The document provides an overview of the key aspects of the Indian Union Budget for 2015-16, including: 1) The meaning, objectives, and coverage of the Union Budget. 2) Details on revenue receipts including tax revenues, non-tax revenues, and principles of taxation. 3) Details on expenditure including plan expenditure focused on development and non-plan expenditure on administration. 4) Background and key proposals in the 2015-16 budget related to direct and indirect taxes, financial management, infrastructure, education, and social security.

1. Fundamentals of Union Budget & Budget
2015-16
-B.V.Raghunandan
AJ Institute of Management,
Mangalore
April 7, 2015

2. Meaning of Union Budget
• Financial Statement containing the
estimated revenue and proposed
expenditure of the Union Government of
India
• According to the Constitution, the
Government has to prepare a Budget
annually
• The Union Finance Minister presents it in the
Lok Sabha on the last working day of
February
• Conventionally called Government Budget

3. Objectives of a
Government Budget
• Accelerating Economic Growth
• Alleviating Poverty and
Unemployment
• Reduction of Inequalities in income
and wealth
• Redistribution of Income
• Investment in Socially Productive
Sectors
• Maintaining Price and Economic
Stability
• Financing and Management of PSUs

4. Coverage of the Budget
• Revenue and expenditure of three consecutive
years
• In the Budget presented in 2015, revenue and
expenditure for three consecutive years
1. Actual Figures for 2013-14
2. Revised Estimates for the year 2014-15
3. Budget Estimates for the year 2015-16

6. Receipts
• Capital Receipts
• Revenue Receipts

7. Capital Receipts
Capital Receipts:
1. LT Borrowings: Creating a long-term liability
like issue of Government Bonds
2. Provident Funds: LT Liability
3. Reduction of LT Assets: Receiving repayment
of loan given to State Governments
4. Disinvestment: Sale of shares of PSUs held by
Union Government to the public or
institutions (offer for sale)

8. Revenue Receipts: Tax Revenue
• Revenue Receipts:
A] Tax Revenue:
(1) Direct Taxes: Income Tax, Corporate Tax,
Dividend Distribution Tax, Wealth Tax, Gift Tax,
Estate Duty, Expenditure Tax, STT and CTT
(2) Indirect Taxes: Excise Duty, Customs Duty,
Sales Tax, Service Tax, Entertainment Tax
B] Non-Tax Revenue: Interest Receipts,
Receipt of Dividend, Fees & Fines, External
Grants and Special Assessment

9. Revenue Receipts: Non-Tax Revenues
B] Non-Tax Revenues
1) Receipt of Interest on Loans advanced to
state governments and others
2) Dividend on Investment (From PSUs)
3) Fees and Fines Collected
4) External Grants received from International
Bodies and Others
5) Special Assessments

10. Principles of Taxation
• Efforts to increase direct taxes rather than indirect
taxes
• IT Rates at a higher rate than wealth tax, wealth tax
rate is higher than estate duty
• Taxes are for redistribution of income and wealth
• Earlier, high tax regime and now, low tax rates,
better compliance and wider tax base (Kelkar
Committee)

11. Expenditure
• Expenditure is divided into:
A] Plan Expenditure and
B] Non-Plan Expenditure

12. Plan Expenditure
• Expenditure provided for the achieving the Five
Year Plan objectives are called Plan Expenditure
• They include both capital expenditure and
revenue expenditure
• Plan Expenditure includes expenditure on
1. Electricity generation
2. Irrigation and Rural Development
3. Construction of roads, bridges and canals
4. science, technology, environment
5. Assistance given to State Governments and
Union Territories for funding their Plans

13. Non-Plan Expenditure
• Non-Plan Expenditure is expenditure incurred other than
plan expenditure
• Government spends mainly on
1. Providing goods and services to citizens
2. Subsidies (Food and Oil)
3. Maintaining law and order through police force, judiciary
etc
4. Internal Security like intelligence agencies
5. External Security like Defence
6. Administrative Expenses
7. Staff Salary
8. Pension for the Retired Staff

14. Background of Union Budget 2015-16
• First Normal Budget by Jaitley
• In the wake of Abolition of Planning
Commission
• Need to convince the people that the
government is for inclusive growth and not
necessarily pro-business
• Need to get out of industrial sluggishness

15. Tax Proposals-Direct TaxProposals
• No change in personal income tax
• Reduction of corporate tax from 30 to 25%
over next four years
• Penalty for concealment of income-300%
• Quoting Pan is compulsory for purchases
above Rs. 1 lakh
• Abolition of wealth tax-replaced by additional
2% surcharge on income above Rs.1 crore

16. Direct Tax Proposals-Continued
• Deduction in respect of Mediclaim premium
increased from Rs.15,000 to Rs.25,000 (For senior
citizens, 20,000 to 30,000)
• Additional Deduction of Rs.25,000 to physically
challenged persons
• 80 CCD-Additional Deduction of Rs. 50,000
towards New Pension Scheme
• 80 C-Sukanya Samriddi Scheme
• Transport Allowance Deduction , raised from
Rs.800 to Rs.1,600

17. Indirect Tax Proposals
• Bringing in Goods & Services Tax
• Central Excise Duty , increased from 12.36% to
12.5%
• Footware costing more than Rs.1,000 to attract
6% excise duty
• Service Tax-enhanced from 12.26% to 14%
• 1005 reduction towards contribution to Swachh
Bharath or Clean Ganga Fund
• Duty on polythene, increased from 12% to 15%

18. Financial Management
• Establishment of NITI Ayog
• Creation of Public Debt Management Agency
• Merging Forward Markets Commission with
SEBI
• Creation of a Monetary Policy Committee
• Gold Monetisation Scheme and Sovereign
Gold Bond and Developing Indian Gold Coins
with Ashok Chakra

19. HR and Education
• Deen Dayal Upadhyay Grameen Kaushal
Yojana at Rs.1,500 crore for skill development
• Pradhan Mantri VidyaLakshmi Karyakrama to
minotor student scholarship and educational
loan scheme
• IIT in Karnataka
• AIIMS in J&K, Punjab, TN, HP and Assam

20. Infrastructure
• Creation of National Investment &
Infrastructure Fund
• Atal Innovation Mission included in NITI
• 5 New Ultra Mega Power Project of 4,000 MW
each
• Proposal of Tax Free Infrastructure Bonds
• Rural Infrastructure Development Bank with
Rs.25,000 crore
• Micro-Irrigation Programme- Rs. 5,300 crore

21. Social Security Programme
• Pradhan Mantri Suraksha Bima Yojana to cover
accidental death risk upto Rs. 2 lakh for premium of
Rs.12
• Pradhan Mantri Jeevan Jyothi Yojana to cover
accidental and natural death upto Rs. 2 lakh for a
premium of Rs.330
• Atal Pension Yojana to provide defined pension
• Rs.1,000 crore more is allocated for Nirbhay Yojana
• Unclaimed deposit of Rs.3,000 crore in PPF to be used
for subsidising the above schemes
• MUDRA Bank for refinancing microfinance institutions
to help SC/ST borrowers

22. THANK YOU