Union Budget 2025: Key Terms and Definitions to Understand the Budget

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 in Parliament on February 1, marking her eighth consecutive budget. As the nation awaits crucial economic policies and financial allocations, understanding key budget-related terms is essential. Here’s a quick guide to some important terms that will help you grasp the upcoming budget’s implications better:

1. Budget Estimate

The projected allocation of funds to various ministries, departments, sectors, and schemes. This estimate helps determine the government’s planned expenditures and how resources will be utilized during the financial year.

2. Annual Financial Statement (AFS)

A document that provides details of the government’s total receipts and expenditures for the fiscal year. It forms the basis of the Union Budget.

3. Contingency Fund

A reserve fund set aside for unforeseen emergencies, under the direct disposal of the President. Any expenditure from this fund is later reimbursed through the Consolidated Fund with prior parliamentary approval.

4. Cess

An additional tax levied on income tax to fund specific sectors like health, education, and infrastructure. It is applied to the total tax liability, including surcharges.

5. Divestment

A process where the government sells its stakes in public sector enterprises to raise funds and reduce fiscal burden.

6. Fiscal Deficit

The gap between the government’s total expenditure and its revenue receipts for a fiscal year, expressed as a percentage of GDP. This deficit is often covered through borrowing, including loans from the Reserve Bank of India (RBI).

7. Rebate

A reduction in total income tax liability, aimed at reducing the tax burden on individuals and stimulating economic growth.

8. Revenue Deficit

Occurs when the government’s revenue expenditure exceeds its total revenue receipts, indicating a shortfall in funds needed for operational expenses.

9. Tax Collected at Source (TCS)

A tax amount collected by sellers from buyers at the time of sale of specific goods or services, which is then deposited with tax authorities.

10. Tax Surcharge

An additional tax levied on taxpayers with an annual income exceeding Rs 50 lakh. This surcharge is imposed over and above the existing tax rate.

With these key terms in mind, you’ll be better equipped to understand the announcements and financial policies unveiled in the Union Budget 2025. Stay tuned for live updates and in-depth analysis!