Budget Glossary: Important terms to know
Abatement
Abatement is reduction of or exemption from taxes granted by a government
for a specified period, usually to encourage certain activities such as
investment in capital equipment. A tax incentive is a form of tax abatement.
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.
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. Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the consumer.
Revenues & expenditure
The government’s budget comprises largely about revenues and expenditure.
Government revenue is the income a government receives, while government
expenditure is the money it spends. Spending or expenditure is further divided
into plan and non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes, while expenditure consists of
salaries, subsidies and interest payments. These revenue receipts and
expenditure—which generally do not lead to sale or creation of assets—come
under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received from the sale of assets, shares and
debentures. Capital account includes all receipts from liquidating (for
instance selling shares in a public sector company), assets and spending to
create assets (for example lending to receive interest).
Revenue budget
The government has to prepare a revenue budget which outlines in detail
revenue receipts & revenue expenditure. The revenue budget consists of
revenue receipts of the government (revenues from tax and other sources), and
its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts
and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government from which it has to pay the
states their share as mandated by the relevant finance commission. The balance
is available to the Union government.
Non-tax revenue
The main receipts under the non-tax revenue are interest on loans
given by the government, and dividends and profits received from PSUs. The
government also earns from various services, including public services, it
provides. Of this, only the Railways is a separate department, though all its
receipts and expenditure are routed through the Consolidated Fund of
India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the government’s support to five-year plans,
which includes state plans. The five-year plans are divided into five
annual plans. The funding of the plan is split almost evenly between government
support (from the budget) and internal and extra-budgetary resources of state-owned
enterprises.
Plan expenditure
There are two components of expenditure—plan and non-plan. Planned
expenditure is essentially the budget support to the annual plans. This is
typically considered developmental spending (on health, education,
infrastructure and social goals). Like all budget heads, it is also split into
revenue and capital components.
Non-plan expenditure
This is in the nature of consumption expenditure, broadly corresponding to
revenue expenditure: interest payments, subsidies, salaries, defence &
pensions. Its ‘capital’ component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the
economy and the ministries of the government.
Finance Bill
The government proposals for the levy of new taxes, changes in the present
tax structure or continuance of the current tax structure beyond the period
approved by Parliament, are laid down before Parliament in this Bill. The
Parliament approves the Finance Bill for a period of one year at a time, which
becomes the Finance Act.
Public debt
Public debt or public borrowing is considered to be an important source of
income to the government. If revenue collected through taxes & other
sources is not adequate to cover government expenditure government may resort
to borrowing. Such borrowings become necessary more in times of financial
crises & emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated within
the country; while external debt refers loans floated outside the country.
Fiscal policy
Fiscal policy is a change in government spending or taxing designed to
influence economic activity. These changes are designed to control the level of
aggregate demand in the economy. Governments usually bring about changes in
taxation, volume of spending, and size of the budget deficit or surplus to
affect public expenditure.
Fiscal deficit
The fiscal deficit is the gap between expenditure and revenue receipt.
Generally the government spends more than what it earns through various
sources. This shortfall, which is met with borrowed funds, is called fiscal
deficit.
Revenue deficit
It is the excess of revenue expenditure over revenue receipts. All
expenditure on revenue account should ideally be met from receipts on revenue
account; the revenue deficit should be zero. In such a situation, the
government borrowing will not be for consumption but for creation of
assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue
deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on
its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the market value of all officially
recognized final goods and services produced within a country in a given period
of time. It includes all of private and public consumption, government outlays,
investments and exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and revenue receipt. Fiscal deficit is
essentially the difference between what the government spends and what it
earns. It is expressed as a percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget Management Act was enacted in 2003 and
required the elimination of revenue deficit and reduction of fiscal deficit to
3% of GDP. The financial crisis and the subsequent slowdown had forced the
government to abandon the path of fiscal consolidation for a while. A new
fiscal consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of India (the country's central bank)
extends loans to the central and state governments to offset temporary cash
flow problems they may have. Ways and means advances may be issued without
collateral (normal WMAs) or they may be guaranteed by Indian government bonds
(special WMAs).
