60 A2 Budget 26Mar

1. What is  Budget

The term Budget is actually derived from a French word Bougette, which means a sack or pouch. It was first used in France in 1803. In the Constitution of India the term Budget is no where used. It is rather mentioned as Annual Financial Statement under Article 112 comprising the revenue budget, capital budget and also the estimates for the next fiscal year called budgeted estimates.

2. What is  Revenue Budget

 The revenue budget are all current receipts such as taxation, surplus of public enterprises and expenditure of the governments.

3. What is Capital Budget

The capital budget are all capital receipts and expenditure such as domestic and foreign loans, loan repayments, foreign aid, etc.

4. What is Tax Revenue

 It includes taxes such as customs duties, excise duty, service tax, income tax and so on. There are  two types of taxes: (i) Direct taxes and (ii) Indirect taxes.

5. What is Direct taxes

 In this tax, the impact and incidences is on the same person and shifting of tax burden is not possible. It means that the one who pays the direct tax also bears the burden of the tax. Examples of direct taxes are personal tax, corporate tax, income tax, etc.

6. What is  Indirect taxes

 Indirect taxes are those taxes which are paid by someone who shifts the burden of the tax on some other person. Therefore, tax impact and tax incidence is on two different people. Examples are: excise tax, sales tax, service tax, etc.

7.What is Progressive tax

A tax that takes away a higher proportion of one's income with an increase in the income is known as progress tax. Indian income tax is progressive and direct tax.

8. What is Regressive Tax 

 It is in opposition with a progressive tax, which takes a larger percentage from high-income earners. A regressive tax is generally a tax that is applied uniformly to all situations, regardless of the payer.

9. What is Personal Income Tax 

 Personal income tax is generally imposed on an individual combined Hindu families and total income of people of any other communities.

10.What is Corporate Tax 

 Corporate tax is imposed on registered companies and corporations. The rate of corporate tax on all companies is equal. However, various types of rebates and exemptions have been provided.

11.What is Customs Duties

 As per the constitutional provisions, the central government imposed import duty and export duty both. Import and export duties are not only sources of income but with the help of it the central government regulates the foreign trade.

12. What is Import Duties

 Generally import duties are ad-valorem in India. It means import duties are imposed on the taxable item on the basis of percentage.

13 Export Duties

 Export duties are more important, compared to the import duties in terms of revenue and regulation of foreign trade.

14. What is Excise Duties

 Excise duties are commodity tax as it is imposed on production of an item and it has no relevance with its sale. This is the largest source of revenue for the central government.

The major tax revenue sources for states are their shares in union excise duties and income tax, commercial taxes, land revenue, stamp duty, registration fees, state excise duties on alcohol and narcotics, etc. Sales tax forms the most important component of commercial taxes.

15.What is  Plan Expenditure 

It includes the outlay for agriculture, rural development, irrigation and flood control, energy, industry and minerals, transport, science and technology, environment and economic services, etc.

16. What is Non-Plan Expenditures

 The major non-plan expenditures are interest payments, defence, subsidies, and general services.

17. What is Internal debt

 It comprises of loans raised from the open market, compensation bonds, prize bonds, treasury bills issued to the RBI commercial banks, etc.

18. What is External debt

 It consists of loans taken from the World Bank, IMF, ADB and individual countries like the USA, Japan and others

19.What is  Revenue Deficit

 Revenue Deficit  = Revenue Expenditure - Total Receipts

Or Non Plan Expenditure - Plan Expenditure (net tax revenue - non-tax revenue)

20.What is Budget Deficit

 Budget Deficit= Total expenditure - Total Receipts or (Revenue Receipts + Capital Receipts) - (Non plan Expenditure + Plan Expenditure)

21.  What is Fiscal Deficit

Fiscal Deficit= Revenue Receipt (net tax revenue + non-tax revenue) + Capital Receipts (only recoveries of loans and other receipts) - Total Expenditure (plan and non-plan)

22. What is Primary Deficit 

Primary Deficit= Revenue Deficit - Interest Payments

23.What is Monetized Deficit

Monetized Deficit  = Increment in net RBI credit to the central government