● The Goods and Services Tax Council shall make

recommendations to the Union and the States on------

● The Goods and Services Tax Council shall establish a
mechanism to adjudicate any dispute —
1. between the Government of India and one or more States;
or
2. between the Government of India and any State or States
on one side and one or more other States on the other
side; or
3. between two or more States, arising out of the
recommendations of the Council or implementation
thereof.
SUGGESTION--

--Lesser tax slabs(two highly specific rates: a nominal 0.25% for rough
diamonds and 3% for gold)

--1% for the sale of under-construction affordable houses ??

--1% disaster relief cess in Kerala ???

-- Removal of the input tax credit provision from the real estate sector

-- Cement, a huge input in real estate, is taxed at the highest rate of 28%
● BUDGET
● Budget word is no where used in the constitution.
● Annual financial statement(A-112)
● Union Budget has three sets of data for every concerned
sector or sub- sector of the economy---

(i) Actual data of the preceding year (here preceding year

means one year before the year in which the Budget is being
presented. Suppose the Budget presented is for the year
2019–20, the Budget will give the final/actual data for the year
2017-18.
(ii) Provisional data of the current year (i.e., 2018–19)
since the Budget for 2019–20 is presented at the end of the
fiscal 2018–19, it provides Provisional Estimates for this year

(iii) Budgetary estimates for the following year (here

following year means one year after the year in which the
Budget is being presented or the year for which the Budget is
being presented, i.e., 2019–20). This is shown with the
symbol ‘BE’ in brackets with the concerned data.).
CAPITAL RECEIPTS--EITHER REDUCES AN ASSET OR
CREATES A LIABILITY

REVENUE RECEIPTS--NEITHER REDUCES AN ASSET

NOR CREATES A LIABILITY
DIRECT TAXES--

(a) Taxes on Income and Expenditure --

Corporation Tax/MAT(Minimum Alternative Tax)

Taxes on Income Other Than Corporation Tax

Hotel Receipts Tax -- Abolished

Fringe Benefit Tax---Abolished

(b) Taxes on Property and Capital Transactions--

Securities Transaction Tax-

Estate Duty --Abolished

Taxes on Wealth --Abolished

Gift Tax -Abolished

Banking Cash Transaction Tax-Abolished

INDIRECT TAXES-

CGST-

UTGST-

IGST-

Customs-

Union Excise Duties-

Non-tax Revenue Receipts

This includes all money earned by the government from sources

other then taxes. In India they are:

(i) Profits and dividends which the government gets from its public
sector undertakings (PSUs).

(ii) Interests recieved by the government out of all loans forwarded

by it, be it inside the country (i.e., internal lending) or outside the
country (i.e., external lending).
(iii) Fiscal services also generate incomes for the government, i.e.,
currency printing, stamp printing, coinage etc.

(iv) General Services also earn money for the government as the
power distribution, irrigation, banking, insurance, community
services, etc.

(v) Fees and Fines received by the government.

(vi) Grants which the governments receives.

Revenue Expenditure

The basic identity of such expenditures is that they are of

consumptive kind and do not involve creation of productive assets.

(i) Interest payment by the government on the internal and external

loans;

(ii) Salaries, Pension and Provident Fund paid to government

employees;
(iii) Subsidies forwarded to all sectors by the government;

(iv) General defence expenditure by the government;

(v) Postal Deficits of the government;

(vi) Law and order expenditures (i.e., police & paramilitary);

(vii) Grants given by the government to Indian states and

foreign countries
Revenue Budget

The part of the Budget which deals with the revenue income
and revenue expenditure of the government. If the balance
emerges to be positive it is a revenue surplus budget, and if it
comes out to be negative, it is a revenue deficit budget.