Current account deficit
The CAD is the difference between a country’s total imports of goods,
services and transfers and its total export of goods, services and transfers.
In common terms, it means that India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of
securities that are listed on the Indian stock exchanges. This would include
shares, derivatives or equity-oriented mutual funds units. The rate of tax that
is deducted is determined by the central government, and it varies with different
types of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that it pushes
up the cost of the transaction done
Source - Flame
Source - Flame
Abatement
Abatement is reduction of or exemption
from taxes granted by a government for a specified period, usually to
encourage certain activities such as investment in capital equipment. A
tax incentive is a form of tax abatement.
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.
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.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
Revenues & expenditure
The government’s budget comprises
largely about revenues and expenditure. Government revenue is the income
a government receives, while government expenditure is the money it
spends. Spending or expenditure is further divided into plan and
non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes,
while expenditure consists of salaries, subsidies and interest payments.
These revenue receipts and expenditure—which generally do not lead to
sale or creation of assets—come under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received
from the sale of assets, shares and debentures. Capital account includes
all receipts from liquidating (for instance selling shares in a public
sector company), assets and spending to create assets (for example
lending to receive interest).
Revenue budget
The government has to prepare a revenue
budget which outlines in detail revenue receipts & revenue
expenditure. The revenue budget consists of revenue receipts of the
government (revenues from tax and other sources), and its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government
from which it has to pay the states their share as mandated by the
relevant finance commission. The balance is available to the Union
government.
Non-tax revenue
The main receipts under the non-tax
revenue are interest on loans given by the government, and dividends and
profits received from PSUs. The government also earns from various
services, including public services, it provides. Of this, only the
Railways is a separate department, though all its receipts and
expenditure are routed through the Consolidated Fund of India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the
government’s support to five-year plans, which includes state plans. The
five-year plans are divided into five annual plans. The funding of the
plan is split almost evenly between government support (from the budget)
and internal and extra-budgetary resources of state-owned enterprises.
Plan expenditure
There are two components of
expenditure—plan and non-plan. Planned expenditure is essentially the
budget support to the annual plans. This is typically considered
developmental spending (on health, education, infrastructure and social
goals). Like all budget heads, it is also split into revenue and capital
components.
Non-plan expenditure
This is in the nature of consumption
expenditure, broadly corresponding to revenue expenditure: interest
payments, subsidies, salaries, defence & pensions. Its ‘capital’
component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the economy and the ministries of the government.
Finance Bill
The government proposals for the levy of
new taxes, changes in the present tax structure or continuance of the
current tax structure beyond the period approved by Parliament, are laid
down before Parliament in this Bill. The Parliament approves the
Finance Bill for a period of one year at a time, which becomes the
Finance Act.
Public debt
Public debt or public borrowing is
considered to be an important source of income to the government. If
revenue collected through taxes & other sources is not adequate to
cover government expenditure government may resort to borrowing. Such
borrowings become necessary more in times of financial crises &
emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated
within the country; while external debt refers loans floated outside the
country.
Fiscal policy
Fiscal policy is a change in government
spending or taxing designed to influence economic activity. These
changes are designed to control the level of aggregate demand in the
economy. Governments usually bring about changes in taxation, volume of
spending, and size of the budget deficit or surplus to affect public
expenditure.
Fiscal deficit
The fiscal deficit is the gap between
expenditure and revenue receipt. Generally the government spends more
than what it earns through various sources. This shortfall, which is met
with borrowed funds, is called fiscal deficit.
Revenue deficit
It is the excess of revenue expenditure
over revenue receipts. All expenditure on revenue account should ideally
be met from receipts on revenue account; the revenue deficit should be
zero. In such a situation, the government borrowing will not be for
consumption but for creation of assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services
produced within a country in a given period of time. It includes all of
private and public consumption, government outlays, investments and
exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and
revenue receipt. Fiscal deficit is essentially the difference between
what the government spends and what it earns. It is expressed as a
percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget
Management Act was enacted in 2003 and required the elimination of
revenue deficit and reduction of fiscal deficit to 3% of GDP. The
financial crisis and the subsequent slowdown had forced the government
to abandon the path of fiscal consolidation for a while. A new fiscal
consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of
India (the country's central bank) extends loans to the central and
state governments to offset temporary cash flow problems they may have.
