All about Indian Union Budget and its Features

The Indian Union Budget is the annual financial statement presented by the Union Government of India to Parliament, outlining the estimated government revenue and expenditure for the upcoming fiscal year.

New Tax Regime 2023-24

Income Upto 7 lakh : Tax Free

Rebate under section 87A has been hiked from Rs 5 lakh to Rs 7 lakh

Taxable income up to 3 lakhs: No tax
Taxable income between 3 lakhs to 6 lakhs: 5% tax
Taxable income between 6 lakhs to 9 lakhs: 10% tax
Taxable income between 9 lakhs to 12 lakhs: 15% tax
Taxable income between 12 lakhs to 15 lakhs: 20% tax
Taxable income above 15 lakhs: 30% tax

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Features of Indian Union Budget include:

It is Presented on the first day of February by the Finance Minister.

Budget lays down the Government’s plan for revenue generation and Expenditure for the upcoming financial year.

It provides information on the state of the Country’s economy, including the growth rate, Inflation, tax revenue, and foreign exchange reserves.

The budget proposals include changes in tax laws, allocation of funds to various sectors like Agriculture, education, defense, infrastructure etc.

Budget also lays down the Government’s vision and priorities for the Country’s development.

The budget is closely monitored by financial markets, industry leaders, and Economists, as it sets the tone for the Country’s Economic direction and growth prospects for the coming year.

Here are some additional points:

The Indian Union Budget is divided into two parts: the Annual Financial Statement (AFS) and the Finance Bill. The AFS contains the estimated income and Expenditure of the government, while the Finance Bill contains the proposed tax changes and other financial Legislation.

The budget also includes provisions for subsidies for certain sections of society, such as farmers, small businesses, and the economically weaker sections.
The budget also outlines the government’s plans for public sector investments, disinvestment, and borrowings.
The budget also provides information on the Government’s plans for capital Expenditures, including investments in Infrastructure and public services.
The budget is prepared after Consultation with various Stakeholders, including industry leaders, Economists, and state governments, to ensure that the Government’s plans align with the Country’s broader Economic goals.
The budget is debated and discussed in Parliament, and its approval is necessary for the government to Implement its proposals.

The budget has a significant impact on the Country’s economy, and its announcements can result in changes in stock market indices, currency values, and overall Investor Sentiment.

Here are a few more points to consider:

The budget also provides an Overview of the Government’s plan for public spending, including allocations for social sector programs such as health, education, and poverty alleviation.

It is also used to announce new policies and initiatives aimed at boosting the country’s economic growth and improving the standard of living for its citizens.

The budget is a critical document for understanding the government’s priorities and its approach to economic management.

The government’s revenue projections, expenditure plans, and policy proposals in the budget are closely scrutinized by economists, industry leaders, and media, who analyze its impact on various sectors of the economy and provide their perspective on its strengths and weaknesses.

In recent years, the Indian Union Budget has also included proposals aimed at promoting digitalization and promoting the use of technology in various sectors of the economy.

The budget also includes provisions for fiscal consolidation, such as reducing the government’s fiscal deficit and controlling inflation, which are critical for maintaining macroeconomic stability and sustaining economic growth in the long run.

Budget features

The features of the Indian Union Budget include:

Annual financial statement: The budget is presented annually in Parliament, outlining the estimated government revenue and expenditure for the upcoming fiscal year.
Tax proposals: The budget includes proposals for changes in tax laws, including changes in tax rates, exemptions, and deductions.
Allocations to various sectors: The budget allocates funds to various sectors of the economy, such as agriculture, education, defense, infrastructure, health, and social welfare.
Overview of the economy: The budget provides an overview of the state of the country’s economy, including the growth rate, inflation, tax revenue, and foreign exchange reserves.
Public sector investments: The budget outlines the government’s plans for public sector investments, disinvestment, and borrowings.
Capital expenditures: The budget provides information on the government’s plans for capital expenditures, including investments in infrastructure and public services.
Subsidies: The budget includes provisions for subsidies for certain sections of society, such as farmers, small businesses, and the economically weaker sections.
Policy initiatives: The budget is used to announce new policies and initiatives aimed at boosting the country’s economic growth and improving the standard of living for its citizens.
Macroeconomic stability: The budget includes provisions for fiscal consolidation, such as reducing the government’s fiscal deficit and controlling inflation, to maintain macroeconomic stability and sustain economic growth.
Debate and discussion: The budget is debated and discussed in Parliament and its approval is necessary for the government to implement its proposals.

