 "Tax revenue")
Union Budget 2024: An interim Budget is set to be presented on February 1 by Finance Minister Nirmala Sitharaman, in which the central government will outline the necessary expenses needed to run the country till the impending Lok Sabha elections.
The final consolidated budget of 2024 is only expected to be presented following the conclusion of the elections, likely scheduled in April-May.
The key exercise, conducted during the Budget Session of the Parliament, can be full of financial jargon, embodying the government's expenditure plan for the year ahead. Many of these terms often pop up on our screens and may seem confusing, but they are essential to understanding the intricacies of the budget.
Sin Tax to Disinvestment - Know these 10 key budget terms
Appropriation Bill: The Appropriation Bill gives power to the central government to withdraw funds from the Consolidated Fund of India. The Consolidated Fund of India comes under Article 266(1) of the Indian Constitution and is the account of the revenue the Government of India receives from various sources.
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Divestment or disinvestment: Disinvestment is a mechanism used by the government in which it sells stakes in public sector companies to raise revenues. Notably, in 2023, the government had set a disinvestment target of nearly Rs 51,000 crore. However, only 20 per cent or Rs 10,049 crore, of this target has been met in this financial year.
Long-term Capital Gains Tax: Capital gains amount to the profit earned by an individual on the sale of his investment in assets such as stocks, real estate, bonds, commodities, etc. In India, assets held for over one year or more are taxed accordingly by the government. While for equities, this period is one year, real estate investments are considered long-term if they are held for two years, as the Income Tax Act of 1961 defines.
Short-term capital gains tax: The government taxes the capital gains made on the individual assets under 'short-term' if they are held for a lesser period. For assets such as stocks, equities and mutual funds, this period is 12 months. For other immovable assets, such as land and property, the period is up to 24 months.
Gross National Product (GNP): Gross National Product is the total value of all finished goods and services produced by a country's citizens and businesses in a given financial year, be it at a domestic location or abroad. This is different from Gross Domestic Product, which is defined by the value of the finished domestic goods and services produced within a nation's borders.
Dividend Distribution Tax (DDT): Dividend Distribution Tax is a kind of tax imposed on the dividends that are distributed by businesses from their profits to the shareholders. This is taxable at source and deducted at the time of distribution. An exception in DDT happens when a shareholder receives more than Rs 10 lakh in dividends, in which case they are required to pay an additional tax.
Sin Tax: As the name suggests, this kind of tax is levied on goods and services which are considered harmful to society. Tobacco, alcohol, and gambling are some of the examples of the products that attract 'sin tax' on them.
Wealth Tax: Wealth tax is imposed on the market value of personal assets such as vehicles, jewellery, land, etc. Earlier, the now-abolished 'Wealth Tax Act of 1957' was used to impose a tax of one per cent on an individual, Hindu Undivided Family (HUF) and companies on net wealth exceeding Rs 30 lakh. However, this act was abolished in 2016 and replaced with a 2 per cent additional surcharge levy on the super-rich (those with annual taxable income exceeding Rs 1 crore).
Treasury bills: Treasury bill is an instrument available to the central government to raise money in the financial market. These are issued when the government needs money for a short period. Market forces determine the interest on these.