Ways and means advances may be issued without collateral (normal WMAs)
or they may be guaranteed by Indian government bonds (special WMAs).
Current account deficit
The CAD is the difference between a
country’s total imports of goods, services and transfers and its total
export of goods, services and transfers. In common terms, it means that
India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or
equity-oriented mutual funds units. The rate of tax that is deducted is
determined by the central government, and it varies with different types
of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that
it pushes up the cost of the transaction done - See more at:
http://flame.org.in/KnowledgeCenter/Understandingsometechnicaltermsusedinbudget.aspx#sthash.Rw00ckRy.dpuf
Abatement
Abatement is reduction of or exemption
from taxes granted by a government for a specified period, usually to
encourage certain activities such as investment in capital equipment. A
tax incentive is a form of tax abatement.
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.
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.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
Revenues & expenditure
The government’s budget comprises
largely about revenues and expenditure. Government revenue is the income
a government receives, while government expenditure is the money it
spends. Spending or expenditure is further divided into plan and
non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes,
while expenditure consists of salaries, subsidies and interest payments.
These revenue receipts and expenditure—which generally do not lead to
sale or creation of assets—come under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received
from the sale of assets, shares and debentures. Capital account includes
all receipts from liquidating (for instance selling shares in a public
sector company), assets and spending to create assets (for example
lending to receive interest).
Revenue budget
The government has to prepare a revenue
budget which outlines in detail revenue receipts & revenue
expenditure. The revenue budget consists of revenue receipts of the
government (revenues from tax and other sources), and its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government
from which it has to pay the states their share as mandated by the
relevant finance commission. The balance is available to the Union
government.
Non-tax revenue
The main receipts under the non-tax
revenue are interest on loans given by the government, and dividends and
profits received from PSUs. The government also earns from various
services, including public services, it provides. Of this, only the
Railways is a separate department, though all its receipts and
expenditure are routed through the Consolidated Fund of India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the
government’s support to five-year plans, which includes state plans. The
five-year plans are divided into five annual plans. The funding of the
plan is split almost evenly between government support (from the budget)
and internal and extra-budgetary resources of state-owned enterprises.
Plan expenditure
There are two components of
expenditure—plan and non-plan. Planned expenditure is essentially the
budget support to the annual plans. This is typically considered
developmental spending (on health, education, infrastructure and social
goals). Like all budget heads, it is also split into revenue and capital
components.
Non-plan expenditure
This is in the nature of consumption
expenditure, broadly corresponding to revenue expenditure: interest
payments, subsidies, salaries, defence & pensions. Its ‘capital’
component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the economy and the ministries of the government.
Finance Bill
The government proposals for the levy of
new taxes, changes in the present tax structure or continuance of the
current tax structure beyond the period approved by Parliament, are laid
down before Parliament in this Bill. The Parliament approves the
Finance Bill for a period of one year at a time, which becomes the
Finance Act.
Public debt
Public debt or public borrowing is
considered to be an important source of income to the government. If
revenue collected through taxes & other sources is not adequate to
cover government expenditure government may resort to borrowing. Such
borrowings become necessary more in times of financial crises &
emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated
within the country; while external debt refers loans floated outside the
country.
Fiscal policy
Fiscal policy is a change in government
spending or taxing designed to influence economic activity. These
changes are designed to control the level of aggregate demand in the
economy. Governments usually bring about changes in taxation, volume of
spending, and size of the budget deficit or surplus to affect public
expenditure.
Fiscal deficit
The fiscal deficit is the gap between
expenditure and revenue receipt. Generally the government spends more
than what it earns through various sources. This shortfall, which is met
with borrowed funds, is called fiscal deficit.