Here are a few more points:

Social sector spending: The budget provides an overview of the government’s plan for public spending, including allocations for social sector programs such as health, education, and poverty alleviation.
Promoting digitalization: In recent years, the Indian Union Budget has also included proposals aimed at promoting digitalization and promoting the use of technology in various sectors of the economy.
Analysis and scrutiny: The budget is closely scrutinized by economists, industry leaders, and media, who analyze its impact on various sectors of the economy and provide their perspective on its strengths and weaknesses.
Investment sentiment: The budget has a significant impact on the country’s economy and its announcements can result in changes in stock market indices, currency values, and overall investor sentiment.
Fiscal consolidation: The budget includes provisions for maintaining fiscal discipline and reducing the government’s fiscal deficit over time to ensure long-term macroeconomic stability.
Public debt management: The budget also provides information on the government’s plans for managing its public debt, which is critical for ensuring long-term fiscal sustainability.
Inclusive growth: The budget aims to promote inclusive growth by allocating resources to sectors that benefit the most vulnerable and marginalized sections of society.
Long-term planning: The budget is a critical document for understanding the government’s priorities and its approach to economic management and provides a roadmap for the country’s economic development over the medium to long term.

Here are a few more points: Indian Union Budget

International cooperation: The budget often includes provisions for international cooperation, such as aid to other countries, contributions to international organizations, and support for global initiatives.
Financial sector reforms: The budget may also include proposals for financial sector reforms aimed at improving access to finance, promoting financial inclusion, and strengthening the regulatory framework for the financial sector.
Encouraging private investment: The budget often includes measures aimed at encouraging private investment, such as tax incentives, subsidies, and other forms of support, to stimulate economic growth and job creation.
Stimulating economic growth: The budget is an important tool for stimulating economic growth by providing resources for investment, also supporting innovation, and promoting entrepreneurship.
Transparency and accountability: The budget is prepared in a transparent and accountable manner, with regular updates and also provided on the implementation of its proposals and the allocation of resources.
Public participation: The budget is prepared after consultation with various stakeholders, including industry leaders, economists, and state governments, to ensure that the government’s plans align with the country’s broader economic goals and reflect the priorities of its citizens.

Monitoring and evaluation: The budget includes provisions for monitoring and evaluating its impact, to ensure that its objectives are being achieved and that resources are being used effectively.

All about Direct Taxes in India

Direct taxes in India refer to taxes that are imposed directly on individuals and companies and also paid directly to the government. They are a key source of revenue for the government and also play an important role in funding public spending and supporting the country’s economic development. The main types of direct taxes in India are:

Income tax: This is a tax on the income earned by individuals, Hindu Undivided Families (HUFs), companies, firms, and also other entities. The tax is levied on the taxable income, which is calculated after deductions and exemptions are taken into account.
Corporate tax: This is a tax imposed on the profits earned by companies and firms. It is calculated as a percentage of the profits earned by the company and is also one of the major sources of revenue for the government.
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Direct Taxes in India

Securities transaction tax (STT): This is a tax imposed on the sale or purchase of securities, such as stocks and bonds. It is calculated as a percentage of the value of the securities transaction.
Wealth tax: This is a tax imposed on the net wealth of individuals, companies, and other entities. The tax is levied on the value of assets such as property, gold, and other valuable items, minus any liabilities.
Gift tax: This is a tax imposed on gifts received by individuals from others. The tax is calculated as a percentage of the value of the gift and is imposed on the recipient.

The Indian tax system is governed by the Income Tax Act of 1961 and the Direct Taxes Code (DTC). Which was introduced in 2010 to simplify the tax laws and improve the administration of direct taxes. Direct taxes in India are subject to regular review and revision. With changes being made to the tax laws to ensure they remain relevant and effective.

