8 frequently asked questions and their answers on budget
Synopsis
Direct taxes can't be shifted to another entity. Indirect taxes lead to the price hike on products and services. Appropriation bill is the most important aspect of budget.
February 1 is the day when the much-anticipated budget of 2017-18 will be presented on the floor of Parliament and post demonetisation a lot of shockers and surprises are expected from it. Before the budget is presented here are few basic facts and financial concepts one must know to understand the gains and losses.
What is Union Budget 2017-18: This is the annual financial statement of the estimated receipts as well as expenditures of the central government of this particular year. The financial year is the period between April 1 and March 31 and the budget is classified in the capital budget and revenue budget.
What is Capital Budget: This has two parts capital receipts (government loans raised from public also called market loans, borrowings from RBI and others via sale of treasury bills, loans from foreign bodies and government, recovery of loans given to states, UTs, and others) and capital payments (expenditures make on acquiring various movable and immovable assets, investment in shares, loans and advances given to states, UTs, government companies, corporations, etc)
What is Revenue Budget: This is basically revenue receipts by the central government through tax and other revenues, and the expenditures that were met by these revenues.
Revenue receipts earned through tax revenue includes various taxes and duties levied by the government. This also includes other revenue receipts such as interest and dividends earned through investments as well as fees and receipts through other services provided by the central government.
On the other hand, revenue expenditure meaning various expenses required for smooth running of government departments and other various services, interest charges on liability incurred by the government, different subsidies and so on and so forth.
What's Direct Tax?: These are the taxes which the taxpayer cannot shift to someone else. In other words, the same entity (individual or organisation) bears the incidence and impact of the taxation. For example, income tax, property tax, corporation tax, etc. are some of the direct taxes.
What's Indirect Tax?: This is the tax where the same entity does not bear the incidence and the impact of the taxation. This is the tax that raises the prices of various products and services. For example, central excise tax, customs duty, service tax, value added tax are indirect taxes.
Why Finance Bill?: This bill is presented along with the union budget as per the Constitutional provision. This bill is a detailed account of imposition, abolition, alteration, remission, or regulations made on various taxes on the proposed budget.
What's Consolidates Fund: Consolidates Fund of India (CFI) is where all the government receipts go into this fund including all revenues earned, loans raised, the recovery made, etc. Also, all the expenditure of the government is incurred through this CFI. However, the government needs Parliament’s authorisation for withdrawing money from this fund.
Why Appropriation Bill?: To get the grants proposed through the budget withdrawn from the CFI, appropriation bill is presented in the Parliament. This bill has to be passed to get Parliament’s authorisation to withdraw money from CFI.
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