Q. In Union Budget 2018, the term “grandfathering clause” was used in which of the following context?
Answer:
Long-term capital gains (LTCG) tax
Notes: In Union Budget 2018, the term “grandfathering clause” was used in the context of Long-term capital gains (LTCG) tax. The “grandfathering” clause is a special provision by which a person, institution or any entity can be exempted from a new law, rule or regulation. The Finance Minister used a new provision of long-term capital gains (LTCG) tax in his 2018-19 Union Budget speech. As per the new provision, the government would tax long-term capital gains exceeding Rs 1 lakh at a rate of 10 percent; however, the all gains up to January 31, 2018, have been “grandfathered” or exempted from LTCG tax. The gains made in the future, or beyond January 31, 2018, will be taxed according to the new LTCG tax regime.