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All about Indirect Tax in India: Indian Union Budget

Indirect taxes in India refer to taxes that are levied on goods and services. And are collected by intermediaries such as retailers and manufacturers. Rather than being paid directly to the government by individuals or companies. The intermediaries then pass on the tax to the government as part of the price of the goods or services. Indirect taxes play a crucial role in funding public spending and supporting the country’s economic development. The main types of indirect taxes in India are:

Value Added Tax (VAT): This is a tax on the sale of goods and services. Calculated as a percentage of the value added at each stage of production and distribution. It is now replaced with GST.
Central Excise Duty: This is a tax imposed on the manufacture of goods. And is calculated as a percentage of the value of the goods being manufactured.
Service Tax: This is a tax imposed on the provision of services. And is calculated as a percentage of the value of the services being provided.
Customs Duty: This is a tax imposed on the import or export of goods. And is calculated as a percentage of the value of the goods being traded.
Central Sales Tax (CST): This is a tax imposed on the sale of goods between states in India. And is also calculated as a percentage of the value of the goods being sold.

The Indian tax system is governed by the Central Goods and Services Tax (CGST) Act. Which was introduced in 2017 to simplify the indirect tax system and improve its administration. Indirect taxes in India are subject to regular review and revision. With changes being made to the tax laws to ensure they remain relevant and effective in meeting the country’s economic needs.

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All about GST in India

Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services in India. It was introduced on July 1, 2017 and replaces several indirect taxes such as Value Added Tax (VAT). Central Excise Duty, and Service Tax. The main features of GST in India are:

Dual GST: India has a dual GST system, where both the central government and the state government can impose GST. The central government levies Central GST (CGST) and the state government levies State GST (SGST).
Input Tax Credit: GST allows for the credit of taxes paid on inputs (raw materials, components, etc.) to be used to offset the taxes payable on outputs (finished goods and services). This helps to reduce the tax burden on businesses and promotes efficiency in the supply chain.
GST Council: The GST Council is a federal institution responsible for making decisions on GST-related matters. Such as rate structure, exemptions, and administrative procedures. The council is composed of the finance ministers of the central and state governments.
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Goods and Services Tax (GST)

GST Rates: GST has four slabs for tax rates – 5%, 12%, 18% and 28% – for different types of goods and services. Essential items such as food and medicines are taxed at lower rates. While luxury goods and services are taxed at higher rates.
GST Returns: GST requires businesses to file regular returns detailing their sales, purchases, and tax liabilities. These returns are used by the government to monitor compliance and ensure that businesses are paying the correct amount of tax.
GSTN: The GST Network (GSTN) is the IT infrastructure that provides the technology platform for the implementation of GST in India. It is responsible for maintaining the database of taxpayers, processing returns, and facilitating the payment of taxes.

GST has brought about a significant change in the indirect tax regime in India, leading to a simpler. More efficient, and also more transparent system for the collection of taxes on goods and services. It has also increased the tax base and improved the government’s revenue collection. Thereby contributing to the country’s economic growth and development.

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GST Slab rates in India

The Goods and Services Tax (GST) in India has four tax slabs for different types of goods and services:

5% GST: This is the lowest tax rate and is applied to essential goods such as food items, including fruits and vegetables. Dairy products, and salt.
12% GST: This tax rate is applied to items such as processed foods, smartphones, and kitchen appliances.
18% GST: This tax rate is applied to a wide range of goods and services. Also including furniture, packaged food items, and electronic goods.
28% GST: This is the highest tax rate and is applied to luxury goods and services. Such as high-end cars, large screen TVs, and five-star hotel rooms.

In addition to these four tax slabs, there are also some goods and services that are exempt from GST or attract a special rate of 0.25%. These include items such as fresh fruits and vegetables, medical devices, and educational services. The GST Council periodically reviews the tax slabs and makes changes. As necessary to ensure that the GST system is effective and efficient in meeting the needs of the Indian economy.

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All about HSN Code

HSN Code stands for Harmonized system nomenclature code and is a standardized system used to classify goods and services for tax purposes. It is a numeric code that is used by customs authorities, tax authorities. And other government agencies for the purposes of collecting taxes. Monitoring trade, and tracking the flow of goods and services.

The HSN Code is an internationally recognized system, and is used in more than 200 countries, including India. It also helps to ensure consistency in the classification of goods and services across different countries. Making it easier to monitor and control trade. In India, the HSN Code is also used for classifying goods and services under the Goods and Services Tax (GST) regime.

