Union Finance Minister Nirmala Sitharaman will present the Union Budget 2023 in Parliament on February 1, 2023. While you are preparing to understand the tax slabs, here are a few budget terms that you should know about.
Annual Financial Statement: Under Article 112 of the Constitution, the government is required to present a statement of estimated receipts and expenditures for every financial year to the Parliament. This statement by the government is called the annual financial statement and is the main budget document.
Fiscal Deficit: To break this down or to simplify it Fiscal means money and deficit means shortage which means money shortage. The term is used when the government's total expenditures exceed the revenue generated. It also means the total amount that the government needs to borrow. This deficit is generally balanced by borrowing from the central bank or by raising money from the capital markets using instruments like Treasury bills and bonds.
Budget Estimates: This is the amount of money allocated to a ministry or scheme for the upcoming financial year.
Revised Estimates: This is the mid-year estimate based on six months' actual trends that take into account the likely expenditures and receipts for the remaining six months.
Repo Rate: Repo means the repurchase of securities. Here, it means the rate of interest that commercial banks pay to the RBI for short-term loans it lends against government securities.
Consolidated fund: This fund of India includes revenues received and expenses incurred in any financial year by the government. This doesn't include any exceptional expenses like disaster management, and it cannot be accessed without prior approval from the Parliament. Additionally all expenses made by the government is for this fund except for the exceptional expenditure.
Finance Bill: This is a form of proposal presented to the Parliament to introduce or make changes to taxes or the current tax structure by the central government. This can only be presented in Lok Sabha.
Direct and Indirect Taxes: Direct taxes are the taxes which are directly charged on the income of individuals and corporations like your income tax or corporate tax. While the indirect tax is those that are charged on goods and services like the GST and Custom Duty. This tax is paid by the customers at the time of purchase.
Custom Duty: This is imposed on imports and exports of goods from or into the country. This is also a type of Indirect tax which the final consumer has to pay. The amount is either specific or is based on the value of goods.
Revenue Deficit: This is when the government's income is not sufficient to meet that day-to-day functioning and occurs when the government's revenue expenditure is over the revenue deposits.
