Union Budget 2025: Glossary of Terms You Need to Know Ahead of the Presentation

The Union Budget of India is one of India's most anticipated events. The eighth Union Budget, carrying the government's objectives for revenue and expenditure for the next fiscal year, will be presented by Finance Minister Nirmala Sitharaman on February 1. 

The Union Budget has a significant impact on how the nation's economy develops, affecting every individual, industry, and enterprise. The budget reflects the government's priorities, policy orientation, and approach to national development.

As the Union Budget 2025 approaches, it is important to become familiar with some of the key phrases and concepts that will probably be covered in the presentation. Whether you are an economics student, a professional in the finance sector, or just a citizen interested in learning how budget decisions might affect your day-to-day life, having a firm understanding of these terminologies will help you comprehend the nuances of the Union Budget.

This thorough glossary of key terms related to the Union Budget will make sure you are prepared to follow the debates and analyses that will take place after the presentation. These phrases, which range from technical financial terms to economic policies, can assist you in understanding the government's fiscal objectives and the budget's wider economic implications. 

Union Budget 2025: List of Key Terms Used in Budget Presentation

Appropriation Bill: A legislative proposal that is introduced in Parliament to authorise government expenditure for the financial year, which becomes law upon approval.

Assets: Economic resources owned by the government, such as infrastructure, investments, and land, which have monetary value.

Annual Financial Statement (AF): A fundamental document detailing the government’s projected income and expenditure for the upcoming financial year, which guides the Budget allocation.

Budget Estimates (BE): The government’s forecast of expected revenues and expenses for the upcoming financial year.

Balanced Budget: A situation where the government’s revenue equals its expenditure, with neither a deficit nor a surplus.

Borrowings: Money raised by the government through loans or the issuance of bonds to cover a fiscal shortfall.

Capital Expenditure: Government spending directed at acquiring or improving assets such as infrastructure, educational institutions, and healthcare facilities, with long-term economic benefits.

Consolidated Fund of India: The primary account that houses all government revenues, loans, and other receipts, from which most government expenditure is made.

Customs Duty: A tax imposed on goods brought into or sent out of the country.

Capital Receipts: Funds raised by the government through borrowing or the sale of assets, differing from regular revenue as they usually consist of one-time transactions.

Cess: An additional tax on top of existing taxes, earmarked for specific purposes such as healthcare or education funding.

Contingency Fund: A reserve fund for the government to manage unforeseen or emergency expenses, with withdrawals requiring parliamentary approval.

Deficit Financing: The method of covering a fiscal deficit by borrowing funds or printing additional currency.

Direct Taxes: Taxes collected directly from individuals or corporations, such as income tax or corporate tax.

Disinvestment: The process by which the government sells off its stake in public sector companies to raise capital.

Excise Duty: A tax on goods produced or manufactured within the country.

Expenditure Budget: A comprehensive document detailing the government’s planned spending, categorising it as either revenue or capital expenditure.

Economic Survey: A comprehensive report released annually before the Union Budget, reviewing the country's economic performance and offering a forecast for the upcoming fiscal year.

Finance Bill: A legislative document introduced to Parliament outlining proposed changes to taxation laws for the upcoming financial year. The Budget cannot be implemented without it.

Fiscal Deficit: The gap between the government’s total expenditure and its revenue, excluding borrowings.

Fiscal Policy: The government's strategy for managing taxation and spending to stabilize the economy, control inflation, and promote growth.

Fiscal Responsibility and Budget Management (FRBM) Act: A law designed to ensure fiscal discipline by setting limits on the government’s borrowing and fiscal deficit.

Goods and Services Tax (GST): A unified tax system that replaced various indirect taxes like VAT, excise duty, and service tax, simplifying the tax process on goods and services.

Grants-in-Aid: Financial assistance provided by the central government to states or institutions for specific purposes or projects.

Head of Expenditure: Categories under which the government organizes its spending, such as education, healthcare, or defense.

Indirect Taxes: Taxes that are applied to goods and services, like GST or customs duties, which are collected by intermediaries from consumers.

Inflation: The rate at which the prices of goods and services increase, eroding purchasing power.

Non-Tax Revenue: Government income derived from sources other than taxes, including fees, fines, and interest on investments.

New Tax Regime: Introduced in 2022, this simplified tax system offers lower tax rates with no exemptions or deductions, aiming to reduce compliance burdens.

Old Tax Regime: The previous tax system that allowed for exemptions and deductions, providing higher tax rates across fewer tax slabs.

Primary Deficit: The fiscal deficit excluding interest payments, reflecting the government's current borrowing needs.

Public Account: A government account that manages transactions like savings schemes and provident funds.

Revenue Deficit: The shortfall when the government's expenditure exceeds its revenue receipts, indicating a lack of funds to meet regular operational expenses.

Revenue Expenditure: The government’s spending on ongoing services, such as salaries, pensions, subsidies, and interest payments.

Revenue Receipts: Income the government generates from taxes (both direct and indirect) and non-tax sources like fees and dividends.

Rebate: A reduction in tax liability, often provided to incentivize specific economic behavior, such as savings or investment.

Surplus Budget: When government revenue exceeds its expenditure, resulting in a surplus.

Vote-on-Account: A temporary grant issued by Parliament for government spending until the full Budget is approved, essentially acting as an interim measure.

Tax Collected at Source (TCS): A system where sellers collect tax from buyers at the point of sale and remit it to the government.