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Each HSN Code is Comprised of a series of digits

Each HSN Code is Comprised of a series of digits that represent different levels of Classification. For example, the first two digits represent the chapter level. The next two digits represent the heading level, and the final two digits represent the Subheading level. The HSN Code also helps to ensure that goods and services are Correctly taxed. And by Providing a Standardized system for Categorizing them.

Businesses are required to mention the Relevant HSN Code in their Invoices, tax returns. And other Documentation when they are selling goods or services. This helps the government to monitor and track the flow of goods and services. And also to ensure that the correct amount of tax is being paid. The HSN Code is updated Periodically to ensure that it remains Relevant and effective in meeting the needs of the Indian economy.

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All about CGST and SGST

CGST and SGST are two types of taxes levied under the Goods and Services Tax (GST) regime in India. They are used to tax the supply of goods and services in India.

Central GST (CGST): This is a tax imposed by the central government on the supply of goods and services within a state. The revenue Collected from CGST goes directly to the central government.

State GST (SGST): This is a tax imposed by the state government on the supply of goods and services within a state. The revenue Collected from SGST goes directly to the state government.

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Both CGST and SGST are Applicable on the same Transaction

Both CGST and SGST are Applicable on the same Transaction. And the total tax Liability is calculated as the sum of both taxes. For example, if the total GST rate is 18%, 9% would be levied as CGST and 9% as SGST.

In the case of Inter-State supply of goods and services, the central government levies Integrated GST (IGST). Which is the combination of CGST and SGST. The revenue from IGST is also divided between the central and state governments in Accordance with the Provisions of the GST Act.

The dual GST system in India helps to ensure that the tax revenue is shared between the central and also state governments. And promotes the Harmonization of Indirect tax laws across the country. This also helps to reduce the tax burden on Businesses and makes the tax system more Efficient and Transparent.

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Budget Presented by Indian Finance Minister till Now

Here is a list of Indian Finance Ministers who have Presented the Union Budget in the Parliament till now:

Morarji Desai (1957–1958)
T. T. Krishnamachari (1958–1959)
N. G. Ranga (1959–1960)
Lal Bahadur Shastri (1960–1963)
T. T. Krishnamachari (1963–1964)
Indira Gandhi (1964–1966)
Morarji Desai (1966–1967)
Yashwantrao Chavan (1967–1970)
Sachindra Chaudhuri (1970–1971)
N. K. P. Salve (1971–1973)
Yashwantrao Chavan (1973–1974)
C. Subramaniam (1974–1977)
H. M. Patel (1977–1979)
R. Venkataraman (1979–1980)
Pranab Mukherjee (1982–1984)
V. P. Singh (1984–1987)

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N. D. Tiwari (1987–1988)
Madhu Dandavate (1988–1989)
S. B. Chavan (1989–1990)
Yashwant Sinha (1990–1991)
Manmohan Singh (1991–1996)
P. Chidambaram (1996–1998)
Yashwant Sinha (1998–2002)
Jaswant Singh (2002–2004)
P. Chidambaram (2004–2008)
Pranab Mukherjee (2009–2012)
Palaniappan Chidambaram (2012–2014)
Arun Jaitley (2014–2018)
Piyush Goyal (2018–2019)
Nirmala Sitharaman (2019–present)

Note: The above list only includes the Union Budgets Presented in the Parliament of India. And does not include Interim Budgets or Vote on Account Budgets.

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New Tax slab rates for Direct Taxes 2022: Indian Union Budget

The latest tax slab rates 2022 for direct taxes in India are as follows:

Individuals and Hindu Undivided Families (HUFs):

Taxable income up to 2.5 lakhs: No tax
Taxable income between 2.5 lakhs to 5 lakhs: 5% tax
Taxable income between 5 lakhs to 7.5 lakhs: 10% tax
Taxable income between 7.5 lakhs to 10 lakhs: 15% tax
Taxable income between 10 lakhs to 12.5 lakhs: 20% tax
Taxable income between 12.5 lakhs to 15 lakhs: 25% tax
Taxable income above 15 lakhs: 30% tax

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Companies:

Domestic companies: 22% tax

Companies engaged in the manufacture or production of goods: 25% tax

Foreign companies: 40% tax

Please note that these tax slab rates are subject to change and can also be revised in future budgets. It is advisable to check the latest tax laws and regulations to get an accurate and up-to-date picture of the direct tax regime in India.

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