In the context of public finance, what does the term "Tax Expenditure" refer to?
(a) The total tax collected by the government in a financial year.
(b) The expenditure incurred by the government on tax administration and compliance.
(c) The revenue foregone by the government due to exemptions, deductions, and other tax concessions.
(d) The amount allocated by the government for providing subsidies and welfare schemes.

Question

In the context of public finance, what does the term "Tax Expenditure" refer to?
(a) The total tax collected by the government in a financial year.
(b) The expenditure incurred by the government on tax administration and compliance.
(c) The revenue foregone by the government due to exemptions, deductions, and other tax concessions.
(d) The amount allocated by the government for providing subsidies and welfare schemes.

ONLiNE UPSC · Accepted Answer

Tax Expenditure refers to the loss of potential tax revenue due to various provisions in the tax code that allow:
. Exemptions (e.g., agricultural income)
. Deductions (e.g., under Section 80C of the Income Tax Act)
. Rebates or reduced tax rates for certain sectors or activitiesThese are not direct expenditures, but they reduce the government&rsquo;s actual tax collection, compared to what it could have been if there were no such concessions. The Government of India publishes a "Statement of Revenue Foregone" along with the Union Budget to show these figures.

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M Question 1	⏱ 0
In the context of public finance, what does the term "Tax Expenditure" refer to? (a) The total tax collected by the government in a financial year. (b) The expenditure incurred by the government on tax administration and compliance. (c) The revenue foregone by the government due to exemptions, deductions, and other tax concessions. (d) The amount allocated by the government for providing subsidies and welfare schemes.