Interim Budget 2024: Understanding The A-Z Of Commonly-Used Budget Terms

India¡¯s Finance Minister Nirmala Sitharaman is set to present the Interim Budget 2024 on February 1 at 11 AM. This year will witness not one but two budgets since it's an election year, which makes it even more important for everyone to understand the commonly used budget terms, right?

Whether it is the upcoming interim budget on February 1 or the full union budget that would take place in July 2024, wouldn't it be wise to be well versed with the A-Z of budget so that you are able to understand the budget announcements in a better manner? Let's get on with it.

The A-Z Of Budget: Must Know Terms

A-Z Of Commonly Used Budget Terms/indiatimes

1. Annual Financial Statement

The Finance Minister tables many documents on the day of the union budget presentation. Amongst them, the Annual Financial Statement is the most significant document. It is a statement of the govt¡¯s estimated receipts and expenditure for that particular financial year (from April 1 to March 31).

2. Blue Sheet

The Blue Sheet is the name given to hundreds of pages of the budget document that are colored blue and contain important numbers. It is the foundation of the entire budget process and is kept under wraps, even from the minister of finance.

3. Budget Estimates

When the budget is announced, the finance minister allocates funds for different tasks and ministries. These allocations are budget estimates. They are called estimates because they are not the final commitment made by the government. They denote the upper limit of the government's expenditure for the said task, ministry, sector, etc.

4. Budget Cycle

The life of a budget, from its inception to its assessment, is called the budget cycle. The budget cycle consists of four stages: preparation and submission, approval, execution and audit, and budget evaluation.

Interim Budget 2024 terms/pti

Also Read: Meet Nirmala Sitharaman's Team Behind Interim Budget 2024

5. Capital Budget

The estimated amount of capital receipts and payments is known as the capital budget. It consists of share purchases, loans, and advances given to State Governments, corporations, government companies, and other parties by the federal government.

6. Current Account Deficit

The Current Account Deficit (CAD) is another common budget term used by the Finance Minister. CAD is the shortfall between the money received by selling products to other countries and the money spent to buy goods and services from other nations. If the value of goods and services we import exceeds the value of those we export, the country is said to be in a deficit, and the difference in the two values is CAD. The current account includes net income, including interest and dividends, and transfers, like foreign aid.

7. Corporate Tax

corporate tax/et

Corporate tax is a type of direct tax that is applied to a corporation and its profits. After subtracting expenses like revenue depreciation and cost of goods sold (COGS) and paying the relevant tax rates to the government, this company computes its operating profits.

8. Customs Duty

Customs duty is imposed on both the export and import of goods from or into the country. It is a kind of indirect tax that is passed on to the final consumer of the goods.

9. Divestment

Generally speaking, governments use disinvestment/divestment as a means of reducing losses or increasing revenue. This might come from a business that is losing money or a non-performing asset. This aids in the government's ability to raise non-tax revenue and wind down financially unsound projects.

10. Direct Taxes

income tax budget term/shutterstock

Direct taxes, such as income tax and corporate tax, are those that are imposed directly on the income of individuals and corporations.

11. Dividend Distribution Tax

The Dividend Distribution Tax (DDT) is imposed on dividends that businesses give to their shareholders from their profits.

12. Excise Duty

A tax commonly applied to goods produced domestically is the excise duty. It is an indirect kind of taxation that a retailer or other middleman collects from a customer.

13. Economic Survey

The Ministry of Finance @FinMinIndia releases The Indian Economy - A Review.

The Review consists of two chapters and takes stock of the state of the Indian economy and its journey in the last 10 years and offers a brief sketch of the outlook for the economy in the coming years.¡­ pic.twitter.com/0RDPiW3f5h

¡ª Ministry of Finance (@FinMinIndia) January 29, 2024

The Economic Survey brings out the economic trends in the country. The Survey analyses trends in sectors like agricultural and industrial production, infrastructure, imports, exports, employment, money supply and all the relevant economic factors that have a bearing on the Budget. It is presented in Parliament a day ahead of the Budget for the next financial year.

14. Fiscal/Financial Year

Governments use the term financial year, also referred to as the fiscal year, for accounting and budgetary purposes. India's financial year runs from April 1st to March 31st of the following year.

15. Finance Bill

The Finance Bill is one that concerns the country's finances including taxes, government expenditures, government borrowings, revenues, etc. The Union Budget which contains all these is passed as a Finance Bill. It gives effect to the financial proposals of the government

16. Fiscal Deficit

To put it simply, a fiscal deficit is the difference between the government's non-borrowed revenue (income) and its outlays. If the government's outlays exceed its non-borrowed receipts, the difference between the total outlays and total non-borrowed receipts is known as the fiscal deficit. Typically, it is expressed as a percentage of the GDP of the nation.

17. GDP

gdp budget term/yourstory

One of the key budget terms is GDP. The total market value of all completed goods and services produced in a nation during a given time period is known as the gross domestic product, or GDP. GDP is the benchmark used by the majority of nations to assess economic conditions.

18. GST

GST (Goods and Services Tax) is an indirect tax that has replaced many indirect taxes in India, such as excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in Parliament on March 29th, 2017 and came into effect on July 1st, 2017.

19. Halwa Ceremony

halwa ceremony budget 2024/twitter

One of the most common budget terms is this. Just a few days before presenting the budget in Parliament, the customary ¡®Halwa Ceremony¡¯ is conducted wherein the halwa (a sweet dish) is served to the Finance Ministry officers and staff involved in budget preparation. Click here to know more about halwa ceremony.

20. Interim Budget

An interim budget serves as a temporary framework for managing provisional expenditures over a short duration, usually spanning a few months, until a new government takes office at the central level.

21. Income Tax Slabs

tax budget term/mint

How can we miss one of the most anticipated common budget terms, the income tax! Our nation's tax laws classify taxpayers according to their taxable income, after which they provide refunds and impose different income-tax rates for various tax slabs. Income-tax slabs are groups of tax rates corresponding to various income levels.

22. Inflation

Inflation is the measure of change in the average price of goods and services. Higher inflation hurts the purchasing power of the common man. For example, a product that cost Rs. 100 the year before would now be costing Rs. 107 if the annual rate of inflation is assumed at 7%.

23. Indirect Taxes

Taxes imposed on the goods and services that are provided are known as indirect taxes. At the time of sale, the final customer makes the payment. For instance, customs duties, GST, etc.

24. Long & Short Term Capital Gains

capital gains tax/shutterstock

Whoever invests in any form of asset or securities, must have come across this common budget term capital gains tax. In India, capital gains are defined as the profit a person makes when they sell their investments in stocks, bonds, real estate, and commodities. The Income Tax Act defines "long-term" and "short-term" in India.

25. Revenue Budget

Within the Union Budget, the estimated amount needed for the nation's infrastructure, development, and growth is referred to as the Revenue Budget.

26. Vote On Account

The vote-on-account, which is passed through the interim budget, is a mechanism through which the government requests Parliament's endorsement for funds required adequately to cover expenses until the establishment of a new government.

27. Zero-based Budget

The term "zero-based budget" describes a budget that is created from scratch, or "zero base." No balances are carried forward in a budget that is zero-based. This idea emphasizes defining a task and allocating funds, regardless of the existing expenditure structure.