Revenue deficit
It is the excess of revenue expenditure
over revenue receipts. All expenditure on revenue account should ideally
be met from receipts on revenue account; the revenue deficit should be
zero. In such a situation, the government borrowing will not be for
consumption but for creation of assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services
produced within a country in a given period of time. It includes all of
private and public consumption, government outlays, investments and
exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and
revenue receipt. Fiscal deficit is essentially the difference between
what the government spends and what it earns. It is expressed as a
percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget
Management Act was enacted in 2003 and required the elimination of
revenue deficit and reduction of fiscal deficit to 3% of GDP. The
financial crisis and the subsequent slowdown had forced the government
to abandon the path of fiscal consolidation for a while. A new fiscal
consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of
India (the country's central bank) extends loans to the central and
state governments to offset temporary cash flow problems they may have.
Ways and means advances may be issued without collateral (normal WMAs)
or they may be guaranteed by Indian government bonds (special WMAs).
Current account deficit
The CAD is the difference between a
country’s total imports of goods, services and transfers and its total
export of goods, services and transfers. In common terms, it means that
India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or
equity-oriented mutual funds units. The rate of tax that is deducted is
determined by the central government, and it varies with different types
of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that
it pushes up the cost of the transaction done - See more at:
http://flame.org.in/KnowledgeCenter/Understandingsometechnicaltermsusedinbudget.aspx#sthash.Rw00ckRy.dpuf
Abatement
Abatement is reduction of or exemption
from taxes granted by a government for a specified period, usually to
encourage certain activities such as investment in capital equipment. A
tax incentive is a form of tax abatement.
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.
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.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
Revenues & expenditure
The government’s budget comprises
largely about revenues and expenditure. Government revenue is the income
a government receives, while government expenditure is the money it
spends. Spending or expenditure is further divided into plan and
non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes,
while expenditure consists of salaries, subsidies and interest payments.
These revenue receipts and expenditure—which generally do not lead to
sale or creation of assets—come under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received
from the sale of assets, shares and debentures. Capital account includes
all receipts from liquidating (for instance selling shares in a public
sector company), assets and spending to create assets (for example
lending to receive interest).
Revenue budget
The government has to prepare a revenue
budget which outlines in detail revenue receipts & revenue
expenditure. The revenue budget consists of revenue receipts of the
government (revenues from tax and other sources), and its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government
from which it has to pay the states their share as mandated by the
relevant finance commission. The balance is available to the Union
government.
Non-tax revenue
The main receipts under the non-tax
revenue are interest on loans given by the government, and dividends and
profits received from PSUs. The government also earns from various
services, including public services, it provides. Of this, only the
Railways is a separate department, though all its receipts and
expenditure are routed through the Consolidated Fund of India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the
government’s support to five-year plans, which includes state plans. The
five-year plans are divided into five annual plans. The funding of the
plan is split almost evenly between government support (from the budget)
and internal and extra-budgetary resources of state-owned enterprises.
Plan expenditure
There are two components of
expenditure—plan and non-plan. Planned expenditure is essentially the
budget support to the annual plans. This is typically considered
developmental spending (on health, education, infrastructure and social
goals). Like all budget heads, it is also split into revenue and capital
components.
Non-plan expenditure
This is in the nature of consumption
expenditure, broadly corresponding to revenue expenditure: interest
payments, subsidies, salaries, defence & pensions. Its ‘capital’
component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the economy and the ministries of the government.
Finance Bill
The government proposals for the levy of
new taxes, changes in the present tax structure or continuance of the
current tax structure beyond the period approved by Parliament, are laid
down before Parliament in this Bill. The Parliament approves the
Finance Bill for a period of one year at a time, which becomes the
Finance Act.
Public debt
Public debt or public borrowing is
considered to be an important source of income to the government. If
revenue collected through taxes & other sources is not adequate to
cover government expenditure government may resort to borrowing. Such
borrowings become necessary more in times of financial crises &
emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated
within the country; while external debt refers loans floated outside the
country.
