Ever heard of something called the Indian Union Budget and got confused? Worry not. Let’s chat about it at the cafe down the road with your favorite drink. Most simply, I will explain what the Indian Union Budget is.
What is the Indian Union Budget?
Indian Union Budget, by definition, is kind of a government’s wish list made at the beginning of the year. It describes how your country plans to earn and lose its cash over the year. It is quite similar to when you plan your salary by calculating rent and the groceries you have to buy but on a larger scale!
Union Budget Structure
Finally, let’s take a look at this huge finance plan. A Union Budget is divided into two parts, a Revenue Budget, and a Capital Budget.
A Revenue Budget deals with the everyday expenses of the government, such as salaries, subsidies, and interest payments.
Whereas the Capital Budget is about long-term investments, like building roads, schools, and hospitals.
Definitions and Meanings, Glossary
Sure! In simple words, some words you may see when we talk about budgets:
Fiscal Deficit: The difference between what the government earns and what they spend.
Revenue Deficit: The difference between the government revenue and regular expenses.
Capital expenditure: money spent in making buildings or infrastructure. It is like learning another language but for me makes a lot of sense once I master it.
Breaking Down the Big Words:
Let’s break down a few of those terms that may not make a whole lot of sense:
Income Tax Rate Cut:
This is essentially when the government gives you a little present, reducing the portion of your income you owe in taxes to them. The government has decided that they will take less of your pie!
Example:
So, let’s say you make ₹5 lakh in a year and the current income tax rate for the slab you fall into is 20%. It’s pretty simple: you owe the government ₹1 lakh. So, we can work out your taxes by saying ₹5 lakh cō 20% = ₹1 lakh. Boom!
The government goes ahead and says “We’re going to give you a 5% income tax rate cut for your slab.” So instead of having to pay 20%, you only need to pay 15%. We know that 20% of ₹5 lakh is ₹1 lakh, so 15% is… ₹75,000! You can now keep an extra ₹25,000.
Standard Deductions:
A fixed amount that you can reduce from your taxable income, which in turn reduces the overall tax that you pay. It’s like an eraser for a part of your income. Let me explain in detail:
Example:
- For example: Let us consider standard deductions as to the gift card that the government provides you at the beginning of your every tax season. It’s a fixed amount that you can reduce from your taxable income. And, because of that, overall you pay less tax. Look at how it works:
- Let us say that you earn up to Rs 5 Lakh a year.
- According to the New Tax Regime in Budget 2024, the standard deduction is Rs 75,000.
- Subsequently, you can reduce Rs 75,000 from a total income of Rs 5 Lakh. Therefore the total taxable income you will be left with is Rs 4.25 lakh
- Now, magic happens; you have to pay only tax on your taxable income, that is Rs 4.25 lakh, not on your total earnings.
The standard deduction vs Itemized Deductions:
I think that standard deductions are an easier option for all of you. You need not hurry to get each of the receipts of your rent, travel, or medical bill as it is in the case of the itemized deduction. It is kind of a one-stop solution for reducing your tax. But, let me tell you, there’s one hitch as well.
Sometimes, standard deduction may not be your best option; especially when you have multiple such expenses that are deductible. For example, if you are paying a hefty amount as rent every month, maybe itemizing your deductions will save you much more money in place of the standard deductions. The gist of it is: perform your calculations. Figure out whichever one externalizes to be more profitable. And, let me tell you, many online calculators and resources are present that can assist you that provided that.
Bear in mind: Like the standard deduction amount I stated, it can change each year so try to keep up with when each year the new Union budget will be presented.
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Some key terms
- TDS: Tax Deducted at Source; it’s like an advance tax payment deducted from your salary or other sources. It’s kind of like a pay-as-you-go system to make sure that everybody pays in.
- Income tax slab: these are different “brackets” of how much money you’re earning; each one has a different tax rate. You can think of it like a tiered system – the more you earn, the higher percentage you have to pay (usually).
Is there anything specific you would like me to help with?
Glossary of Budget Lingo (No More Googling!):
There are many more terms used in the budget, but fear not! Here’s a quick reference sheet :
- Rebate: Like getting a partial refund on your taxes – bonus!
- Excise duty: a tax levied on certain goods produced within the country
- Customs duty: a tax on imported goods
- Fiscal deficit: The government spends more than its earnings source.
This is just a taste of the budgetary beast, but hopefully, it demystifies things a bit. Remember, you can find more detailed information on the official websites like https://www.indiabudget.gov.in/ or even Wikipedia (https://en.wikipedia.org/wiki/Union_budget_of_India).
So, what does this mean for you?
Well, the budget has an impact on your wallet in lots of different ways. Maybe you’ll get a tax break, and you’ll have a bit more spare cash every month. Maybe the government has decided to invest in improving the infrastructure of your city. Understanding the budget will help you make the best decision about spending and saving your money.
Union Budget 2024-25
Well, let’s discuss the hottest topic today – the Union Budget 2024-25. This year’s budget is more exciting! Just a fun fact – do you know when the Union Budget date is? It is usually the very first day of February. It’s like a tradition already.
Read Also: Indian Lok Sabha Elections 2024.
Highlights of Union Budget 2024-25
So, here are some of the hottest features of the Union Budget 2024-25:
- Infrastructure: The budget overflows with money for building better roads, railways, and airports.
- Healthcare: More money for hospitals and health services, especially after the COVID-19 pandemic.
- Education and Skills: More means for running schools and training programs.
Looks like the government is updating their software to build a better future.
Union Budget 2024 Summary
Overall, it looks like the Budget 2024 by the Union is balanced between growth and inclusivity. There are a lot of investments and developments in infrastructure, health, and education that are very important for any country to prosper. No doubt, these technologies might be extremely useful but the country depends on its people, and it is important to raise a healthy, well-educated, and developed population first.
Indian Budget History
Just a quick reminder, when was the first Indian Budget presented? It was the first Budget of the country that R.K. Shanmukham Chetty presented in the independent India of 1947. Can you believe it? Since that time the Union Budget has been presented every year. Just as our personal budget evolves, the government must adapt the budget to the ever-changing needs of the country. It establishes principles and frameworks for the allocation of money in different buckets.
Why Should You Care?
Now some may wonder: why should I be interested in the topic of the Union Budget? The fact is that this document has an impact on everything from the price of your morning coffee to the quality of the roads you drive on. By becoming familiar with this document, you will gain a stronger understanding of how our economy works and how government decisions influence our day-to-day lives.
Personal Opinion
I recall my first attempt to understand the Union Budget, and it seemed like trying to read Japanese. Then, I started associating it with my budget, and everything brightened for me. To date, it shocks and intrigues me – you feel like a detective trying to unravel a huge mystery!
Final Thoughts
From this point forward, every time you hear about the Union Budget, you will know that it is more than a set of numbers. It is a plan shaping the future of our country and our lives. Now you will know the central dates and some of the highlights. Do not be afraid to dig deeper if you feel interested. Is there something you wanted to know or share about the Union Budget? Your ideas and questions are highly appreciated in the comments below!
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