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Demystifying the process: Budget 2016

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By Amit Kapoor

New Delhi: The course of fiscal policy of the government is decided by the budget, which is an important document. This year too seems to be kick started with the halwa ceremony, renowned for commencing the printing of the budget documents on February 19.

Another unique feature of this year’s budget is that some of the key officials have communicated through a series of videos that aim to demystify the budgetary process. These videos also give a flavor about the essential features of the upcoming budget to be presented by FM Jaitley on February 29.

The key officials that have spoken before the budget announcement include the finance minister, the minister of state for finance, and the revenue and the economic affairs secretaries – and all have made some crucial points relating to the budget 2016.

The finance minister, in his interactions, had mentioned the use of technology to the advantage of all taxpayers. Already some 1.4 crore people have been notified of the budget refunds through the technology platforms and their refunds have been processed through the same medium. Roughly 90 percent of the budget filings are done online, and this is where the power of technology is making the tax process smooth and efficient.

The minister of state for finance, in his interaction, has mentioned that the budget will aim to reduce poverty, provide prosperity to farmers, help in job creation for the young people of the country and provide a better quality of life to all citizens. He also expressed his belief that India will continue to be a beacon of growth and stability in a very turbulent global environment.

The economic affairs secretary tried to demystify the budget process and mentioned that it is a long-term process as opposed to the common conception. It generally starts in September with a detailed circular being issued to all the ministries. Post this, in November and December, the Department of Expenditure holds meetings with various ministries about the requirements in the current and the next years.

At the beginning of January, the Department of Revenue makes its forecasts for the current year and the next year. There are the revised estimates for the current year and the budget estimates for the next year. Post this once the revenue and expenditure proposals converge, the finance minister holds consultations with various stakeholders and proposals are concretized at the end of January. Decisions are then taken and post this followed by printing of budget documents.

The economic affairs secretary also alluded to the fiscal deficit and how the government is looking at it. He too was upbeat about India’s performance amid global turbulence and said that budget has to focus on growth as it leads to job creation and economic development.

The revenue secretary, in his interaction, mentioned taxation and the broad structure of the budget. He stated that the total tax revenue projection is Rs.14.4 lakh crore. The income tax revenue is close to about Rs.7.9 lakh crore and the indirect tax revenue is close to Rs.6.5 lakh crore.

Within the income tax, there are two components – the corporate income tax and the personal income tax. The corporate income tax is around 59 percent while the personal income tax is around 41 percent.

On the indirect side, there are three major components: excise duties, customs and service tax. Normally these are roughly the same contribution, but this year, due to the oil duty, the excise duties are close to 39 percent while the other two form the remaining indirect taxes.

The service tax structure is diversified, which is a good thing. The direct side seems as having a shortfall of about Rs.40,000 crore as corporate earnings have been low but this will be compensated by the indirect side which is buoyant. The revenue secretary also alluded to ways and means to reduce the litigation that has been seen as a perennial problem for India’s corporate sector.

In the week ahead, a lot of haze will get cleared on the issues pertaining to the budget. The new media strategy seems to be a good initiative leading up to the budget. Overall the stage is set for a historic budget. It is also hoped that the government succeeds in the balancing act when Finance Minister Arun Jaitley presents the budget in the Lok Sabha at 11 am on February 29. (IANS)

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5 Less Known Activities You Can Actually Fund Through Bank Loan

Here are the lesser-known expenses that you can fund with the help of bank loans

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Bank Loan
There are 5 Less Known Activities You Can Actually Fund Through Bank Loan. Pixabay

Unplanned expenses can crop up anytime in your life. With a fixed amount of salary, sometimes you are left without savings for an unforeseen expense. However, with numerous loan options available from all sizes of banks, you can relax and take a deep breath. 

In today’s world, there is a variety of loan options offered by financial institutions, such as personal loan, car loan, education loan, house loan, and so much more. Given the factor that it is not always necessary that you need to go for a loan because you want to buy a car or a house. Here are the lesser-known expenses that you can fund with the help of bank loans: 

1 Planning a Family Vacation

It is said that the best travel experiences are unplanned. However, when you make random family vacation plans, you don’t always have enough money kept aside for it. Catering to such needs, there is an ample number of banks that offers personal loan for planning a family vacation. These loans provide a lower interest rate than that of any credit card. So, if you are planning to go for that trip that you have been preparing for so long, taking a loan from a bank is your best bet.

Bank Loan
However, with numerous options from Bank Loans, you can relax and take a deep breath. Pixabay
  1. Funding a Wedding

In India, weddings are considered a matter of pride. You love to go big and plan a spectacular big fat wedding. However, big celebrations often cost big money. The day to day expenses makes it impossible for you to stop and think about saving for your such expenses. So, what do you do when you go across your wedding budget? It’s simple; you can take out a loan to fund your wedding expenses. 

The best part of taking personal loans for a wedding is that you can repay the loan in inexpensive Equated Monthly Instalments (EMIs) over a flexible tenure of your choice. You can compare the EMI on an online EMI calculator to get a fair understanding of the ratio of principal interest to the interest due, based on the tenure and the interest rates.  

  1. Renovation of Home 

If you are a homeowner, the chances are that with time they’ll need repairs. Though, unfortunately, most of the upgrades come along with a hefty price tag. To ease this issue, you can go for a personal loan offered by reputed financial institutions like Axis Bank. First, make a list of the renovations that are required and the amount of money that you will need for the same. Then, with the help of an EMI calculator, you can evaluate the amount that needs to be paid through the EMI and let you make an informed decision about the loan. 

Bank Loan
However, mutual funds Investment with a Bank Loan can be risky as the returns are market linked. Pixabay
  1. Investing in Mutual Funds

You must have heard the financial lingo “invest a loan,” which means that you take a loan from the bank to invest in mutual funds. Taking a loan to invest in mutual funds can be fruitful in many parts like you can have a higher return on investment of the loan as opposed to a lower risk level of investment. However, mutual funds Investment with a loan can be risky as the returns are market linked. Therefore, you need to assess your risk tolerance and start by investing small amounts in different fund options. You can invest in SIP after calculating the monthly SIP amount using online SIP calculator and get good returns. When you keep such instances aside, investment is one of the lesser-known activity that can be funded by a bank loan.

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  1. Pay the Credit Card Bill

Indians have made the usage of credit card an essential part of their life. There are times when you need money to buy a gadget or a home appliance on an urgent basis. You might not have savings to match such emergencies and end up using your credit card. At the end of the month, you must clear your credit card bill, but you do not have enough in your account for the same. For such instances, you can take a personal loan to pay your credit card bills.