Budget 2022: Here are key terms you should know ahead of FM Nirmala Sitharaman's speech

SUMMARY

As Finance Minister Nirmala Sitharaman gears to present the Union Budget for 2022-23, here is a look at some key terms that you should familiarize yourself with, ahead of the big day.

By CNBCTV18.comJan 18, 2022 9:56:35 PM IST (Published)

The common man eagerly awaits Finance Minister Nirmala Sitharaman to deliver the 2022 Union Budget speech, with major expectations of raising tax slab and provide some relief given the jolts everyone has suffered amid the coronavirus pandemic. The government recently announced that the Union Budget this year will be held in two phases – on January 31 and February 1 – which has further raised hopes of tax breaks to citizens. Nonetheless, as this year's Budget is around the corner, here is a look at some key terms that you should familiarize yourself with, ahead of Budget 2022.

Annual financial statement | The key document of the Budget, the compilation comprises three government accounts -- public account, consolidated fund and contingency fund -- for which the government has to mention the expenditure and income for a financial year. Apart from this, the document includes other receipts and expenditures.

Public account | This is a fund where the government plays a banker for the citizens. All public savings like provident fund, small saving schemes etc are deposited into this public account. Although the government uses these funds for various purposes, it needs to be repaid to the rightful owners at some point in time. The government cannot withdraw money from any of the government funds without the Parliament's approval, except the Public Account. For the funds listed above, the government is required to present a statement of the earnings and the expenditure for the financial year.

Consolidated fund | This is the main account from which the government facilitates its revenues. From this fund, the government finances loans and adds the receipts from loans. Most government expenditures are made from the consolidated fund.

Contingency fund | The money from this account is for complying with any unforeseen expenditures. The amount which is taken out from this fund has to be reimbursed with the money available in the consolidated fund.

Revenue | Receipts and Expenditures: Revenue expenditures are termed to be the expenses which the government requires to run the business as usual and pay the interest on debt and subsidies. Revenue receipts for the government come from direct and indirect taxes, interest, dividends and profits from investments, fees and other receipts from services rendered.

Capital | Receipts and Expenditures: Capital expenditures are incurred by the government for acquiring assets and investments and loans and advances to the state governments. The capital receipts are funds raised from the market, borrowing from the central bank, external assistance from foreign governments and recoveries of the loans and advances. Divestments and tax revenue also fall under the umbrella of capital receipts.