Budget 2023: 8 Important Terminologies To Know Before The Budget

Some terms used in the Union Budget may be difficult to understand. Use this glossary to learn the important Budget-related terms.

Union Budget Glossary

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2023-2024 in the Parliament on February 1, 2023. Some terms used while presenting the Union Budget may be difficult to understand. To help you understand the Budget, here is a glossary of important terms you must know ahead of the upcoming annual Union Budget 2023.

Annual Financial Statement

As per Article 112 of the Constitution, it is mandatory for the government to present a statement of the estimated receipts and expenditures in respect of every financial year- from April 1 to March 31, to the Parliament. This statement is the main Budget document, called the Annual Financial Statement.

Fiscal Deficit

Fiscal deficit occurs when the government’s total expenditures exceed the total revenue that it generates, excluding borrowings, during the fiscal year. This is an indication of the total borrowing required by the government. 

Consolidated Fund

The Consolidated Fund of India is the most important of all government accounts. This fund includes the revenues received by the government and expenses incurred in a financial year, except for exceptional expenses like disaster management. All government expenditure, except exceptional items, is made from this fund. 

Finance Bill

Article 110 of the Constitution defines the Finance Bill as the Money Bill. This is an important part of the Union Budget that specifies all the legal amendments proposed by the Finance Minister with respect to changes in taxation for the upcoming financial year.

Tax Revenue

Tax revenue is the total revenue collected by the government from taxes imposed on income and profits and those levied on the consumption of goods and services. These include both direct and indirect taxes. Tax revenue constitutes the main source of the government’s revenue.

Direct And Indirect Tax

Direct tax is a type of tax which is directly levied on the income of individuals and corporates. Here the incidence and impact of taxation fall on the same entity. Some examples of direct taxes are income tax, corporate tax, property tax, inheritance tax, etc. Indirect tax is a type of tax which is levied on the goods and services supplied. Here the incidence and impact of taxation do not fall on the same entity.  Some examples of indirect taxes are GST, customs duty, central excise, etc.

Customs Duty

The tax imposed on the export and import of goods is called customs duty. The custom duty rates are either specific or on an ad valorem basis (based on the value of goods). As per Rule 3(i) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the value of imported goods shall be the transaction value adjusted in accordance with the provisions of its Rule 10.

Revenue Deficit

The excess of the government’s revenue expenditure over its total revenue receipts is called revenue deficit. This is an important control indicator which depicts that the government’s own earnings are not enough to meet its day-to-day operations. A revenue deficit will lead to borrowings when the government spends more than what it earns.

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