Key Terms to Know for Budget 2025

1. Annual Financial Statement (AF)

The Annual Financial Statement outlines the government’s receipts and expenditures for the financial year. This document serves as the foundation for understanding the country’s fiscal position.

2. Budget Estimate

Budget Estimate refers to the projected funds allocated to ministries, departments, sectors, and schemes. It guides how the government plans to utilize resources and manage costs during the fiscal year.

3. Capital Expenditure (Capex)

Capital expenditure, or capex, represents the funds the government intends to use for asset creation and economic development. These investments aim to boost long-term growth.

4. Capital Receipts

Capital receipts include funds generated through borrowing, asset sales, or equity investments, forming a critical component of the government’s finances.

5. Cess

A cess is an additional tax levied on income tax to fund specific initiatives such as health or education. It adds to the overall tax liability, including any surcharge.

6. Consolidated Fund

The Consolidated Fund of India encompasses all government revenue, market borrowings, and loan receipts. Most government expenditures are drawn from this fund.

7. Contingency Fund

The contingency fund is a reserve for emergencies, managed at the president’s discretion. Parliament’s approval is required to withdraw money, which is later reimbursed from the Consolidated Fund.

8. Direct Taxes

Direct taxes, such as income and corporate tax, are collected directly from taxpayers. These taxes play a crucial role in government revenue.

9. Divestment

Divestment refers to the government’s process of selling its assets, typically to raise funds or reduce its role in non-core sectors.

10. Economic Survey

Presented during the Budget session, the Economic Survey reviews the economy’s performance and provides a roadmap for the upcoming financial year.

11. Finance Bill

The finance bill introduces proposals for levying new taxes, modifying existing tax structures, or continuing current policies. It is vital to implementing the Budget’s financial provisions.

12. Fiscal Deficit

Fiscal deficit measures the gap between the government’s total expenditure and revenue. This shortfall is often bridged by borrowing, and it is expressed as a percentage of GDP.

13. Fiscal Policy

Fiscal policy governs the nation’s economic management by estimating taxation and government spending. It plays a key role in economic stability.

14. Indirect Taxes

Indirect taxes are levied on goods and services, including GST, VAT, customs duties, and excise duties. These taxes are embedded in the cost of consumption.

15. Inflation

Inflation reflects the rise in prices of goods and services over time, reducing consumer purchasing power. Controlling inflation is essential for economic stability.

16. New Tax Regime

Introduced in 2022, the new tax regime features seven tax slabs with concessional rates. In 2023-24, it became the default tax system, offering an alternative to the old regime.

17. Old Tax Regime

The old tax regime has four slabs, with the highest rate of 30% applied to incomes above ₹10 lakh. It remains an option for taxpayers preferring traditional structures.

18. Public Account

The public account manages funds held by the government in trust, such as provident funds. The government acts as a banker for these transactions.

19. Rebate

A rebate reduces a taxpayer’s income tax liability, encouraging economic activity by lowering the tax burden.

20. Revenue Deficit

Revenue deficit arises when the government’s revenue expenditure exceeds its revenue receipts, highlighting a mismatch in regular income and expenses.

21. Revenue Expenditure

Revenue expenditure covers operational costs such as salaries, subsidies, and interest payments. It is essential for running government departments and services.

22. Revenue Receipts

Revenue receipts include the government’s earnings from taxation, fines, and services. They represent income generated from regular operations.

23. Tax Collected at Source (TCS)

TCS refers to the tax collected by sellers from buyers during transactions. The collected amount is deposited with tax authorities.

24. Tax Deduction

Tax deductions reduce taxable income, lowering the overall tax liability. Investments in instruments like PPF, NSC, and tax-saving FDs qualify for deductions.

25. Tax Surcharge

A tax surcharge applies to high-income earners, typically those with incomes above ₹50 lakh. It adds an extra percentage to the existing tax rate, increasing the total liability.

By familiarizing yourself with these terms, you can better understand how Budget 2025 impacts the stock market, India’s financial outlook, and the broader economy.