The Union Budget 2026 will be presented in Parliament on February 1, 2026, by Finance Minister Nirmala Sitharaman. Also called the Annual Financial Statement (AFS), it outlines the government’s plan for income and spending in the coming financial year. To understand the announcements better, here is a guide to important budget terms explained.
Budget Estimate (BE): This is the government’s forecast of how much money it expects to earn and spend in the upcoming year.
Capital Expenditure (Capex): Money spent on building long-term assets like roads, railways, schools, hospitals, machinery, and defence equipment. These investments are meant to boost growth.
Revenue Expenditure: Day-to-day expenses needed to run government departments and services. Examples include salaries, pensions, subsidies, interest payments, rent, and maintenance of existing assets.
Capital Receipts: Funds that either reduce government debt or add to its assets. These are usually one-time sources of money used for investments or to cover deficits.
– Debt Capital Receipts: Borrowings through bonds, treasury bills, loans from banks, RBI, or foreign institutions.
– Non-Debt Capital Receipts: Money from selling government stakes in PSUs (disinvestment), recovering loans, or selling assets like land.
Cess: An extra tax collected for a specific purpose, such as Education Cess or Swachh Bharat Cess.
Consolidated Fund of India (CFI): The main government account under Article 266(1). All revenues from taxes, PSU profits, and other sources go here, and all government spending is drawn from it.
Contingency Fund: Money kept aside for emergencies like natural disasters. It is set up under Article 267(1) and managed by the Finance Secretary on behalf of the President.
Direct Taxes: Taxes paid directly by individuals or businesses on their income. These are overseen by the Central Board of Direct Taxes (CBDT).
Indirect Taxes: Taxes collected on goods and services, such as GST, customs duty, excise duty, and stamp duty.
Divestment: When the government sells its shares in public sector companies to raise money, reduce debt, or encourage private participation.
Economic Survey: A report released a day before the Budget. It reviews the country’s economy over the past year and highlights government policies and programs.
Finance Bill: A bill introduced in Parliament that contains tax proposals and financial rules. It is governed by Articles 110 and 117 of the Constitution.
Fiscal Deficit: The gap between government spending and income (excluding borrowings). It shows the financial health of the country and is expressed as a percentage of GDP.
Fiscal Policy: The government’s overall plan for taxation, spending, and borrowing to achieve growth and stability.
Inflation: The rate at which prices rise, reducing the purchasing power of money. Controlled inflation supports healthy economic growth.
New Tax Regime: Introduced in 2020-21 and made default from 2023-24. It offers lower tax rates but fewer exemptions.
Old Tax Regime: The earlier system with higher tax rates but more deductions and exemptions.
Public Account: Funds held by the government on behalf of citizens, such as provident funds, small savings, and deposits.
Rebate: A reduction in the final tax payable if income is below a certain limit.
Revenue Deficit: When the government’s regular income is less than its routine expenses.
Revenue Receipts: Money earned from taxes, fees, and interest. These do not create debt or reduce assets.
Tax Collected at Source (TCS): Tax collected by sellers from buyers at the time of sale of certain goods or services.
Tax Deducted at Source (TDS): Tax deducted when making payments like salaries, rent, or professional fees, and deposited with the government.
Tax Surcharge: An extra tax charged on top of the basic tax, usually for high-income earners or certain companies.
