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20 Jul 2026ECONOMY3 questions

LTCG Collections Rise 79% While Debt Falls to 58.2% of GDP: Reading the Fiscal Disclosures

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Article summary

Answers tabled in Parliament during the Monsoon Session disclosed that long-term capital gains tax collections on equity transactions rose to about ₹1,29,158 crore in assessment year 2025-26 from ₹72,249 crore in the preceding assessment year, an increase of roughly 79 per cent, and that the government has no proposal to scrap the levy. The LTCG rate on listed equities and equity mutual funds stands at 12.5 per cent, applying only to gains above ₹1.25 lakh in a financial year. The same set of disclosures recorded that the Centre's debt has fallen to about 58.2 per cent of GDP from 61.4 per cent in 2020-21, and that roughly 48 per cent of net borrowing over the past decade, some ₹60.21 lakh crore, was directed to capital expenditure. Together these figures describe the composition rather than merely the size of the fiscal position.

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recallTests whether you read the article and retained key facts.
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applicationTests whether you can apply the concept to a new scenario.
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analysisTests whether you can reason across multiple related facts.
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Sample questions — answers revealed after test

ECONOMYRecallEasy

Q1. The debt-to-GDP ratio of a government is best described as which of the following?

AThe government's annual borrowing in a year expressed as a share of that year's GDP.
BThe stock of the government's accumulated outstanding liabilities expressed as a share of GDP.
CThe gap between government revenue and expenditure in a single year.
DThe interest paid on government borrowing expressed as a share of tax revenue.
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ECONOMYApplicationMedium

Q2. Long-term capital gains tax collections rose sharply in the assessment year while the debt-to-GDP ratio declined. Which one of the following best explains how these two facts fit together?

AHigher LTCG collections directly reduce the debt stock, since capital gains tax receipts are legally earmarked for debt repayment.
BBuoyant tax revenue, including from capital gains, widens the resource base and, alongside GDP growth, can lower the debt-to-GDP ratio even without a fall in absolute debt.
CA decline in debt-to-GDP proves that the government borrowed nothing during the year.
DLTCG collections and the debt ratio are unrelated, since capital gains tax is a state subject.
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ECONOMYAnalysisHard

Q3. Consider the following statements about the quality of government expenditure: 1. Capital expenditure creates assets and tends to raise the economy's future productive capacity, whereas revenue expenditure meets recurring costs and creates no lasting asset. 2. A rising share of net borrowing directed to capital expenditure improves the quality of the fiscal deficit even at a given deficit level. 3. Because all government borrowing is repaid from future taxes, the composition of what borrowing funds is irrelevant to fiscal sustainability. Which of the statements given above are correct?

A1 and 2 only
B1 only
C2 and 3 only
D1, 2 and 3
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