Finance Minister Nirmala Sitharaman is going to present this year's budget on 1 February. In this, you will get information about the income and expenses of the government in the coming financial year.
The importance of this budget is also because in the midst of a declining economy, Modi Government 2.0 will have a big chance to tell the general public and businessmen that it is taking this economic slack seriously and is taking steps to get out of it.
But before the budget, it is important to understand some of the terms related to it so that the budget can be understood.
- What will happen to the falling economy
- 'Indian economy is growing at zero, not five'
1. Fiscal deficit
When the expenditure is more than the total annual income of the government, it is called fiscal deficit. It does not include loans.
Announcing the budget in the year 2017, Finance Minister Arun Jaitley said that he expected the fiscal deficit to be 3.2% of the total GDP in the year 2017-18. This was lower than its previous financial year's target of 3.5%.
It is anticipated that the budget will be populist in which the government will announce more spending to woo the voters and may also change the tax limit.
2. Personal income tax exemption limit
At present, there is no tax on annual earnings up to Rs 2.5 lakh.
However, it is anticipated and it is being expected that the government is planning to increase the personal income tax limit to increase the purchasing power of the people.
- Why don't there be an uproar on the price of a penny
- Will this figure touch the Indian economy?
Direct and indirect taxes
Direct taxes are those which the citizens of the country pay directly to the government. In this, tax is levied on an individual's income and it cannot be transferred to any other person.
Direct tax includes income tax, wealth tax and corporate tax.
Indirect taxes are those in which the tax burden can be transferred to another person like a service provider and manufacturer imposes tax on the service or product.
The example of indirect tax is GST which has replaced different taxes like VAT, sales tax, service tax, luxury tax.
4. Financial year
The financial year in India starts from April 1, which runs till March 31 of the next year. This year's budget will be for the financial year 2021, which will be from April 1, 2020 to March 31, 2021.
5. Short term and long term gains
Currently, if a person makes a profit by investing in the stock market for less than a year, then it is called short-term capital gain. It is taxed at 15%.
The money held in stocks for more than a year is called long-term capital gains.
Long-term capital gains of more than one lakh on the sale of equity shares and units of equity oriented funds have been levied 10 percent tax on transfers on or after April 1, 2018. Earlier it was not taxed.
There is a possibility that the government may change the time limit for long term capital gains. This will cause the shares to hold for a long time, so that the capital gains on them can be tax free.
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