Budget & Taxation

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 BUDGET AND TAXATION

❖ Budget came from a French word “Bougett”.

❖ The Budget was first introduced in Britain in 1773 by
Professor Phillip.
Budget in India:
❖ The Article 112 of the Indian constitution deals with the
annual financial statement of one fiscal year
(1st April to 31st March).
❖ The fist budget of India was presented in 1860 by James
Wilson.
❖ The first budget of independent India was presented
by Shanmukham Chetty.
❖ In 1950, John Mathai became the first finance minister
to represent the budget in republic of India.
❖ In 1952, CD Deshmukh became the 1st finance minister
of India to represent the budget in Hindi.
❖ Maximum budget in India as a finance minister is
presented by Morarji Desai which is 10 times.
❖ The Finance Minister prepares the budget in India and
it takes almost 2 months for the budget to be
prepared.
❖ The time period till which the budget is prepared, all
the expenses of the government are born through
Vote-on-account under article 116 of the Indian
constitution.
❖ The Railway budget was presented separately from
the union budget from 1925 to 2016.
❖ In 2017, Railway Budget was merged with the Union
Budget.
Revenue Receipt:
Those income by the government on which there is no
liability is termed as Revenue. For example – Direct and
Indirect taxes.
Revenue Expenditure:
All the expenditure of government in which production
capacity or future income is not increasing. For example –
Government subsidy, Pension.
Capital Receipts:
It is the income/ receipts of the government, which
includes Liability and are needed to be paid in future. For
example – Borrowings from RBI
Capital Expenditure:
Those expenditure of the government which increases
production capacity and also generates future Income for
the Government is called Capital Expenditure.
Types of Budget:
The various types of Budgets are discussed below as
follows:
Performance Budget:
The Budget which is prepared for the next financial year
based on the performance of the current fiscal year.
Zero-Based Budget System:
❖ Those budgets which do not include the expenditure,
losses of the last financial year and is drafted completely
in new form is called Zero-Based Budget System.
❖ This concept was given by an American Economist Peter
A Pyre.
Outcome Budget:
The Budget which includes major government initiatives
and schemes are called Outcome Budgets.
Gender Budget:
The Government budgets which have provisions for
expenditure on Women related welfare programmes in
order to reduce inequality among men and women are
said to be Gender Budget.
Deficit:
❑ When expenditure is more than Income then the condition
of deficit arises.
❑ Budget Deficit = Total Expenditure – Total Receipts
❑ Fiscal Deficit = Total Expenditure – Total Receipts +
Borrowings
❑ Fiscal Deficit is always greater than Budget Deficit.
❑ Primary Deficit = Fiscal Deficit – Interest Payments
❑ Revenue Deficit = Total Revenue expenditure – Total
Revenue
TAXES:
There are two types of taxes which are given below as
follows:
Direct Taxes: Examples are Corporate Taxes, Income Tax
etc.
Indirect Taxes: Examples are GST etc.
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