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Important Terminologies of Union Budget

The Finance Minister presents a comprehensive statement of government's finances including expenditures, revenues, deficit, debt etc., which is called Union Budget.
Budget Terms

Union Budget 2023 will be presented by the finance minister Nirmala Sitharaman on Feb 1st.

Here is the list of a few important terminologies related Union Budget of India.

Budget Terms Meaning
Union Budget The Union Budget details the government’s plan for taxation and expenditure in the coming financial year. The Finance Minister presents the Union Budget.
Interim Budget In India, an Interim Budget is presented only if the government does not have the time to present a full budget or because the General Lok Sabha elections may be close.
Vote-on-account It is the process by which an incumbent government obtains votes from Parliament to spend money on various items for a part of the year.
Direct and Indirect Taxes Direct taxes are the taxes which are directly levied on the income of the individuals and corporates — for example, income tax, corporate tax, etc. Indirect Taxes are taxes which are levied on the goods and services supplied. The final consumer pays it at the time of sale. For example, GST, Customs Duty, etc.
GST & Excise duty An Excise Duty is levied on goods manufactured in India and meant for home consumption. Goods and Services Tax (GST) is levied on the supply of goods and services in India. GST came into effect from 1st July 2017.
Customs duty Customs Duty is imposed on the export and import of the goods from or into the country. It is also a type of Indirect tax and is passed on to the final consumer of the goods.
Fiscal Deficit Fiscal Deficit is the Money Shortage when the government’s total expenditures exceed the revenue, excluding the money from borrowings. 
Revenue Deficit Revenue Deficit arises when the government’s revenue expenditure exceeds its revenue receipts. 
Primary Deficit Primary Deficit = Fiscal Deficit – Interest payments on the previous borrowings made by the Government. It is the difference between the fiscal deficit of the current year and the interest paid on the previous borrowings made by the Government.
Fiscal Policy Fiscal policy is the decision taken by the government for adjusting its expenditure level and revenue collection (through taxation) to monitor and accomplish the nation’s economic goals.
Monetary Policy Monetary Policy is the action plan by the RBI to monitor and manage the demand and supply of money in the economy.
Inflation Inflation is the situation where prices of the goods generally increase and purchasing value of money falls in an economy.
Capital Budget It is the estimated amount of the 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.
Revenue Budget Revenue Budget is the estimated amount required for the growth, development and infrastructure of the country.
Budget Estimates Budget Estimates is the approximate expenses the Government will incur to run the country and their approximate income made through taxes in a financial year. Expenditures include spending on different sectors, infrastructure and nation building.
Consolidated fund of India Consolidated Fund of India includes revenues received and expenses incurred by the government in a financial year, except exceptional expenses like disaster management. Government cannot access it without approval from the Parliament.
Contigency fund of India It is used to meet unexpected expenses by the President of India. It usually contains Rs. 500 crores.
Corporate tax Corporate tax is a direct tax levied on a company or a corporate their profits. 
Minimum Alternate Tax There are some ‘Zero Tax Companies’ that show minimal to zero income to evade taxes. Minimum Alternate Tax (MAT) enables the government to levy a minimum tax on such companies based on their book profits.
Non-plan expenditure It is any expense incurred by the government other than plan expenditure (like 5-year plan). Examples include interest payments, grants, and govt employees’ salary among many others.
Plan expenditure Plan expenditures are calculated after discussing with concerned ministries and the Niti Aayog. 
Balanced Budget A balanced budget is a budget in which revenues are equal to expenditures. This means there is neither a deficit nor a surplus. Typically, it is a budget that does not have a budget deficit but could have a budget surplus.
Annual Financial Statement It is a statement of estimated receipts and expenditure in respect of every financial year (from April 1 to March 31).
Fiscal Year A fiscal year, also known as a financial year, is the period used by governments for budget and accounting purposes. India’s financial year starts on April 1st and ends March 31st of the next year.
Gross Domestic Product The Gross Domestic Product or GDP is the final value of the goods and services that are produced within the geographic boundaries of a country in a given time period, typically a year. This metric is an important indicator of a country’s economic performance.
Net Domestic Product The Net Domestic Product or NDP is the annual measure of the economic output of a country with adjustments for depreciation. NDP is equal to GDP minus depreciation of the country’s capital goods.
Zero based budgeting This is a practice where all the expenditure for the economy are allocated and the estimates for revenue are made for a new period. In this method, when the budget is created it will have to justify every expense for the new period.

Also Read: Current Affairs Practice Tests

Published date : 31 Jan 2023 06:18PM

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