Union Budget 2024: A handy FAQ guide to decode the upcoming budget

• Union Budget 2024 to be presented on July 23, 2024, at 11 am
• Changes in the new income tax regime possible in the budget
• Budget is a detailed estimate of the government's revenue and expenses

Next week, Nirmala Tai will present the 2024 union budget. While the internet is already abuzz with the endless expectations of different industries and sectors, what the common man wishes for, and more, are we aware of how the budget comes to life in the first place? What do some of its terms like expenditure and revenue budgets even mean? And what exactly is the finance bill? If you have all these questions running through your mind, here's a ready reckoner for you, answering all your questions

1. Why should I care about the budget?
Most of all, because it holds the answer to how your money will be taxed in the coming financial year, or years. Yes, you can (and perhaps will) choose to gloss over most of it, like when Tai talks about its capital expenditure or allocations made to various ministries. But you should know if there are any major changes introduced in the existing income tax slabs, because that would mean an automatic increase or decrease in your taxes.

If there are some deductions or exemption that have just been introduced and can help you reduce your taxable income, you'd certainly want to use it to your benefit, wont you? (Unless you're a stickler for paying high taxes)! But for that, you should first know how your hard-earned money is being taxed, and that is why, you should tune into the upcoming union budget.

2. What will happen to Income taxes in this budget? Will they be cut?
We wouldn't know anything for sure until July 23rd, but there is news that the new tax regime might be made more attractive for the salaried class by way of increasing the standard deduction threshold (which is currently Rs 50,000 for both old and new regime), or by raising the total deduction limit under the old regime from the present Rs 2,00,000.

Akhil Chandna, Partner at Grant Thornton Bharat also believes enhancing the standard deduction limit will do a world of good to salaried Indians. "With the introduction of the standard deduction in 2018 and the last increase in 2019 from ₹ 40,000 to ₹ 50,000, it is essential to raise the threshold to ₹75,000 now to align with current living costs and inflation. Raising the standard deduction can help improve people's purchasing power, especially those with fixed incomes like pensions", he said.

Krishan Mishra, CEO, FPSB India also wishes for the tax exemption limit under new regime be raised from Rs 7 lakh to Rs 10 lakh, since "it will be a crucial step to encourage savings and investments among the mid-income group and will provide much-needed relief to taxpayers".

The government may make the new tax regime more lucrative by enhancing its basic exemption limit (up to which no income tax is payable) from Rs 3,00,000. But that's a lot of MIGHTS, that will have to wait the final bell till 23rd!

3. How is the Budget is prepared?
It is a lengthy, long-drawn process, which starts with the finance ministry asking all departments, states, ministries and union territories to give them an estimate of how much money they'd potentially need during the year. In addition to this, they also have to present details of all their revenues and expenditures in the past year. Then begins a super duper long process of consultations and discussions and deliberations and consultations and dialog (you get the gist!), after which the allocations are made.

Weeks before the budget presentation, the finance minister also meets representatives from various industries like agriculture, trade, manufacturing and more to know what they want. Based on that, the budget is fine tuned.

9-10 days before the budget is to be presented in the parliament, a halwa ceremony takes place, which commenced today, marks the start of budget printing. From this time on, the finance ministry staff goes super hush-hush and in lockdown, with no one allowed to leave the ministry premises till the budget is tabled in the parliament.

4. Why did India have 2 budgets this year?
Because 2024 was an election year. That is why you saw an interim budget in February, where the government presented a budget, the aim of which was just to fund its regular expenses and spending over the next 2-3 months, till elections. After the elections, it is the responsibility of the newly elected government to prepare a full-fledged budget. Think of this as borrowing from your friends just to fund your mid-month, small term, interim cash crunch. You pay them back as soon as you get your salary, and your budget is set again (at least for the time being!)

5. What are the various types of budget documents
The union budget is a hefty set of documents! There's Annual Financial Statement, which lays out how much money it needs in revenue, and how much does it plan to spend that during the year. There's demands of grants, which tells us how these receipts and expenditures will be utilised by different ministries and departments, down to each scheme. There's the finance bill, which outlines any changes the government intends to make, in order to raise these proposed funds. This primarily includes change in tax structures.

Then there is appropriation bill, which highlights how the government plans to withdraw money from the consolidated fund of India (where all of government's revenue from income tax, customs and excise and other sources flow in). Once approved, both finance and appropriation bill become acts.

The extremely complex sounding "medium term fiscal policy cum fiscal policy strategy statement" has all your important macro- economic indicators like GDP, fiscal deficit, revenue deficit, primary deficit and more.

But of course, you can skip through all this to just check out budget at a glance and highlights, which presents the key features and decisions made in the budget in a concise manner.

6. What is a revenue and expenditure budget?
Think of this as a detailed breakdown of how the government plans to raise money for everything during the year by of tax or non-tax revenues, borrowings and more. The revenue budget also outlines how much revenue the government had to forego to fund various tax incentives or subsidies.

There's no chance you wont spend what you've earned! And so, how the government plans to spend its receipts are mentioned in the expenditure budget. It highlights what each ministry gets, how much money will be spent on a certain scheme and more.

7. What is a populist budget?
No, its not another budget document, but just a fancy name for a budget that is prepared with the sole intention to appeal to the people by slashing down income taxes, increasing subsidies and spending more on social schemes. Such a budget might seem lucrative in the short run, but it do not contribute to the country's long-term economic development in any way. On the contrary, it only adds to the overall fiscal burden of the country.

Its as if a character came in for a short cameo in your favorite series, won people's hearts, and then vanished into thin air, with no meaningful contribution to the story line. You'd feel short-changed, wont you?

So, time to listen to Nirmala Tai and the budget's humdrums with some understanding and interest!

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