REVENUE DEFICIT= REVENUE EXPENDITURE-REVENUE

RECEIPTS(Shown as percentage of GDP)
 Effective Revenue Deficit-

● Revenue expenditures includes all the grants which the Union

Government gives to the state governments and the UTs
● some of which create assets (though these assets are not
owned by the Government of India but the concerned state
governments and the UTs).
● such revenue expenditures contribute to the growth in the
economy and therefore, should not be treated as unproductive
in nature like other items in the revenue expenditures
ERD=RD- (grants for creation of capital assets).

Capital Receipts __________________

All non-revenue receipts of a government are known as

capital receipts. Such receipts are for investment purposes
and supposed to be spent on development by a government.
But the receipts might need their diversion to meet other
needs to take care of the rising revenue expenditure of a
government as the case had been with India.
(i) Loan Recovery

The money the government had lent out in the past in India (states,
UTs, PSUs, etc.) and abroad.

This capital comes back to the government when the borrowers

repay them .

(ii) Borrowings by the Government

This includes all loans raised by the government inside the country
(i.e., internal borrowings) and outside the country (i.e., external
borrowings).
(iii) Other Receipts by the Government

This includes many long-term capital accruals to the

government through the Provident Fund (PF), Postal
Deposits, various small saving schemes (SSSs) and the
government bonds sold to the public (as Indira Vikas Patra,
Kisan Vikas Patra, etc.).
Capital Expenditure __________________

(i) Loan Disbursals by the Government

The loans forwarded by the government internal (i.e., to the states,

UTs, PSUs, FIs, etc.) or external (i.e., to foreign countries, foreign
banks, purchase of foreign bonds, loans to IMF and WB, etc.).

(ii) Loan Repayments by the Government

(3)General Services-The railways, , water supply, education, rural

extension, etc.
Earlier there used to be budget deficit ,but govt started to finance
the deficit by capital earnings and BD became zero making it
difficult to know the financial health of the govt so the concept of
fiscal deficit evolved.

Fiscal deficit =borrowings

Primary Deficit __________________

The fiscal deficit excluding the interest liabilities for a year is the
primary deficit, This is considered a very handy tool in the process
of bringing in more transparency in the government’s expenditure
pattern.
Any two years for example might be compared and so many things
can be found out clearly such as, which year the government
depended more on loans, the reasons behind higher or lower fiscal
deficits, whether the fiscal deficits have gone down due to falling
interest liabilities or some other factors, etc.

Deficit and Surplus Budget

When the budget proposes higher expenditures than the receipts, it

is known as a deficit budget. Opposite to this, if the budget
proposes lesser expenditures than the receipts, then it is a surplus
In practice, governments do not present a surplus budget as
it symbolises government’s lower concerns towards
development.(HOW?)

Need of Deficit Financing__________________

It is when government needs to spend more money than it

was expected to earn or generate in a particular period, to go
for a desired level of growth and development.
● Had there been some means to go for more expenditure with
less income and receipts, socio-political goals could have been
realised as per the aspirations of the public policy. And once the
growth had taken place, the extra money spent above the
income would have been repaid.
● It was by the early 1930s that the US first tried its hand at deficit
financing soon to be followed by the whole Euro-American
governments.
● Through this route the developed world was able to come out of
the problem of the Great Depression (1929).
● The idea became popular around the world by the 1960s.
India tried its hand at deficit financing in 1969
● Since the 1970s It became a routine phenomenon, till it
became wild and illogical, demanding immediate
redressal.
● The fiscal deficits in India peak to unsustainable levels
● Finally, India headed for fiscal reforms that is also known
as the process of fiscal consolidation
The Consolidated Fund of India (CFI) (Article 266)

All revenues received by the Government, loans raised by it,

and also receipts from recoveries of loans granted by it,
together form the Consolidated Fund of India. All expenditure
of the Government is incurred from the Consolidated Fund of
India and no amount can be drawn from the Consolidated
Fund without due authorization from the Parliament.
Contingency Fund of India(A-267)--

An imprest placed at the disposal of the President of India to

facilitate meeting of urgent unforeseen expenditure by the
Government pending authorization from the Parliament.
Parliamentary approval for such unforeseen expenditure is
obtained, expost-facto, and an equivalent amount is drawn
from the Consolidated Fund to recoup the Contingency Fund
after such ex-post-facto approval. The corpus of the
Contingency Fund as authorized by Parliament presently
stands at ` 500 crore.
● Public Account of India(A-266)----
● Moneys held by Government in trust are kept in it.

