Budget FAQs

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What is the Union Budget?

The Union Budget is the annual report of India as a country. It contains the government of India's revenue and expenditure for the end of a particular fiscal year, which runs from April 1 to March 31. The Union Budget is the most extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. It comprises the revenue budget and the capital budget. It also contains estimates for the next fiscal year.

What is a revenue budget?

The revenue budget consists of revenue receipts of the government (revenues from tax and other sources), and its expenditure.

Revenue receipts are divided into tax and non-tax revenue. Tax revenues are made up of taxes such as income tax, corporate tax, excise, customs and other duties that the government levies.

The government also has other expenditure like servicing interest on its borrowings, subsidies, etc.

Usually, expenditure that does not result in the creation of assets, and grants given to state governments and other parties are revenue expenditures. The difference between revenue receipts and revenue expenditure is usually negative. This means that the government spends more than it earns. This difference is called the revenue deficit.

What is a capital budget?

The capital budget is different from the revenue budget as its components are of a long-term nature. The capital budget consists of capital receipts and payments.

Capital receipts are government loans raised from the public, government borrowings from the Reserve Bank and treasury bills, loans received from foreign bodies and governments, divestment of equity holding in public sector enterprises, securities against small savings, state provident funds, and special deposits.

Capital payments are capital expenditure on acquisition of assets like land, buildings, machinery, and equipment. Investments in shares, loans and advances granted by the central government to state and union territory governments, government companies, corporations and other parties.

What are direct taxes?

These are the taxes that are levied on the income of individuals or organisations. Income tax, corporate tax, inheritance tax are some instances of direct taxation.

Income tax is the tax levied on individual income from various sources like salaries, investments, interest etc.

Corporate tax is the tax paid by companies or firms on the incomes they earn.

What are indirect taxes?

Indirect taxes are those paid by consumers when they buy goods and services. These include excise and customs duties.

Customs duty is the charge levied when goods are imported into the country, and is paid by the importer or exporter.