Interim Budget 2024 – I

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Interim Budget 2024 – I Blog Image

What’s in Today’s Article?

  • Why in news?
  • What is Vote on Account?
  • What is Interim Budget?
  • News Summary: Summary of the Interim Union Budget 2024-25
  • Key highlights of the Interim Budget 2024-25

Why in news?

  • The Finance Minister Nirmala Sitharaman presented the Interim Union Budget for 2024-2025 in Parliament.

Vote on Account

  • Article 116 of the Constitution allows the Lower House to make any grant in advance for the estimated expenditure for part of any financial year by voting and passing such a legislation. This is called vote on account.
  • A simple vote on account includes presenting the Centre’s fund requirements for salaries, ongoing projects and other expenditure for the transitional period.
  • It cannot make any changes to tax rates. It is also valid only for two months and can be extended up to four months.

Interim Budget

  • Background: need for an interim Budget
    • As per Article 112 of the Indian Constitution, annual financial statement is laid before both Houses of Parliament.
      • Annual financial statement is a statement of the estimated receipts and expenditure of the Government of India for a specific financial year.
    • The Centre seeks both Houses’ approval to withdraw the necessary funds from the Consolidated Fund of India.
      • Hence, this statement has to be passed by both Houses.
    • However, in an election year, the incumbent Government cannot present a full Budget as there may be a change in the executive after the polls.
    • Hence, the need for an interim budget.
  • Constitutional provisions of interim Budget
    • There is no constitutional provision for an interim budget.
    • Hence, the Centre chooses to seek the Lower House’s approval for the funds required for the transition period (April - July) till the new government presents a full Budget— via the votes on account provision.
  • About
    • In an interim budget, the Finance Minister presents the current state of the Indian economy, its fiscal status including India’s revised estimated growth in the next year.
    • S/he will also detail the government’s planned and non-planned expenditure and receipts.
    • While the Centre has to desist from announcing any major scheme which could influence voters or present an Economic Survey, the government is allowed to revise tax rates via an interim budget.
    • The interim budget too is presented to both Houses on February 1 by the Finance Minister, put to vote and then sent for Presidential approval.
    • Like the Union budget, the interim budget too is debated in the Lok Sabha before passage and is valid for the entire year though it is merely a transition arrangement.

News Summary: Summary of the Interim Union Budget 2024-25

Key highlights of the Interim Budget 2024-25

  • No change relating to taxation
    • No change relating to taxation has been proposed in the Interim Budget.
    • The same rates for direct taxes and indirect taxes, including import duties, have been retained.
  • Withdrawal of Outstanding direct tax demands
    • The Minister announced to improve tax payer services which is in line with the government’s vision to improve ease of living and ease of doing business.
    • The Interim Budget proposes to withdraw such outstanding direct tax demands:
      • up to Rs. 25000/- pertaining to the period up to financial year 2009-10 and
      • up to Rs. 10,000/- for financial years 2010-11 to 2014-15.
    • This is expected to benefit about a crore tax payers.
  • Direct tax collections trebled
    • Over the last 10 years the direct tax collections have more than trebled and the return filers swelled to 2.4 times.
    • The Govt has reduced and rationalised the tax rates due to which under the new tax regime there is no tax liability for tax payers with income up to Rs. 7 lakh.
    • The Minister also mentioned about decrease in corporate tax rates for existing domestic companies from 30% to 22%, and for certain new manufacturing companies to 15%.
    • The Government’s focus has been to improve tax-payer services.
      • This has led to transformation of age-old jurisdiction-based assessment system, and filing of tax returns has been made simpler and easier.
      • Average processing time of returns has been reduced from 93 days in the year 2013-14 to a mere ten days this year.
  • GST reduced compliance burden
    • GST has reduced the compliance burden on trade and industry by unifying the highly fragmented indirect tax regime in India.
      • Mentioning about a recent survey conducted by a leading consulting firm, she said that 94% of industry leaders view the transition to GST as largely positive.
    • Tax base of GST has more than doubled and average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore this year.
    • States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22.
    • The biggest beneficiaries are the consumers as reduction in logistics cost and taxes have brought down prices of most goods and services.
  • Number of steps taken in customs to facilitate international trade
    • The Minister said, over the last four years since 2019, the import release time declined:
      • by 47 per cent to 71 hours at Inland Container Depots,
      • by 28 per cent to 44 hours at air cargo complexes and
      • by 27 per cent to 85 hours at sea ports.
  • Laying of White Paper
    • The Minister announced that the Government will come out with a white paper, on ‘where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years’.
      • A white paper is an official government document that provides detailed information, analysis, or proposals on a particular policy issue or matter of public concern.
      • White papers serve to explain complex topics, present government policies, and solicit feedback or discussion from legislators and citizens.
      • They are important tools for transparency, accountability, and policymaking in the Indian parliamentary system.

Q1) What is White Paper in Politics?

A white paper is an official government document that provides detailed information, analysis, or proposals on a particular policy issue or matter of public concern.. 

Q2) What is Goods and Services Tax (GST)?

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption.