Budget Decoded: Your one-step guide for financial terms

Demand for Grants is an expenditure estimate, including provisions related to revenue expenditure, capital expenditure, and grants, that is expected to be incurred in the next financial year. Hence, every ministry puts forth its own Demand for Grants and this is presented in the Lok Sabha as part of the Union Budget. However, it cannot be presented without the President of India's prior approval.

. The capital budget primarily deals with capital receipts and capital payments.

Capital receipts include money a government gets through treasury bills, market loans, loans received from a foreign government, disinvestment receipts, or debt paid by union territories or state governments and other parties.

. Tax that is charged against services which the government provides is non-tax revenue. You pay non-tax revenue if and only if you consume the services the government offers.

Some of the most simple examples of non-tax revenue include the interestthe government earns as it gives amounts to states during calamities like floods, the fees paid for getting rights to start petroleum-related exploration in a particular region (royalties), fees the Central Electricity Authority earns for the supply of electricity, use of roads, bridges, interalia.

Incidentally, non-tax revenue is the greatest contributor to the government’s money box.

. Cess is not a long-term source of revenue for the government, and it is phased out after the goal for which it was imposed is met. It can be applied to indirect as well as direct taxes.

Cess is distinct from other taxes such as income tax, GST, and excise duty since it is levied in addition to other taxes. While all taxes are paid to the Consolidated Fund of India (CFI), cess may be paid to the CFI at first, but it must be used for the purpose for which it was collected.

. Customs duty is, in simple words, the tax levied on imports and exports of goods. The government uses this to raise revenues, regulate the movement of goods and safeguard domestic industries.

The rate of customs duty is either specific or decided based on the value of goods. It keeps varying depending on where the goods are made and what materials they are made of.

. Money market instruments issued by RBI to finance the short term requirements of the government of India. These are discounted securities and are thus issued at a discount to face value. The return to the investor is the difference between maturity value and issue price.

. Any urgent expenses are met by the contingency fund. This fund is released by the President under Article 267. The money taken from these funds is later received through a consolidated fund.

. Disinvestment or divestment is the government's action of selling or liquidating the stake it has in a PSU or subsidiary. It takes place when PSU becomes a liability and shows negative returns, which in turn puts pressure on government resources. Here, disinvestment helps lower the financial burden imposed by inefficient PSUs on public finances, raise money, and put these proceeds to better use.

. Surcharge is an additional charge levied on tax. It is levied on the tax payable and not on the income generated. For example, if your income is Rs 300, to which the tax is 20 per cent, and the surcharge is 15 per cent then the total tax burden of an individual would be 35 per cent.

. An Economic Survey, in simple terms, is a survey that is conducted to review the financial developments of the country in the last fiscal year.

. Fiscal policy is an estimate of taxes that are to be levied and also the expenditure that the government will make to run the economy of the country. Fiscal policy can be of two types.

Expansionary policy means government will decrease the tax rates, increase the expenditures or both. This will increase the consumption of the products and profit of businesses increasing their investment expenditures, thereby increasing Gross Domestic Product (GDP) and fight the recession.

. Deflation is the phenomenon when the overall price of goods and services goes down to an extent that the inflation rate becomes negative. It can be caused by a decline in the money supply, government spending, consumer spending, and corporate investment.

. Supplementary grants are extra grants approved by the parliament, to meet the expenditure of the government in a given fiscal year.

. In order to boost economic development, the government reduces taxes for corporates and businesses for a certain period. Such reductions are called tax abatement. The purpose of abatement is to support the development or economic activity within a city or community.

. The economic growth rate is expressed in percentage that shows a rate of change in the country's Gross Domestic Product (GDP). GDP is the market value of all the goods and services produced in a country in a particular time period. A nation's economic growth is measured by the rate at which a nation's GDP changes in a particular year.

. Indirect taxes are imposed on goods and services. They are paid by consumers indirectly at the time of buying goods and services. Tax is levied on the seller of goods and service providers but often gets passed on to the end consumer and hence the consumer bears the tax. An indirect tax is levied at the same rate for everyone irrespective of their income. Service tax, excise duty, entertainment tax, customs duty, securities transactions tax, stamp duty are some of the widely applied indirect taxes.

. Direct tax is that tax which an individual or company pays directly to the ones who impose it.Income tax, corporation tax, wealth tax are a few examples. Unlike indirect tax, they have the same incidence and impact.

. The revenue budget is the total of the government's revenue receipts and revenue expenditures.

Revenue receipts consist of two sources: Tax and non-tax revenue. Tax revenue includes direct tax such as income tax and indirect tax such as GST, cess and import/export duties.

. Finance Minister Nirmala Sitharman will unveil the closely-watched Union Budget for 2023-24 on February 1 as the economy is slowly but surely making post-pandemic recovery. With just a couple more days to go for the Budget 2023, a lot of related jargons are being thrown around that may leave one bewildered and cluelessly searching word meaning on the internet.

Budget Decoded: Your one-step guide for financial terms

Budget 2023 | What is Demand for Grants?

Budget 2023 | What is Capital Budget?

Budget 2023 | What is tax and non-tax revenue?

Budget 2023 | What is Cess?

Budget 2023 | What is Customs Duty?

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