The Finance Minster Nirmala Sitharaman presents her first Union Budget for the financial year 2019-2020 on July 5. All eyes are set on to the Finance Ministry to know how the Modi government in its second term will deal with the country's economy. As the goal envisioned by Prime Minister Modi is to make India 5 trillion dollar economy till 2025, it is expected that Budget 2019 will pave the way for it.
A day ahead of Union Budget, the Finance Minister tabled economic survey 2019 that drew a roadmap for achieving the goal of five trillion dollar economy by 2024-2025. While hopes are high to see what comes in the Union Budget 2019, it is also a bone of contention to understand the terminology used by the Finance Ministry in the Budget.
Here is a list of terms that will make understanding the Budget easier:
- Annual Financial Statement: The annual budget also known as annual financial statement in which government estimates its income and expenditure for a given year. It is mandated by Constitution under Article 112. The Article 112 states that that the government will present its estimates to teh Parliament.
It has three parts:
- Consolidated Fund: This fund is made under Article 266 (1) of the Constitution of India. It has all the revenues govt gets by means of direct taxes and indirect taxes. All the expenditure by the government is also made from this fund. Money can be withdrawn from this fund after the Parliament's approval.
- Contingency Fund: This fund is made under Article 267 of the Constitution of India. This fund is for emergency or unforeseen expenditure of the government. Money can be withdrawn from this fund after the Parliament's approval and the amount is returned from the Consolidated fund to it.
- Public Fund or Account: This fund is made under Article 266 (1) of the Constitution of India. These fund do not belong to the government but it act as a banker. Approval from the Parliament is not required for this.
- Fiscal year: One of the most commonly used terminology which simply means the period for which the estimates are made. It may or may not be same as calender year. Government presents its financial statement for a definite period and that particular period is called Fiscal Year.
- Fiscal deficit: The difference in the revenue generated by the government and its expenditure is termed as fiscal deficit.
- Exchequer: It can be termed as the national account in which all the funds generated by the government is deposited.
- Budget estimates: It basically means to chalk out the cost expected by the government in various activities, policies, projects, etc. It represents the idea of the Finance ministry and to foresee the financial year - its income and its expenses.
- Minimum Alternate Tax (MAT): It is the tax that the any company pays even if it is outside the tax bracket. The Section 115-JA introduced in 1997-1998 aimed to bring the zero tax companies in the the tax frame under Companies act.
- Fiscal policy: The Policy followed by the government to manage the expenditure and to monitor the tax rates on commodities is the policy. It basically defines roadmap of taken for the country's economy.
- Deflation / Inflation: The technical term used for rise in price of goods and services is called inflation and the decrease in prices is called deflation.
- Equilibrium / disequilibrium: When the supply of goods and services in an economy is equal to the demands of that economy, it is said to be an equilibrium.
- Subsidy: The money transferred by the government to the citizen for a given commodity. This helps in ensuring welfare as the price of commodity for the beneficiary reduces.
- Surcharge: This means an additional charge. The government charges an additional tax on people or companies with a certain income limit or bracket.
- Surcharge of 10 percent is charged on taxable salary more than Rs 1 crore.
- Surcharge of 5 percent is charged on domestic corporations if taxable income is between 1 crore to 10 crore.
- Surcharge of 2 percent is charged on foreign corporations if taxable income is between 1 crore to 10 crore.