Fiscal policy
Fiscal policy is a change in government
spending or taxing designed to influence economic activity. These
changes are designed to control the level of aggregate demand in the
economy. Governments usually bring about changes in taxation, volume of
spending, and size of the budget deficit or surplus to affect public
expenditure.
Fiscal deficit
The fiscal deficit is the gap between
expenditure and revenue receipt. Generally the government spends more
than what it earns through various sources. This shortfall, which is met
with borrowed funds, is called fiscal deficit.
Revenue deficit
It is the excess of revenue expenditure
over revenue receipts. All expenditure on revenue account should ideally
be met from receipts on revenue account; the revenue deficit should be
zero. In such a situation, the government borrowing will not be for
consumption but for creation of assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services
produced within a country in a given period of time. It includes all of
private and public consumption, government outlays, investments and
exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and
revenue receipt. Fiscal deficit is essentially the difference between
what the government spends and what it earns. It is expressed as a
percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget
Management Act was enacted in 2003 and required the elimination of
revenue deficit and reduction of fiscal deficit to 3% of GDP. The
financial crisis and the subsequent slowdown had forced the government
to abandon the path of fiscal consolidation for a while. A new fiscal
consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of
India (the country's central bank) extends loans to the central and
state governments to offset temporary cash flow problems they may have.
Ways and means advances may be issued without collateral (normal WMAs)
or they may be guaranteed by Indian government bonds (special WMAs).
Current account deficit
The CAD is the difference between a
country’s total imports of goods, services and transfers and its total
export of goods, services and transfers. In common terms, it means that
India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or
equity-oriented mutual funds units. The rate of tax that is deducted is
determined by the central government, and it varies with different types
of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that
it pushes up the cost of the transaction done - See more at:
http://flame.org.in/KnowledgeCenter/Understandingsometechnicaltermsusedinbudget.aspx#sthash.Rw00ckRy.dpuf
Abatement
Abatement is reduction of or exemption
from taxes granted by a government for a specified period, usually to
encourage certain activities such as investment in capital equipment. A
tax incentive is a form of tax abatement.
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.
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.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
Revenues & expenditure
The government’s budget comprises
largely about revenues and expenditure. Government revenue is the income
a government receives, while government expenditure is the money it
spends. Spending or expenditure is further divided into plan and
non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes,
while expenditure consists of salaries, subsidies and interest payments.
These revenue receipts and expenditure—which generally do not lead to
sale or creation of assets—come under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received
from the sale of assets, shares and debentures. Capital account includes
all receipts from liquidating (for instance selling shares in a public
sector company), assets and spending to create assets (for example
lending to receive interest).
Revenue budget
The government has to prepare a revenue
budget which outlines in detail revenue receipts & revenue
expenditure. The revenue budget consists of revenue receipts of the
government (revenues from tax and other sources), and its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government
from which it has to pay the states their share as mandated by the
relevant finance commission. The balance is available to the Union
government.
Non-tax revenue
The main receipts under the non-tax
revenue are interest on loans given by the government, and dividends and
profits received from PSUs. The government also earns from various
services, including public services, it provides. Of this, only the
Railways is a separate department, though all its receipts and
expenditure are routed through the Consolidated Fund of India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the
government’s support to five-year plans, which includes state plans. The
five-year plans are divided into five annual plans. The funding of the
plan is split almost evenly between government support (from the budget)
and internal and extra-budgetary resources of state-owned enterprises.
Plan expenditure
There are two components of
expenditure—plan and non-plan. Planned expenditure is essentially the
budget support to the annual plans. This is typically considered
developmental spending (on health, education, infrastructure and social
goals). Like all budget heads, it is also split into revenue and capital
components.
Non-plan expenditure
This is in the nature of consumption
expenditure, broadly corresponding to revenue expenditure: interest
payments, subsidies, salaries, defence & pensions. Its ‘capital’
component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the economy and the ministries of the government.
