10 KEY TERMS OF UNION BUDGET YOU MUST KNOW
It refers to the act of selling assets of a subsidiary or a sale by the government of a government owned enterprise. This is done for raising resources to meet normal expenditure of running the government or for special projects like giving additional capital to banks.
Divestment is hence considered a kind of non-tax revenue. The finance minister announces the expected amount to be raised during the financial year.
This refers to the amount spent by the government in order to reduce the price of some goods less than the market value. Subsidy is usually given on food products, fertilizers, etc. Last year the total amount spent on subsidies was Rs. 3600 billion.
3. TAX REVENUE:
This is the amount that government raises by levying taxes. The taxes are income tax, Property Tax, Service tax, excise duty, custom duty, and corporation tax.
4. PLAN EXPENDITURE:
This expenditure is incurred by the central government in consultations with the Planning Commission for projects and in areas related to the achievement of the goals set out in the 5 year plans. The expenditure here is expected to result in creation of better infrastructure and facilities across the country.
5. NON PLAN EXPENDITURE:
Non-plan revenue expenditure is the amount spent by the central government for the day to day running of the country for interest payments, subsidies wage and salary payments to government employees, pension, administrative costs, defense expensespolice, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
6. DEBT SERVICING:
It is the total of the capital repaid during the year along with the interest payments made on loans. This shows the amount that is spent in managing the debt of the country.
7. REVENUE DEFICIT:
There is a difference in the revenue and the expenditure of the government. Revenue deficit is calculated by the difference between the revenue expenditure of the government and the revenue receipts that are earned during the year.
8. FISCAL DEFICIT:
This is the difference between the total expenditure of the government in a year and the revenue receipts and the recoveries of loans. It is different from revenue deficit as it represents the amount that the government will have to borrow to fund its shortfall. Lower the fiscal deficit, the better economy is.
9. PRIMARY DEFICIT:
This is the amount that is left out after deducting the interest payments of the country. It is known as primary deficit as it gives the difference between the total expenditure and revenue. The smaller the interest payments, better it is for the economy.
This refers to the amount that will be allowed as a reduction from the total taxable income of the taxpayer. The final tax is calculated on the taxable income after considering the deductions so this helps to reduce the taxable income and consequently the tax to be paid and hence deductions are eagerly awaited by all taxpayers so that they can make the most out of it.