Glossary Terms Related to Budget

Following are some of the commonly used terms in connection with the Indian Budget.

Ad- Valorem Duties :- Defined as those duties that are established as a certain percentage of the price of the product.

Appropriation Bill :- It is a bill that authorizes payment and appropriation of expenses from the Consolidated Fund. This bill is introduced only after the general discussion on budget proposals and the completion of voting on grants. The procedure to pass the bill in parliament is like other money bills.

Bill :- It is a well drafted legislative proposal that later becomes an Act on being approved by both the Lok Sabha and Rajya Sabha.

Budget/ Annual Financial Statement :- According to the section – 112 of the Indian Constitution, the government presents a statement of estimated receipts, expenditure and a detailed plan that is presented for every financial that is for 1st of April to 31st March of each year.

There are usually three divisions of budget and for each of them a statement of expenditure & receipts are presented. These three divisions include – Contingency Fund, Consolidated Fund and Public Account.

Budget Estimates :– These are assessment of expenditure by the government for a year. This also includes the estimate of Revenue Deficit and Fiscal Deficit for the year.

Budget Deficit :- When the expenditure becomes more than revenues, then the budgetary exercise is considered a failure as there is shortage of funds. Such a situation is said to be a 'Budget Deficit'.

Capital Budget :- This budget comprises of loans & advances that are granted to Union & State territory by the Union government, corporations, government companies and other parties. Capital budget also includes capital receipts and payments by the government.

Capital Expenditure :- The total expenditure by the government on acquiring any asset that may include investment in shares, machinery, building or land. The scope of capital expenditure extends to payments, advancements or loans that are approved or sanctioned to the State governments, union territories, public sector undertakings by the Central government.

Countervailing Duties :- These duties are imposed on all imports inorder to thwart any kind of unfair trading practices carried by the foreign countries.

Consolidated Fund :- This fund is made of the revenues that is received by Government plus the loans that is raised by this revenue as well as the receipts from recoveries of loans granted by it.

Contingency Fund :- The fund that is used by the government in order to meet the unforeseen expenditure or incase to meet emergencies. The contingency fund is generally used when the government cannot wait for long for the parliament to authorise the expenses on the expenditure.

CENVAT :- This scheme is implied for most of the goods and reduce the cascading effect of indirect taxes on finished products.

How to invest in PPF?

Any financial advisor would definitely recommend an investment in PPF (Public Provident Fund) as one of the means to build long-term wealth. You can make investments in this scheme every year (in a maximum of twelve instalments) right from Rs 500 upto Rs 1 lakh. You can make investments either in your name or on behalf of a minor. While the tenure of the PPF account is fixed at 15 years, you can extend it for a further block of five years too. From 2012, interest on the PPF account will be notified by the government at the beginning of every year (April 1). PPF investments are eligible for deduction under Section 80C of the Income-Tax Act. Here's the lowdown on how you can open a PPF account.

POST-OFFICES AND BANKS

Along with instruments such as the MIS and NSC, PPF is part of the small savings scheme run by the post office. Hence, one of the options is to maintain your PPF account in the nearest post-office. Opening the account involves filling up a simple two-page application form and the tendering of cash/cheque for the initial subscription. Your passport size photograph, PAN and address proof are the basic requirements.

In case the PAN is not available, an attested copy of the ration card, voter identity card or passport can be submitted. If you are opening an account on behalf of your minor son or daughter, a copy of his/her birth certificate may also be needed. When you open the account, you will be given a passbook. The passbook needs to be updated for every investment you make and for the interest you receive. You will also get a receipt for every deposit you make which can be shown as a proof of tax-saving investment at your office. This will help reduce the TDS outgo from your salary. Besides post-offices, most public sector banks also help you open PPF accounts with them. The account opening and documentation requirements here are largely the same.

ONLINE INVESTMENTS

With almost every investment option, be it stocks, mutual funds, fixed deposits or bonds, available at the click of the mouse, can PPF investments be made online too? Well, you cannot if you have an account with the post-office.

But some banks permit online transfers. For example, if you have your PPF account with SBI and your salary/savings account with ICICI Bank, you can log into net banking and add the SBI PPF account as a payee/beneficiary for transfer from your ICICI account. Similarly, money from your Citibank savings account can be transferred to your State Bank of Mysore PPF account.

Moreover, if you have a savings account and the PPF account with the same bank, these two can be linked. In this case, you need not add the PPF account as a third-party beneficiary. You can directly transfer money. Also, you can view the credits to the PPF account online just like how you see your bank statements.

So, if you have savings/PPF account with other private/public sector banks, do a quick check with your banker. In case the bank does not allow online transfers, you can transfer your account to a bank that does. A post-office PPF account too can be transferred to a bank.