Union Budget is like the report card of the financial performance of the country. The union budget effects every citizen of the country. It tells the country-men about the growth and future plan of the nation. The finance minister of center government announces the Union Budget every year. The union budget includes some complex terms, which makes the budget complicated for common people to understand . In this post, we will decode the complex terms for you so that you can understand the union budget easily.
Union Budget 2019-2020
The government represented the Interim Budget on 1st February 2019 in the Parliament. This budget has many complex terms which can confuse you to understand it. Here, we have decoded them in simple language so that you can understand the Budget 2019-2020 easily.
So without much ado, here are the complex terms of the budget with their simple meanings.
· Interim Budget
Interim Budget is one of the most common words which you all are listening today in reference to budget 2019-2020. The budget of 2019-2020 is the interim budget because it is presented by the government in the year of the general election.
The Interim budget is presented in the year when the general elections are scheduled to take place. There is no big difference in the Regular and Interim Budget apart of this that in Interim budget the government has to obtain a vote on account in the Parliament to sanction funds from the Consolidated Funds of India till the full budget is approved after the polls by the newly elected government.
Parliament also needs to approve a vote on account to give the government rights to spend the funds until the upcoming government presents its regular budget after elections.
Here, the use of word “Vote on Account” might have made it difficult for you to understand the meaning of interim budget. So, let us understand what is vote on account.
· Vote on Account
A vote on account presents an estimate of expenditures to be sanctioned by the exchequer till the regular Budget is passed by the new government. It is like a grant in advance issued by the Parliament. No discussion required for this in Lok Sabha whereas the full budget is passed only after discussions and voting-on-demand for grants. For the interim Budget for the year 2019, the Vote on Account will be valid for only three months. The new government will presents a regular budget in July for the next financial year.
· Union Budget
The Union Budget is also called as annual financial statement. In this statement, the government has to mention all the earnings and expenditures. This aspect of the budget is main and compulsory according to the Constitution of India. The government needs to get the budget sanctioned by the parliament for the coming financial years as well. The government cannot draw from the Consolidated Fund of India in absence of approval of the houses of Parliament.
Inflation is the quantitative measurement of the rate at which the selective products and services in an economy are increased over a particular period of time. The rise in inflation happens when the price of some certain commodities rises because of any factor. The inflation is usually measured in percentage. A rise in inflation indicates a decrease in the country’s currency value and purchasing power.
Goods and Services Tax (GST) has been the talk of the town for a long time now. In the budget, the earnings from GST is also mentioned by the finance minister of India. This tax was implemented on July 1, 2017, in a bid to subsume a number of indirect taxes. Many people are happy with GST and few are not satisfied. The GST council has taken many steps to simplify the terms of GST. India’s GST has five slabs; 0 percent, 5 percent, 12 percent, 18 percent, and 28 percent. In Interim Budget 2019-2020, no changes have been done in the slabs of GST.
· Revenue Expenditure
Revenue expenditure denotes short-term cost-related assets that are not capitalized. Revenue expenditure is also called an income statement expenditure. These expenditures are recurring in nature and government incurred the on regular basis.
· Direct and Indirect Taxes
All of us want to know about the taxes and the way to save our money from the tax deduction. So to know more about the taxes, let’s understand what direct and indirect taxes are;
Direct taxes are those taxes which are levied on an individual’s income and profits, while indirect are levied on goods and services. Direct taxes include income tax, corporate tax, whereas indirect taxes include GST, Excise duty etc. In direct taxes the incident and impact of taxation falls directly on the individual, unlike the indirect taxes.
· Income and Corporate Tax
Income tax is that direct tax which we have to pay on our earning. The government has different slabs for the income tax. The corporate tax is also a direct tax. This tax is paid by corporations or firms on the incomes they earn. Like income tax, in corporate tax also many income slabs are defined by the finance ministry. In other words, corporate tax (also known as company tax) can be assumed as an Income Tax for income earned by businesses.
· Budget Estimates
The budget estimate is the amount of money allocated to the ministry for that financial year.
· Fiscal Deficit
The fiscal deficit is another common term which becomes common during budget time. The term is difficult but its meaning is not that complicated. The difference between revenue and total expenditure of the government is the fiscal deficit. This term is used when the government’s total expenditure exceeds total revenue, excluding any external borrowings.
· Revenue Deficit
When the government’s net income is less than the projected net income, a revenue deficit occurs. It indicates that the government is overspending from its regular income.
· Revenue Surplus
When the net realized income is more than the projected net income, the revenue surplus occurs. Its opposite to revenue deficit.
Divestment is a common term that you may have heard during the yearly budget speech. Divestment is actually the opposite of investment. The process of disinvestment involves the sales of existing assets. This is done to close the fiscal deficit gap.
The Bottom Line
Here we have compiled the complicated yet common terms of budget. To understand the budget, you should know the meaning of all the difficult terms used in it.
For competitive exam aspirants, is important to understand the yearly and interim budget. Here we have used the simplest language to decode the complex terms. We hope that this will help you to get an in-depth knowledge of Budget 2019-2020.
If you have any other query, then drop it in the comment box below. We shall revert you.