Union Budget 2025 | A-Z glossary of budget-related terms

As Finance Minister Nirmala Sitharaman prepares to unveil the budget on February 1, here’s a look at what taxpayers can expect this year.

A

Appropriation Bill: A Bill introduced in Parliament to approve government expenditure for the financial year. It becomes law after getting Parliament’s approval.
Assets: Resources owned by the government, such as infrastructure, financial investments, or land, which hold economic value.

B

Budget Estimates (BE): The government’s financial projections of revenue and expenditure for the upcoming financial year.
Balanced Budget: A situation where the government’s revenue equals its expenditure, leaving no deficit or surplus.
Borrowings: Funds raised by the government through loans or bonds to bridge the fiscal deficit.

C

Capital Expenditure: Spending on creating or acquiring assets like roads, bridges, and schools, with long-term economic benefits.
Consolidated Fund of India: The government’s main account that includes all revenue, loans raised, and money received by the government.
Customs Duty: A tax imposed on goods imported into or exported out of the country.

D

Deficit Financing: The practice of funding a fiscal deficit by borrowing money or printing currency.
Direct Taxes: Taxes paid directly by individuals or organisations, such as income tax and corporate tax.
Disinvestment: The process of selling the government’s stake in public sector enterprises to raise funds.

E

Excise Duty: A tax levied on the production or manufacture of goods within the country.
Expenditure Budget: A detailed statement of the government’s planned spending, classified as revenue or capital expenditure.

Also Read | The Budget Process: From speech to debate, passage, and execution

F

Finance Bill: A Bill introduced in Parliament detailing taxation proposals for the upcoming financial year. It must be passed for the Budget to be implemented.
Fiscal Deficit: The shortfall when the government’s total expenditure exceeds its revenue (excluding borrowings).
Fiscal Responsibility and Budget Management (FRBM) Act: A law aimed at maintaining fiscal discipline by limiting fiscal deficits and government borrowing.

G

Goods and Services Tax (GST): A unified tax system on goods and services, replacing multiple indirect taxes like VAT, excise duty, and service tax.
Grants-in-Aid: Financial assistance given by the central government to state governments or institutions for specific purposes.

H

Head of Expenditure: A category under which government spending is organised, such as education, defence, or health.
Horizontal Devolution: The distribution of tax revenue among states based on factors like population, income, and area.

I

Indirect Taxes: Taxes collected indirectly through goods and services, such as GST or customs duty.
Inflation: The rate at which the general price level of goods and services rises, reducing purchasing power.

Also Read | Budget in India: Where rupee comes from, where it goes

L

Lapse of Funds: Unspent funds allocated for a specific purpose that cannot be carried forward to the next financial year.

M

Monetary Policy: Measures taken by the Reserve Bank of India (RBI) to control money supply, interest rates, and inflation.
Minimum Alternate Tax (MAT): A tax levied on companies that pay minimal or no tax under regular income tax rules.

N

Non-Tax Revenue: Revenue earned by the government from sources other than taxes, like fees, fines, dividends, or interest income.
Net Tax Revenue: The revenue remaining after deducting the share of taxes distributed to states.

P

Primary Deficit: The fiscal deficit minus interest payments on previous borrowings, indicating the current year’s borrowing needs.
Public Account: A government account used to manage transactions like provident funds, savings schemes, and small savings deposits.

R

Revenue Deficit: The gap between revenue expenditure and revenue receipts, showing the shortfall in regular income to meet daily expenses.
Revenue Expenditure: Spending on recurring needs like salaries, pensions, subsidies, and interest payments.
Revenue Receipts: Income from taxes (direct and indirect) and non-tax sources like fees or dividends.

Also Read | Non-Tax Revenue: How the government earns beyond taxes

S

Subsidy: Financial assistance provided by the government to make goods or services affordable, like food, fertilisers, or LPG subsidies.Surplus Budget: When the government’s revenue exceeds its expenditure.

T

Tax-to-GDP Ratio: The proportion of a country’s tax revenue compared to its GDP, reflecting the government’s ability to mobilise resources.
Treasury Bills (T-Bills): Short-term government debt instruments used to raise funds, usually maturing within a year.

V

Vote-on-Account: An interim approval granted by Parliament for government spending until the full Budget is passed.
Value Added Tax (VAT): A tax on the value added at each stage of production or distribution, replaced by GST in India.

W

Ways and Means Advances (WMA): Temporary loans provided by the RBI to the government to manage short-term cash flow mismatches.

This glossary can be expanded further or tailored to include more terms. Let me know if there are any additional terms you’d like to highlight or specific tweaks you’d prefer!

FAQs: Your budget questions answered