Budget 2024: A guide to understanding the complex terms

The Union Budget 2024, to be presented by Finance Minister Nirmala Sitharaman on February 1, 2024, is an interim budget for the next financial year. It is the last Union Budget by the Narendra Modi government before the 2024 Lok Sabha Election.  An annual financial statement for the Union of India that contains the government's revenue and expenditure for a given fiscal year, the Union Budget is a massive and complex document.

Here is your guide to understanding all the complex terms that you are likely to encounter in the budget.

Budget

The budget is an annual financial statement that outlines the government's proposed expenditures and revenues for the upcoming fiscal year, which begins on April 1st and ends on March 31st of the following year.

“The budget draws its major share from borrowings and liabilities, constituting the largest chunk of 34%,” said Pramod Kathuria, Founder and CEO of Easiloan.

Economic Survey

A flagship document summarising the state of the economy, which sets the stage for the budget of the upcoming financial year.

Vote on Account

The Vote on Account is a grant made in advance by the parliament, in respect of the estimated expenditure for a part of the new financial year, pending the completion of procedure relating to the voting on the Demand for Grants and the passing of the Appropriation Act.

Gross domestic product (GDP)

The added value of output of all productive sectors in the economy as measured by the Central Statistics Office.

Capital Expenditure (Capex)

The total amount of money that the government plans to use for the acquisition or degradation of machinery and assets linked to boosting the economy.

Budget Estimate

The estimated funds allocated to ministries.

Finance Bill

A document used to introduce the policy of levying new taxes, making alterations in the tax structure, or continuing with the existing tax structure.

Fiscal Deficit

Total additional borrowings are made by the government every year to bridge the gap between its income and expenditure.

“The gap between government income and spending. Lower is better, but too low can slow growth,” said Pramod Kathuria.

Direct and Indirect Taxes

Direct taxes are the ones that fall directly on individuals and corporations. For example, income tax, corporate tax, etc. Indirect taxes are imposed on goods and services. They are paid by consumers when they buy goods and services. These include excise duty, customs duty, etc.

Home Loans and Affordable Housing

“The budget may address the issue of affordable housing through potential deductions for home loans. However, specific details about this aspect may only be available after the budget is presented,” said Pramod Kathuria.

TDS

The concept of TDS was introduced to collect tax from the very source of income. 

“We hope that the finance ministry would reduce in the Tax Deducted at Source (TDS) rate from 1% to 0.01%. Additionally, the offsetting of losses against gains made should be allowed. The underlying objective is to ensure a level playing field in the cryptocurrency space, devoid of regulatory or tax arbitrage for any participant,” said Rajagopal Menon, Vice President, of WazirX.

Corporate Tax

This is the tax paid by corporations or firms on the incomes they earn.

Minimum Alternative Tax (MAT)

The Minimum Alternative Tax is a minimum tax that a company must pay, even if it is under zero tax limits.

Disinvestment

By disinvestment, we mean the sale of shares of public sector undertakings by the Government . If these shares are sold to get cash, then earning assets are converted into cash, So it is referred to as disinvestment.