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Budget 2018-19 will be presented in the Parliament in the next few days. The Budget session of the Parliament will start on 29th January and the Budget will be presented by Finance Minister Arun Jaitley on 1st of February 2018. Prior to the Budget being presented, in the Budget while it’s being presented and even after the Budget has been presented one will hear some Budget Terminology which is mostly heard in and around the Budget period. Mentioned below are some lesser known Budgetary terms that you are going to come across in the next few days after the Budget 2018-19 is presented on 1st February 2018.
Economic Survey - Economic Survey, also known as the Economic Survey of India is a document that is presented in the Parliament prior to the presentation of the Union Budget of India. The Economic Survey of India is prepared and presented by the Department of Economic Affairs which operates under the Finance Ministry of India. The document reviews and lists all major fiscal developments, economic highlights, policy initiatives and economic prospects in the short to medium term basis.
Public Account - The transactions and funds in which the Government merely acts as a banker are classified as Public Account. In Public Account the actual funds belong to general public thus provident funds, small savings and other such accounts are accounted for here. The Public Account has been set up under the Article 266(2) of the Indian Constitution.
Gross Domestic Product (GDP) - GDP or the Gross Domestic Product is described as the total market value of everything including products and services produced in the country on a quarterly or yearly basis. There are many types of GDP depending upon various factors such as Nominal GDP, Real GDP, GDP per Capita and more.
Fiscal year - Fiscal year (FY) also known as Financial Year is a period that the Government uses for its accounting or financial purposes. Although it is also of 12 months but Fiscal Year is different than the Calendar Year. In India the new Fiscal Year starts from 1st April and end on 31st March the next year. Thus in India accounts prepared for a specific financial year will start from 1st April and will end on 31st March after which a new Fiscal Year will start.
Fiscal Consolidation - Fiscal Consolidation can be termed as steps and policies formulated by the Government to improve its fiscal health and to observe fiscal prudence. Mostly steps taken by the government to reduce deficits and debts and improve revenue collections are termed as components of fiscal consolidation.
Ways and Means Advance (WMA) - Ways and Means Advance is a tool by which the Reserve Bank of India (RBI) provides funds to the States to tackle temporary mismatches of cash flow in their receipts and payments. RBI acts as a banker for states and states can avail for two types of WMA from RBI which are Normal WMA and Special WMA.
Current Account Deficit - Current Account Deficit is primarily described as the deficit between the value of goods and services that a country imports in comparison with what it exports. If in case a country exports more than it imports then the term current account surplus is used.
Zero-Based Budget (ZBB) - Zero-Based Budget is an accounting practise in which every function and aspect of the Budget begins from scratch or zero-base. With a fresh start in Zero-Based Budgeting each new expense has to be justified and is then analysed depending upon needs and costing.
Capital Gain Tax - Capital Gain Tax (CST) is a tax levied upon profit gained from sale of non-inventory assets such as property, stocks, bond, gold and more in a financial year.
Perquisite Tax - Perquisite Tax is a tax which is levied upon employers over incentives or other benefits other than the salaries which they provide to their employees.
Surcharge - Surcharge is an additional charge over and above the levied existing tax. A surcharge is mostly levied on entities which earn above a certain limit which has been specified by the Government.
Cess - Cess which is a shortened version of assess can be termed as an additional tax levied to raise funds for a specific purpose. Tax collected through cess is kept outside the Consolidated Fund of India (CFI) and is spent only on the specific purpose for which it was collected.
Tax Abatement - Tax Abatement can be described as a tax holiday or exemption from paying tax for a specific period of time. Tax abatement is generally used by government as an incentive to encourage investment.
Subvention - Subvention is an aid or grant provided by the Government to various entities. Mostly in Budget the Government uses the term interest subvention which means a part of the interest on loans given to farmers or students will be paid by the Government.
Balance of Payments - Balance of Payments or BOP is the statement that records all financial transactions of citizens of a country in goods, services and assets with the rest of the world. Thus it records all inflows and outflows from a country in a specified time period.
Countervailing Duties - Countervailing Duties is an import duty or tax that is levied on certain products to discourage and prevent dumping of these products. The said duty is also imposed to offset any export subsidies and protect local businesses.
Non-Plan Expenditure - Non-Plan Expenditure is all expenditure of the Government which is not part of Planned Expenditure. Non-Plan Expenditure covers routine and apparent expenditures of the government such as subsidies, interest payments, salary payments to government employees, pensions, grants to states and much more.
Direct Taxes Code (DTC) - Direct Taxes Code (DTC) is an initiative by the Government to simplify the direct tax laws in India. When it comes in to effect the Direct Taxes Code will replace the Income-tax Act, 1961 (ITA), Wealth Tax Act, 1957 and other such direct tax legislations.