InvestorQ : What is grandfathering clause?
divya Sing made post

What is grandfathering clause?

Swapnil Sarang answered.
3 years ago
A grandfather clause is a provision to any new rule, which allows the old rule to continue to apply to the existing situation or the situation that was approved before the new rule was implemented. This means that after a new rule comes in to place, it will be applicable only to future cases and not the case prior the new rule coming in to effect. This clause was created to ensure that the existing system is not disturbed with the announcement of the new clause. Grandfathering clause has been in the news since ex-Finance Minister Arun Jaitley reintroduced the long-term capital gains (LTCG) tax in Union Budget 2018-19., with grandfathering clause. Thus, since April 1, 2018, long-term capital gains (LTCG) made on redemption of equity mutual funds have been subject to 10% tax. The grandfathering clause here means that LTCG made till January 31, 2018, have been grandfathered, so the gains will remain tax-exempt.