Budget 2024

The budget speech is divided into two Parts: A and B. The first part contains an overview of the state of the economy, policy initiatives, estimates on expenditure and fiscal deficit. Part B contains the tax proposals - direct and indirect. • Income tax and customs duties come in Part B. The Interim Budget, conventionally, doesn’t contain any income tax changes. Over the years, Finance Ministers have used the Interim Budget as an occasion to present the government’s report card on the economic reforms and policies.

During the presentation of the budget ahead of the new financial year, the government lays out the estimated earnings and spending during the course of the year. These estimates undergo change and revised estimates of revenues and expenditure are laid out in the following year’s budget. Any additional projections made in the Revised Estimates need to be authorized for expenditure through the Parliament's approval.

A Cut Motion is a veto used by members of a legislature against a specific allocation in Budget proposals. The motions are moved on grounds of economy or difference of opinion on matters of policy or just in order to voice a grievance. If the motion is adopted, it amounts to a no-confidence vote and the government falls. A Cut Motion can be of the following types: Disapproval of Policy Cut, Economic Cut, Token Cut.

Appropriation Bill is required for the withdrawal or appropriation from and out of the Consolidated Fund of India. It is a Money Bill passed annually or at various times of the year. The Constitution confers an over-riding authority on the Lok Sabha in the passage of Money Bills. Article 114 of the Constitution stipulates that no amount can be withdrawn from the Consolidated Fund of India without authorisation from the Parliament of India or State Assemblies. Usually, after the presentation of a budget, an Appropriation Bill is tabled so that the government can withdraw funds to allocate.

The Annual Financial Statement tabled along with the Union Budget shows the government’s estimated receipts and expenditure for the financial year. The receipts and disbursements are shown under three parts in which government accounts are kept. These are the Consolidated Fund of India, the Contingency Fund of India and the Public Account of India. It acts like an imprest fund at the disposal of the President to meet urgent unforeseen expenses, pending the Parliament’s authorization.

The annual Economic Survey is usually presented a day before the presentation of the annual budget and it serves as the official report of the economy. The survey’s outlook serves as a marker about future policy moves.The Economic Survey is authored by the Chief Economic Adviser in the finance ministry and his team. The government isn’t bound to follow these recommendations and it only serves as a policy guide. In an election year, the Economic Survey is presented ahead of the full budget’s presentation in July.

The government’s main earnings are from taxes—both direct and indirect. Direct taxes are the one that fall directly on individuals and corporations. Personal income tax, and corporate tax are the main heads of direct taxes. Indirect taxes are imposed on goods and services and they are paid by consumers when they buy goods and services. Customs duty is the charge levied when goods are imported into the country.

Article 113 of the Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement and required to be voted by the Lok Sabha, be submitted in the form of Demands for Grants. The Demands for Grants are presented to the Lok Sabha along with the Annual Financial Statement. Generally, one Demand for Grant is presented in respect of each Ministry or Department. However, more than one Demand may be presented for a Ministry or Department depending on the nature of expenditure.

Disinvestment can also be defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary. In the context of government budgets and fiscal policy, disinvestment typically refers to sale from the government, partly or fully, of a government-owned enterprise.

Finance Bill is a Money Bill, as defined in Article 110 of the Constitution and is introduced every year to give a legislative backing to proposals made in the Union Budget. Once the Speaker has certified a Bill as a Money Bill, its nature cannot be questioned in a court of law, in the Houses of Parliament, or even by the President.

Fiscal deficit broadly represents the amount of money that the government has to borrow every year to meet its expenses. In budget accounting parlance, it represents the difference between government’s total revenue receipts (tax and non-tax) and capital receipts such as recoveries and interests earned on loans given to state governments.

A guillotine is a parliamentary procedure that is used to fast-track the passage of a Bill. Once the prescribed period for discussion on Demands for Grants is over, the Lok Sabha Speaker puts all the outstanding Demands, whether discussed or not, to the vote of the House. This process is popularly known as 'Guillotine'.

Minimum Alternate Tax (MAT) was introduced to address inequities in taxation of Indian corporations. The Income Tax Act contains a large number of exemptions, incentives and permitted deductions. This has resulted in the emergence of Zero tax companies, which in spite of having high book profits, were able to reduce their taxable income to nil. MAT was introduced to address such inequities. Simply put, the Minimum Alternative Tax or MAT is a minimum tax that a company must pay, even if it is under zero tax limits.