Finance Bill
The government proposals for the levy of
new taxes, changes in the present tax structure or continuance of the
current tax structure beyond the period approved by Parliament, are laid
down before Parliament in this Bill. The Parliament approves the
Finance Bill for a period of one year at a time, which becomes the
Finance Act.
Public debt
Public debt or public borrowing is
considered to be an important source of income to the government. If
revenue collected through taxes & other sources is not adequate to
cover government expenditure government may resort to borrowing. Such
borrowings become necessary more in times of financial crises &
emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated
within the country; while external debt refers loans floated outside the
country.
Fiscal policy
Fiscal policy is a change in government
spending or taxing designed to influence economic activity. These
changes are designed to control the level of aggregate demand in the
economy. Governments usually bring about changes in taxation, volume of
spending, and size of the budget deficit or surplus to affect public
expenditure.
Fiscal deficit
The fiscal deficit is the gap between
expenditure and revenue receipt. Generally the government spends more
than what it earns through various sources. This shortfall, which is met
with borrowed funds, is called fiscal deficit.
Revenue deficit
It is the excess of revenue expenditure
over revenue receipts. All expenditure on revenue account should ideally
be met from receipts on revenue account; the revenue deficit should be
zero. In such a situation, the government borrowing will not be for
consumption but for creation of assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services
produced within a country in a given period of time. It includes all of
private and public consumption, government outlays, investments and
exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and
revenue receipt. Fiscal deficit is essentially the difference between
what the government spends and what it earns. It is expressed as a
percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget
Management Act was enacted in 2003 and required the elimination of
revenue deficit and reduction of fiscal deficit to 3% of GDP. The
financial crisis and the subsequent slowdown had forced the government
to abandon the path of fiscal consolidation for a while. A new fiscal
consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of
India (the country's central bank) extends loans to the central and
state governments to offset temporary cash flow problems they may have.
Ways and means advances may be issued without collateral (normal WMAs)
or they may be guaranteed by Indian government bonds (special WMAs).
Current account deficit
The CAD is the difference between a
country’s total imports of goods, services and transfers and its total
export of goods, services and transfers. In common terms, it means that
India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or
equity-oriented mutual funds units. The rate of tax that is deducted is
determined by the central government, and it varies with different types
of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that
it pushes up the cost of the transaction done - See more at:
http://flame.org.in/KnowledgeCenter/Understandingsometechnicaltermsusedinbudget.aspx#sthash.Rw00ckRy.dpuf
Abatement
Abatement is reduction of or exemption
from taxes granted by a government for a specified period, usually to
encourage certain activities such as investment in capital equipment. A
tax incentive is a form of tax abatement.
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.
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.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
Revenues & expenditure
The government’s budget comprises
largely about revenues and expenditure. Government revenue is the income
a government receives, while government expenditure is the money it
spends. Spending or expenditure is further divided into plan and
non-plan.
Revenue receipt & expenditure
All revenues or receipts include taxes,
while expenditure consists of salaries, subsidies and interest payments.
These revenue receipts and expenditure—which generally do not lead to
sale or creation of assets—come under the revenue account.
Capital receipt & expenditure
Capital receipt is the amount received
from the sale of assets, shares and debentures. Capital account includes
all receipts from liquidating (for instance selling shares in a public
sector company), assets and spending to create assets (for example
lending to receive interest).
Revenue budget
The government has to prepare a revenue
budget which outlines in detail revenue receipts & revenue
expenditure. The revenue budget consists of revenue receipts of the
government (revenues from tax and other sources), and its expenditure.
Capital budget
The government also prepares capital budget which includes capital receipts and payments.
Capital receipts
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
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.
Gross tax revenue
The total tax received by the government
from which it has to pay the states their share as mandated by the
relevant finance commission. The balance is available to the Union
government.
Non-tax revenue
The main receipts under the non-tax
revenue are interest on loans given by the government, and dividends and
profits received from PSUs. The government also earns from various
services, including public services, it provides. Of this, only the
Railways is a separate department, though all its receipts and
expenditure are routed through the Consolidated Fund of India.
