End of Fiscal 2021-22<\/strong>. \u202fThis includes tax deduction upto Rs 1.5 lakh on interest on housing loan, and <strong>tax holiday<\/strong> for affordable housing projects.&nbsp;&nbsp;<\/li><li><strong>Housing For All: <\/strong>In order to spur investment in the housing sector, the government is considering providing<strong>\u202ftax incentives for certain projects<\/strong> to ensure &#8216;Housing for All by 2022.&nbsp;&nbsp;<\/li><li><strong>New Rent House Policy:<\/strong> The draft National Urban Rental Housing Policy has suggested a host of fiscal incentives to encourage rental housing with a view to achieve the goal of housing for all by 2022.&nbsp;&nbsp;<\/li><li><strong>Economic Survey:<\/strong> As per Economic Survey 2019-20 Central government has slashed interest rates on <strong>house buildings advance<\/strong> for government employees. The interest rates have reduced to 7.9% from 8.3% and would now be linked with 10-year G-sec yields.&nbsp;&nbsp;<\/li><li><strong>Relaxation of ECB\u2019s: <\/strong>The external commercial borrowings guidelines will be relaxed to provide easy financing for home buyers who are eligible under Pradhan Mantri Awas Yojana.&nbsp;&nbsp;&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<p>Due to reduced tax exemption from the government, a number of people owned their own houses. The tax expenditure budget comprises estimated revenue losses attributable to various exemptions, deductions, non-refundable credits etc. These provisions reduce liabilities of certain types of businesses, individuals etc.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-0852e8d9-d77d-4f32-b617-621718b5dbf9\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"block-f1a56b80-b7b4-4135-a37b-2aa2660d6bfd\">For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p id=\"block-ac11dd41-cc2b-4afd-b9df-7cc51084d393\">For Daily Updates and Study Material:<\/p>\n\n\n\n<p id=\"block-3285c649-2f18-4f86-b863-9ca055737fe0\">Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\" id=\"block-a98aa02f-712e-4117-a211-d368b2ee4be7\"><li>1. Learn through Videos &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3vOD8sU\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>2. Be Exam Ready by Practicing Daily MCQs &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3Q9z2nF\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>3. Daily Newsletter &#8211; Get all your Current Affairs Covered &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3bE2y5J\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>4. Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"block-e2cb2cad-5b82-4c27-b2a1-13223c909d62\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@ShabbirsEduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>Tax expenditure refers to government policies that forego revenue through preferential tax treatment or subsidies in order to achieve certain social or economic objectives.<\/p>\n","protected":false},"author":17,"featured_media":27847,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1524],"tags":[142,2015,232,145,140],"class_list":["post-27846","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-mains-solved-paper-gs-3","tag-previous_year_questions","tag-tax-expenditure","tag-upsc","tag-upsc-mains-question-paper","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/27846","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=27846"}],"version-history":[{"count":1,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/27846\/revisions"}],"predecessor-version":[{"id":27848,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/27846\/revisions\/27848"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/27847"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=27846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=27846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=27846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}