Provident Funds, Small Savings collections, income of

Government set apart for expenditure on specific objects
such as road development, primary education, other
Reserve/Special Funds etc., are examples of moneys kept
in the Public Account.

● Public Account funds that do not belong to the

Government and have to be finally paid back to the
persons and authorities who deposited them, do not
require Parliamentary authorisation for withdrawals.
-----The approval of the parliament is obtained when amounts
are withdrawn from the Consolidated Fund and kept in the
Public Account for expenditure on specific objects.

----- The actual expenditure on the specific object is again

submitted for vote of the Parliament for withdrawal from the
Public Account for incurring expenditure on the specific
objects.
● Charged Expenditure-- NO VOTING ,ONLY DISCUSSION
● Emoluments of the President
● Salaries and allowances of the Chairman and the Deputy
Chairman of the Rajya Sabha ,etc
● Interest on and repayment of loans raised by the
Government Payments made to satisfy decrees of courts
etc.,
The list of Budget documents presented to the Parliament,
besides the Finance Minister's Budget Speech,also includes
Statements mandated under FRBM Act:

i. Macro-Economic Framework Statement

ii. Fiscal Policy Strategy Statement

iii. Medium Term Fiscal Policy Statement

Macro-Economic Framework Statement--

. It contains an assessment of the growth prospects of the

economy along with the statement of specific underlying
assumptions. It also contains an assessment regarding the
GDP growth rate, the domestic economy and the stability of
the external sector of the economy, fiscal balance of the
Central Government and the external sector balance of the
economy.
ii. Fiscal Policy Strategy Statement

It outlines for the existing financial year, the strategic

priorities of the Government relating to taxation,
expenditure, lending and investments, administered pricing,
borrowings and guarantees. The Statement explains how the
current fiscal policies are in conformity with sound fiscal
management principles and gives the rationale for any major
deviation in key fiscal measures.
iii. Medium-Term Fiscal Policy Statement

It sets out the three-year rolling targets for five specific fiscal
indicators in relation to GDP at market prices, namely (i)
Revenue Deficit, (ii) Fiscal Deficit, (iii) Effective Revenue
Deficit (iv) Tax to GDP ratio and (v) Total outstanding Central
Government Liabilities at the end of the year.
Medium-Term Expenditure Framework Statement---

It is presented to the Parliament separately in the session

next to the session in which Budget is presented. It indicates
three-year rolling target for expenditure along with
description of the underlying assumptions and risks.
Economic Survey

The Economic Survey brings out the economic trends in the

country which facilitates a better appreciation of the mobilisation
of resources and their allocation in the Budget. The Survey
analyses the trends in agricultural and industrial production,
infrastructure, employment, money supply, prices, imports, exports,
foreign exchange reserves and other relevant economic factors
which have a bearing on the Budget, and is presented to the
Parliament ahead of the Budget for the ensuing year
Fiscal Responsibility and Budget Mgt act(FRBM Act)
2003--

To provide the support of a strong institutional/statutory

mechanism.(RD was to be cut by 0.5 per cent per annum and
FD by 0.3 per cent per annum to achive the target of
FD-3%,RD-0)

Along with the Budget and Demands for Grants, the GoI was
mandated to lay the three statements before the Parliament
in each financial year:
Amendment in FRBM act in 2012--

in addition to the existing three documents, Central

Government shall lay another document - the Medium Term
Expenditure Framework Statement (MTEF) - before
Parliament

Budget 2018-19 has amended the FRBM Act again and shifted the
target of 3% fiscal deficit-GDP ratio to March 2021. No target has
been set for revenue deficit