Capital receipts
These include recoveries of loans and advances.
Gross budgetary support
Gross Budgetary Support is the
government’s support to five-year plans, which includes state plans. The
five-year plans are divided into five annual plans. The funding of the
plan is split almost evenly between government support (from the budget)
and internal and extra-budgetary resources of state-owned enterprises.
Plan expenditure
There are two components of
expenditure—plan and non-plan. Planned expenditure is essentially the
budget support to the annual plans. This is typically considered
developmental spending (on health, education, infrastructure and social
goals). Like all budget heads, it is also split into revenue and capital
components.
Non-plan expenditure
This is in the nature of consumption
expenditure, broadly corresponding to revenue expenditure: interest
payments, subsidies, salaries, defence & pensions. Its ‘capital’
component is small, the largest chunk being defence.
Central plan outlay
It is the division of financial resources among the various sectors in the economy and the ministries of the government.
Finance Bill
The government proposals for the levy of
new taxes, changes in the present tax structure or continuance of the
current tax structure beyond the period approved by Parliament, are laid
down before Parliament in this Bill. The Parliament approves the
Finance Bill for a period of one year at a time, which becomes the
Finance Act.
Public debt
Public debt or public borrowing is
considered to be an important source of income to the government. If
revenue collected through taxes & other sources is not adequate to
cover government expenditure government may resort to borrowing. Such
borrowings become necessary more in times of financial crises &
emergencies like war, droughts, etc. Public debt may be raised
internally or externally. Internal debt refers to public debt floated
within the country; while external debt refers loans floated outside the
country.
Fiscal policy
Fiscal policy is a change in government
spending or taxing designed to influence economic activity. These
changes are designed to control the level of aggregate demand in the
economy. Governments usually bring about changes in taxation, volume of
spending, and size of the budget deficit or surplus to affect public
expenditure.
Fiscal deficit
The fiscal deficit is the gap between
expenditure and revenue receipt. Generally the government spends more
than what it earns through various sources. This shortfall, which is met
with borrowed funds, is called fiscal deficit.
Revenue deficit
It is the excess of revenue expenditure
over revenue receipts. All expenditure on revenue account should ideally
be met from receipts on revenue account; the revenue deficit should be
zero. In such a situation, the government borrowing will not be for
consumption but for creation of assets.
Effective revenue deficit
This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.
Primary deficit
It is the fiscal deficit less interest payments made by the government on its earlier borrowings.
Gross domestic product
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services
produced within a country in a given period of time. It includes all of
private and public consumption, government outlays, investments and
exports less imports that occur within a defined territory.
Fiscal deficit
It is the gap between expenditure and
revenue receipt. Fiscal deficit is essentially the difference between
what the government spends and what it earns. It is expressed as a
percentage of GDP.
FRBM ACT
The Fiscal Responsibility and Budget
Management Act was enacted in 2003 and required the elimination of
revenue deficit and reduction of fiscal deficit to 3% of GDP. The
financial crisis and the subsequent slowdown had forced the government
to abandon the path of fiscal consolidation for a while. A new fiscal
consolidation road map is likely to be announced this year.
Ways and means advances
A system whereby the Reserve Bank of
India (the country's central bank) extends loans to the central and
state governments to offset temporary cash flow problems they may have.
Ways and means advances may be issued without collateral (normal WMAs)
or they may be guaranteed by Indian government bonds (special WMAs).
Current account deficit
The CAD is the difference between a
country’s total imports of goods, services and transfers and its total
export of goods, services and transfers. In common terms, it means that
India is a net debtor to the rest of the world.
Securities transaction tax
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or
equity-oriented mutual funds units. The rate of tax that is deducted is
determined by the central government, and it varies with different types
of transactions and securities. STT is deducted at source by the broker
or AMC, at the time of the transaction itself, the net result is that
it pushes up the cost of the transaction done - See more at:
http://flame.org.in/KnowledgeCenter/Understandingsometechnicaltermsusedinbudget.aspx#sthash.Rw00ckRy.dpuf
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