Union Budget 2025: Quick look at 5 basic terms every UPSC aspirant must know

The Budget part comes nether the Department of Economic Affairs of Finance Ministry of Government of India. The fund is caused to beryllium presented earlier some the houses of the Parliament by the President. It is presented by the Finance Minister. The Budget code consists of 2 parts. Part A consists of overview of the system and highlights the concerns and priorities of the government- flagship schemes and large programmes . Part B of the code deals with taxation proposals successful the Budget.

Along with Budget Speech and Annual Financial Statements, the pursuing documents are submitted: Demands for Grants, Finance Bill, Statement mandated nether FRBM Act, Expenditure Budget, Receipt Budget, Statement of Revenue forgone, Expenditure Profile, Budget astatine a Glance, Memorandum Explaining the Provisions of Finance Bill and Outcome Budget.

For Your Information: The Railway Budget was separated from the General Budget successful 1921 based connected the Acworth Committee’s recommendation. This signifier continued for 92 years until it was merged with the General Budget successful 2017-18 connected the proposal of the Bibek Debroy Committee.

The Funds

The General Budget contains estimated receipts and expenditure for 1 twelvemonth usually. The 3 funds which are important successful this respect are:

Consolidated Fund of India: All revenues received, loans raised and each wealth received by the Government successful repayment of loans are credited to the Consolidated Fund of India and each expenditures of the Government are incurred from this fund. Money tin beryllium spent done this money lone if appropriated by the Parliament. The consolidated Fund has further been divided into ‘Revenue’ and ‘Capital’ divisions. It has been defined successful Article 266 (1) of the Constitution.

Public Account of India: It is established nether Article 266(2) of the Constitution. All nationalist wealth received, but those included successful the Consolidated Fund of India, is held successful this account. It chiefly consists of funds raised done tiny savings schemes, provident money schemes, and akin sources. The authorities acts simply arsenic a custodian and is obligated to repay the amounts either connected the maturity day oregon whenever claimed by the rightful individuals.

Contingency Fund of India: It is established nether Article 267 of the Constitution to code unforeseen expenditures. It is maintained astatine the disposal of the President of India, allowing for contiguous disbursement of funds erstwhile necessary. The expenditure incurred tin beryllium met promptly, with parliamentary support obtained retrospectively.

The Receipts 

There are 2 types of receipts:

Revenue Receipts: These are receipts that bash not request to beryllium repaid to the payee by the authorities and see income generated from authorities assets. Essentially, these are one-way transactions. Revenue receipts chiefly dwell of taxation revenues, non-tax revenues, and different non-tax receipts.

Capital Receipts: These receipts impact two-way transactions. Once disbursed, the wealth either generates regular income oregon is recovered erstwhile an plus created from the disbursed funds is disposed of. Capital receipts originate from the disposal of imperishable assets, the betterment of loans extended to others, and the raising of caller loans by the government. They are further classified into 2 categories: Debt Capital Receipts (such arsenic borrowings and different liabilities) and Non-Debt Capital Receipts.

The Expenditures

Public expenditures tin beryllium classified into 2 categories:

1. Revenue Expenditure: This refers to expenses incurred to conscionable the day-to-day operational and administrative needs of the government, which bash not make gross successful the future. It is simply a one-way expenditure, meaning erstwhile the authorities spends the amount, it cannot beryllium recovered.

2. Capital Expenditure: This includes expenses that make imperishable assets and make periodic income. It besides covers loans provided to authorities governments and section bodies. Capital expenditure is considered a two-way outgo since the wealth spent tin beryllium recovered either done periodic income oregon by selling the created asset.

The Deficits

The spread betwixt the receipts and expenditure is called deficit. So, it is simply a shortage of wealth for expenditure. Here are immoderate deficits you indispensable know.

Budget Deficit = Total Expenditure – Total Receipts

Revenue Deficit = Revenue Expenditure – Revenue Receipts

Effective Revenue Deficit = Revenue Deficit – Grant successful assistance for instauration of superior assets

Fiscal Deficit = Total Expenditure – Total Receipts but Borrowing and Other liabilities

Primary Deficit = Fiscal Deficit – Interest Payment

Monetised Deficit = Borrowings from RBI + Draw down equilibrium of authorities from RBI

The Tax

Tax is simply a mandatory outgo made by an economical entity to the government, without immoderate warrant of receiving a circumstantial oregon nonstop instrumentality from the authorities successful exchange.

The wide areas of taxes are: Tax connected income and expenditure ( Tax connected Personal Income, Corporate income, GST etc.), taxation connected commodities and taxation connected spot and spot transaction.

There are 2 types of taxes:

1. Direct taxes: The Central Board of Direct Taxes (CBDT) is liable for administering assorted nonstop taxes. It consists of Income tax, Corporate tax, Securities transaction taxation etc. The nonstop taxes are straight paid to the authorities by individuals and firm entities.

2. Indirect taxes: An indirect taxation is applied to the depletion of goods and services. The authorities collects this taxation from the sellers and retailers of these products and services, who past walk the outgo connected to the buyers. When you bargain a merchandise oregon service, you not lone wage for the point itself but besides the tax. In this way, you are indirectly paying the taxation to the government. Sales tax, Custom duty, GST are examples of Indirect taxes.

Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram transmission – IndianExpress UPSC Hub, and travel america on Instagram and X.

🚨New Year Special: Click Here to work the January 2025 issue of the UPSC Essentials monthly magazine. Share your views and suggestions successful the remark container oregon at manas.srivastava@indianexpress.com🚨