Finance Minister Nirmala Sitharaman will present the full-year budget for financial year 2019-20 on July 5. It will be the first budget of the Prime Minister Narendra Modi-led National Democratic Alliance (NDA) government after it got re-elected in May. Budget is the annual financial statement of Government of India that contains details such as revenue, expenditure, growth projections and its fiscal position. From economists to analysts to tax experts to the general public, all eyes remain on Budget announcements for any signs of changes in policy in the coming period.
Here are some of the basic terms you need to know to understand the Budget:
1. Budget documents: This is a set of documents tabled in Parliament as part of the Budget. They include Budget Speech, Annual Financial Statement, Demands for Grants (DG), Macro-Economic Framework and Fiscal Policy Strategy Statements, Expenditure Budget, Receipts Budget and Expenditure Profile.
2. Budget speech: It is the speech delivered by the finance minister in Parliament while presenting Budget.
3. Direct and Indirect Taxes: Direct taxes are the one that fall directly on individuals and corporations. For example, income tax, corporate tax etc. Indirect taxes are imposed on goods and services. They are paid by consumers when they buy goods and services. These include excise duty, customs duty, GST etc.
4. Fiscal Deficit: It is the amount by which government expenditure in a year exceeds government collections (receipts). In other words, the excess of total expenditure over total non-borrowed receipts is called fiscal deficit. To meet the shortfall, government borrows money from the public.
5. Budget estimates: The amount of money allocated in the Budget to any ministry or scheme for any financial year.
6. Finance Bill: The bill produced immediately after the presentation of the Union Budget detailing the imposition, abolition, alteration or regulation of taxes proposed in the Budget.
7. Outcome Budget: From the fiscal year 2006-07, every Ministry presents a preliminary outcome budget to the ministry of finance, which is responsible for compiling them. The outcome budget is a progress card on what various ministries and departments have done with the outlays in the previous annual budget. It measures the development outcomes of all government programs and whether the money has been spent for the purpose it was sanctioned including the outcome of the fund usage.
8. Capital Budget: The capital budget consists of capital receipts and payments. It includes investments in shares, loans and advances granted by the central government to state governments, government companies, corporations and other parties.
9. Revenue Budget: Revenue Budget consists of revenue receipts of the government and its expenditure. Revenue receipts are divided into tax and non-tax revenue. Tax revenues constitute taxes like income tax, corporate tax, excise, customs, service and other duties that the government levies. The non-tax revenue sources include interest on loans, dividends from investments.
10. Vote on account: The Vote on Account is a grant made in advance by the parliament, in respect of the estimated expenditure for a part of new financial year, pending the completion of procedure relating to the voting on the Demand for Grants and the passing of the Appropriation Act.
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