Finance minister Nirmala Sitharaman will present the Union budget 2024 on February 1, 2024. It will be an interim budget as the Lok Sabha elections are due early next year.
What is an interim budget?
As the name suggests, interim budget is a temporary financial plan presented by the central government when the Lok Sabha elections are approaching or a new government is set to take office. It is basically a provisional arrangement to meet the expenditure needs of the government for a short period of time until a new government comes to power and presents a full budget.
The interim budget allocates funds for important governmental operations, schemes and any urgent requirement for running the country. It does not bring in policy changes or reforms, and the focus is on ensuring continued stability and governance until the new government takes office.
As mentioned earlier, the specifics of the budget will be valid till the Lok Sabha election results are announced and a new government takes charge. The interim budget will be presented for the fiscal year starting April 1, 2024 and ending on March 31, 2025.
What is a Vote on Account? How is it different from an interim budget?
A Vote on Account is defined by Article 116 of the constitution, and is an advance grant to the government from the Consolidated Fund of India to cover short-term expenditure requirements until the commencement of the new financial year.
The Consolidated Fund of India stores all the revenue generated by the central government, including taxes, interest on loans, and a portion of state taxes.
Finance minister Nirmala Sitharaman has confirmed that the February 1, 2024 budget will be a vote on account due to the approaching Lok Sabha elections, and the full budget is expected in July.
A vote on account is different from an interim budget on several counts. The latter includes both expenditures and receipts. The former lists only the government expenditure.
The interim budget undergoes discussion and is passed in the Lok Sabha. On the other hand, the Vote on Account is passed without a discussion. The interim budget can propose tax regime changes, but the vote on account cannot alter taxes.
The interim budget projects for a few months and is valid for a year. The vote on account is passed within an interim budget and holds for two months.
Why is the Union Budget presented?
The central government's revenue and loans are held in the Consolidated Fund of India. To withdraw the funds, a parliamentary approval is needed. The budget also has a projected income and expenditure statement, and is passed to appropriate funds for the upcoming fiscal.
What is an economic survey?
An economic survey is a pre-budget document and is prepared by the Economic Division of the Department of Economic Affairs in the ministry of finance and formulated under the supervision of the chief economic adviser (V Anantha Nageswaran this year). The economic survey is presented to both Houses of Parliament during the Budget session.
It gives insights into the state of the economic performance of the country in the past year. An economic survey also highlights performance on major development programmes, government's policy initiatives, and also provides an outlook for the upcoming financial year Budget.
What is a finance bill?
Finance bill is a part of the Union Budget and is passed every year. It includes details of imposition, abolition, remission, alteration or regulation of taxes. The Budget will first be passed by Lok Sabha and then will go to Rajya Sabha, following debates and discussions on the same. After the finance bill is passed, the budget will be put into law.
Who prepares and presents the Union budget?
The ministry of finance in consultation with the NITI Aayog and other concerned ministries, prepares the Union budget. The Union finance minister presents the budget in the Lok Sabha.
How is the Union Budget prepared? The budget making process begins in August-September, six months before the presentation in parliament. The Ministry of Finance in a circular to all ministries, states, union territories and autonomous entities includes skeletal forms and necessary guidelines for them to express their needs and demands.
The ministries are asked to reveal their earnings and expenses for the previous year along with estimates. The top government officials evaluate the estimates and hold discussions with ministries and departments. The finance ministry then allocates revenue to numerous divisions for their impending outlays.
The finance ministry also arranges pre-budget meetings with different stakeholders to gain knowledge about their recommendations and requirements. Those attending the meetings include state representatives, agriculturists, bankers, economists and trade unions.
Days before the presentation of the budget, the government holds the traditional halwa ceremony. A large frying pot is used to make ‘halwa’ which is then fed to the entire workforce of the finance ministry as part of the ceremony.
On the first day of the Budget session, the finance minister presents the Union budget. The minister summarises the budget document's key points and explains the thinking behind the proposals during the presentation.
The Budget is then tabled before both houses of Parliament for discussion. Following approval by both houses, the Budget is forwarded to the President for approval.
What is a direct tax?
Direct taxes are imposed by the Centre on individuals and entities based on their income or profits earned. The direct taxes include income tax, capital gains tax and corporate tax. The direct taxes are essential sources of revenue for the Centre and are crucial for financing public expenditure.
What is an indirect tax?
Indirect tax is levied on the consumption of goods and services, and not on the income of the person. An individual pays tax along with the price of goods or services bought by the seller. The person paying the tax to the government and the person bearing the liability to pay the tax are two different people. The indirect taxes include service tax, excise duty, value added tax (VAT), custom and stamp duties and entertainment tax.
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The Union Budget 2024 will be presented by Union finance minister Nirmala Sitharaman on February 1, 2024.
An interim budget is a temporary financial plan presented by the central government ahead of the Lok Sabha elections. It does not include policy changes and is basically a provisional arrangement for the government to meet expenditure needs until the new government takes over.
A Vote on Account is an advance grant to the government from the Consolidated Fund of India to cover short-term expenditure requirements until the commencement of the new financial year.
The budget preparation begins in August-September, six months before the presentation in parliament.
An economic survey is a pre-budget document and is prepared by the Economic Division of the Department of Economic Affairs in the ministry of finance. It provides insights into the state of the economic performance of the country in the past year.
Finance bill is a part of the Union Budget and is passed every year. It includes details of imposition, abolition, remission, alteration or regulation of taxes.
After the presentation, the budget is tabled before both houses of Parliament for discussion. After approval by both houses, the Budget is forwarded to the President for approval.