Scroll Top

search-icon
    drop-arrow

    Subsidy

    What is a Subsidy?

    A subsidy is a financial advantage or support given to institutions or individuals, generally by the government. This privilege is ordinarily either in the form of cash or a tax cut. It aims to promote the economic and social policies of the government as it raises the general interest of the public.

    Understanding Subsidies

    Subsidies, generally, work as payments provided to the receiving economic sector (enterprises or individuals). The government grants this financial privilege to lessen a related burden levied against the subsidy recipient. There are many forms of Subsidies provided by the authorities including,

    • Direct Subsidies
    • Indirect Subsidies

    Further, they can be broad or narrow, ethical or unethical. The most common kinds of subsidies are the producer or consumer ones. A subsidy is not only a help to the receivers but also the entire nation. Since it fulfils the social and economic commitments of the government, it supports prominent sectors of a country's economy.

    These sectors often stay overlooked by general economic policies. Hence, subsidies lend a helping hand to them.

    Main Kinds of Subsidies

    Direct Subsidies

    Direct Subsidies are those that involve an actual payment of money towards a specific group or individual. Cash grants and interest-free loans are some examples.

    Indirect Subsidies

    Indirect Subsidies are the ones that do not involve actual cash outlays. They usually include activities that lead to price reduction for goods and services. Hence, the savings arising out of the decrease in prices works as monetary help. Some of the notable examples are tax breaks, insurance, rent rebates, low-interest loans, etc.

    Producer/Production Subsidies

    Producer Subsidies is a way to ensure that producers are better off. The government gives production subsidies either by providing market price support, direct support or paying for the factors of production. In this way, the authorities secure producers from any unknown decline in their returns.

    Consumer/Consumption Subsidies

    Consumer Subsidies ordinarily reduce the prices of goods and services in the market. Hence, they give an advantage to the consumers. These subsidies are common in developing countries where the government wants to provide subsidised things as the most basic needs.

    Other Types of Subsidies

    • Export Subsidy
    • Import Subsidy
    • Tax Subsidy
    • Oil Subsidy
    • Housing Subsidy
    • Employment Subsidy
    • Transport Subsidy
    • Environment Externalities
    Index

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use

    ISO

    ISO 27001

    Data Center

    SSL

    SSL Certified Site

    128-bit encryption