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Business News/ Budget / News/  Budget 2024: What is Vote on Account? Significance and more…
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Budget 2024: What is Vote on Account? Significance and more…

Budget 2024: A vote on account or interim Budget is presented by the government during the election year before the pollsis an advance grant to the government from the Consolidated Fund of India to cover short-term expenditure requirements until the new financial year begins.

The vote on the account cannot impact the tax regimePremium
The vote on the account cannot impact the tax regime

The country's economy is approaching the Union Budget on February 1, 2024, along with the general elections in the same year. During an election year, the government does not present a full-fledged Budget for the whole year, instead the government prepares an interim budget or a vote on account. Livemint explains what these terms mean and how they are different from the Union Budget.

What is a Vote on Account?

As defined by Article 116 of the Indian Constitution, 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 new financial year begins.

There is a Consolidated Fund of India, defined in Article 266 of the Indian Constitution, which stores all the revenue generated by the central government, including taxes, interest on loans, and a portion of state taxes.

In accordance with the Act, the Consolidated Fund may not be withdrawn except under an appropriation undertaken by law and approved by the Centre each year during the Union Budget.

What is the need for Vote on Account?

During an outgoing government, an interim budget is presented, or a vote on account is sought. The next government will be responsible for presenting the full budget. The vote on the account cannot impact the tax regime.

Under the constitution, money cannot be withdrawn by the government from the Consolidated Fund of India unless it has been appropriated by law. This is accomplished by passing an appropriation bill during the Budget process. Nevertheless, passing the appropriation bill through the Parliament and becoming a law may take time. As of April 1, when the new financial year begins, the government will require permission to spend even a penny.

Vote on account is the process of withdrawing money from the Consolidated Fund of India during that period, usually two months. A vote on account is a formality and does not require debate. The government seeks a vote on account for four months when elections are scheduled a few months into a new financial year. Vote on account is essentially the Parliament's interim approval of spending by the government.

As such, a vote on account is merely an interim authorization to spend money, as opposed to a full Budget that includes details of expenditures and receipts, including tax changes and government policies.

During election years, when elections are scheduled a few months into the new fiscal year, the government prefers to request a vote rather than present a full budget because it is unfair to deny the government the right to design its own budget for the remainder of the year if it changes after elections.

How is Vote on Account different?

Regular budgets are presented for the whole financial year. During the general elections, the incumbent government will present an interim budget in place of a full budget.

A vote-on-account includes only the government's expenditure, whereas the interim budget deals with both receipts and expenditures.

How is the Union Budget planned?

Union Budget Day is the most sought-after day for Indian citizens, as it determines the economic fate of the country. The central government takes months to plan and implement tasks that lead to budget drafting. The activity usually starts in August-September, i.e. six months before the date of tabling the budget. The budget gets tabled by the Union Finance Minister, Nirmala Sitharaman, on February 1 each year.

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Published: 04 Dec 2023, 01:54 PM IST
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