Financial Terms Of Budget 2016-17

#everydayquiz #budget Terms

Finance Minister Arun Jaitley is all set to present the Union Budget 2016 on Feb 29. As the budget day approaches, we collate the list of financial terminology (from A-Z) and related terms used in the budget speech that may help you understand the annual financial statement better.

A

Annual Financial Statement: Commonly known as the Union Budget, it is a statement of receipts and expenditure of states for the financial year, presented to Parliament by the government. It is divided into three parts: Consolidated Fund, Contingency Fund and Public Account.

Appropriation Bill: This Bill serves as a sanction to the government to withdraw money from the Consolidated Fund to pay off expenses.

Advance tax:  As the name suggests, it is a tax payable in advance before the end of financial year by any person whose tax liability on the total income for the financial year is likely to be Rs 10,000 or more.

Assessee: A person who is liable to pay any tax or any other sum of money under the Income Tax Act

B

Budget Deficit: This denotes the financial state when expenses exceed revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area.

C

Cess: An additional levy on the basic tax liability, governments resort to cess for meeting specific expenditure. For instance, swachh bharat cess of 0.5% is levied all services liable for service tax.

Custom Duty: When goods are exported or imported into the country from another, the importer/exporter pays custom duty on it.

Consolidated Fund of India (CFI): It is a fund where money collected by the government in the form of taxes is kept. Whenever government wants money for infrastructure, schemes and other activities, it uses the money from CFI. However, the government has to take Parliament’s consent before using the money.

Capital Asset: This means property of any kind held by any person, whether or not the same is connected with his business or profession. Stock -in-trade, consumable stores and raw materials held for business purposes, personal effects, agricultural land in India, certain bonds are not capital assets.

Capital Gains: Any profit or gain arising from the sale/ transfer of a capital asset.

D

Direct Tax:  Taxes paid directly by the person or organisation on which they are levied. That is, a tax whose burden cannot be shifted. For example, Income Tax and Corporate Tax.

Deduction: Deductions are those items which are allowed to be deducted from the gross total income of the taxpayers.

Demand for Grants: It is an estimated account of expenditure from the Consolidated Fund. DG requires the approval of Lok Sabha.

Excise Duty: It is a tax that is imposed on the goods that are produced within the country.

F

Financial Bill: A proposal by the government to the Parliament stating the modifications in the existing tax system, introduction of new taxes or continuing the structure in play hitherto.

Fiscal Deficits: When the total expenditure by the government exceeds that of its revenue (excluding the money from  borrowings), it is called fiscal deficit.

Fiscal Policy: A policy deployed to adjust the spending level of the government and to bring it in accordance with the revenue.

Financial Year: It starts from 1st April and ends on 31st March of the succeeding year.

G

Gross Domestic Product (GDP):  A widely used term, it means the total market value of the goods and services manufactured within the country in a financial year.

Goods and Service Tax (GST) :  GST consists the entire element of tax borne by a good / service including a Central and a state-level tax. If GST comes into action in the Indian economy, all indirect taxes will be replaced by one single tax.

I

Income Tax: This is the tax levied on individual income from various sources like salaries, investments, interest, etc.

Indirect Tax: Taxes imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties.

Indexation: It is a benefit to ensure that capital gain tax is only on the real gains and not on the gains arising due to inflation.

Inflation: It is the percentage rate of change in the price level. In inflation, the value of your currency falls, while the prices of commodities rises.

L

Long term Capital Assets: A capital asset held for a period exceeding thirty six months prior to the date of transfer. In case of capital asset being shares, listed securities, specified mutual fund units, zero coupon bonds, the period of holding shall be twelve months instead of thirty six months.

M

Modified Value added tax (MODVAT): MODVAT refers to an excise duty scheme introduced in 1986 to provide relief to manufacturers on the excise duty borne by their suppliers for goods manufactured by them. MODVAT has now been replaced by CENVAT.

Maximum marginal rate: It is the highest rate of income tax applicable in relation to the highest slab of income in case of individuals, Association of persons and Body of Individuals specified during that relevant year.

N

National Debt:  The total borrowings of the central government exchequer.

P

Per Capita Income: The total income of a country divided by its population.

R

Regressive Tax:  A tax wherein the low-income groups pay a larger amount as tax as compared to the high-income group.

Revised Estimates: This refers to the difference between Budget estimates and the actual figures.

S

Subsidies: Financial help given by the government to certain groups or individuals on order to make them competitive.

Short Term Capital Assets: A capital asset held by a person for a period not more than thirty six months preceding the date of transfer. In case of capital asset being shares, listed securities, specified mutual fund units, zero coupon bonds, the period of holding shall be twelve months instead of thirty six months.

Slab Rate: It is a structured range/level of income based on which income tax will be computed.

T

Tax Deducted at Source (TDS): It is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the government account.

Treasury Bills:  These are short-term borrowing instruments issued as promissory notes on discount.

V

Value added tax (VAT): This refers to the tax levied on goods and services to which value is added. VAT is paid by the end consumer and this tax is generally applicable to all goods and services that are meant for consumption.