Union Budget In India

Introduction

The Union Budget is defined in Article 112 of the Indian Constitution as the annual financial statement of a year. This is a budget that consists of the estimated expenditure and receipts of the government in a financial year. It is released by the Finance Minister in Parliament on the first day of February.

The Union Budget is essential for accounting for the government’s finances in a particular financial year. Along with this, it is also focused on the optimal allocation of resources to maximise profit while aiding the development of the country.

The Indian Union budget is divided into two individual parts which are the Capital Budget and the Revenue Budget with each of them consisting of differing receipts and expenditures.

Components of the Union Budget

Revenue Budget

The revenue budget consists of all revenue receipts and expenditures of the Government in the financial year. Revenue receipts are those receipts that the government expects to receive from their normal activities throughout the year. These can be from both taxable and non-taxable sources such as:

• Income tax
• Goods & Service Tax
• Profits
• Fines

Similarly, revenue expenditure is the expenditure that the Government estimates to incur from its normal operations and public services. Some examples would be:

• Government employee salary
• Subsidies
• Government office expenses

Capital Budget

The capital budget is the part of the Union Budget that consists of capital receipts and expenses of the Government in a financial year. 

Capital receipts refer to the increase in Government assets or reduction in liabilities. For example:

• Loans from RBI
• Loans from the public
• Loans from foreign Governments

Capital payments consist of the expenses undertaken by the Government to produce long-term capital assets for the citizens of the country. Some capital payment items are:

• Infrastructure development expenses (roads, hospitals, machinery)
• Loans provided to States/Union Territories

Goal/Importance Of Union Budget

Some goals that the Union Budget of India aims to achieve are:

• Reduce poverty and unemployment rate

One of the most prominent goals of the Union Budget is to reduce the poverty and unemployment levels in the country. This is important for increasing the overall standard of living and ensuring their health and safety for the citizens of India. This is done through various methods such as investment in education, healthcare, government schemes, tax benefits, etc.

• Increase income equality

Another focus of the Union Budget is to reduce income inequality amongst citizens in the country. This is done by imposing progressive tax rates which adjust the tax rates according to the income of an individual. So, higher-income groups are taxed more while lower-income groups are levied a lower tax rate. This in turn decreases the gap in disposable income.

• Monitor and adjust tax rates

To achieve the goal of income equality as well as maintain funding for government entities, continuous adjustment of the tax rates is necessary. This adjustment is done in the Union Budget wherein corporate and personal tax rates are set for the coming financial year.

• Optimal utilisation of resources

A country needs to utilise its resources optimally to promote growth and development while reducing unwanted aspects such as crime and corruption. Thus, the budget is responsible for defining the allocation of resources to achieve maximum growth with minimal loss to society. 

Indian Union Budget 2021-2022

The most recent Union Budget passed in India was for the 2021-2022 financial year. This budget stated an expected growth rate of 9.27% in the coming year and also stated 4 pillars of India’s development. These were climate action, productivity enhancement, inclusive development, and energy transition. Apart from this, here are some key factors of the Indian Union Budget 2021-22:

• Income from all virtual digital assets will be taxed at 30% as well as 1% on transactions.
• The tax deduction limit for government employees will be increased from 10% to 14% to aid in providing State and Central Government employees similar benefits.
• It was stated that the RBI would be introducing its own ‘Digital Rupee’
• The PM Awas Yojana will be allocated Rs. 48,000 crores for the construction of 80,00,000 houses in areas across India.
• Any income from Long Term Capital Gains will now be taxable at 15%.
• E-Passports will be introduced in the year 2022-23.

Conclusion

The Union Budget is an essential financial statement to ensure growth and stability in India. This budget defines the receipts and expenditures of the government for the financial year as well as various factors such as tax rates, subsidies, benefits, etc. Apart from that, the Union Budget is divided into the revenue budget and capital budget which cover specific receipts and expenses of the government.

This year’s Union Budget 2021-22 has made many changes that are essential for reducing income inequalities and promoting development. For example, an investment of Rs. 48,000 crores has been allocated towards the building of homes while taxes on virtual digital assets have also been applied.