Budget & Taxation

Delhi Police Exams - GK Section

1️⃣ Introduction: What Is a Budget?

The Union Budget is the annual financial statement of the Government of India, showing its estimated receipts and expenditures for the upcoming financial year (April 1 to March 31). It reflects how the government earns and spends money to achieve growth, welfare, and stability.

Memory Trick: Budget = Balance of Income and Outcome.

A. Union Budget – Meaning and Components

Definition

Article 112 of the Indian Constitution defines the Budget as the “Annual Financial Statement” of the Union Government.

Presented By

Finance Minister (currently Nirmala Sitharaman) in Parliament (Lok Sabha) every February.

Main Components of the Budget

Category	Description	Examples
Revenue Receipts	Regular income of the govt.	Taxes, interest, fees
Capital Receipts	Non-recurring receipts	Borrowings, loans, disinvestment
Revenue Expenditure	Recurring spending	Salaries, subsidies, interest
Capital Expenditure	Investment for assets	Roads, railways, infrastructure

Trick: Revenue = Routine, Capital = Creation.

Budget Classification

Type	Meaning	Example
Balanced Budget	Receipts = Expenditure	Ideal but rare
Surplus Budget	Receipts > Expenditure	Reduces inflation
Deficit Budget	Receipts < Expenditure	Common in India

India usually runs a deficit budget due to welfare schemes and infrastructure spending.

B. Types of Taxes

1️⃣ Direct Taxes

Feature	Explanation
Paid directly by individuals or organizations	Tax burden cannot be shifted
Based on income and profits	Progressive in nature

Examples: Income Tax, Corporate Tax, Wealth Tax (abolished).
Collected by: Central Board of Direct Taxes (CBDT)

Trick: Direct = You pay directly.

2️⃣ Indirect Taxes

Feature	Explanation
Levied on goods and services	Tax burden can be shifted to consumers
Paid indirectly through intermediaries	Regressive in nature

Examples: GST, Excise Duty, Customs Duty
Collected by: Central Board of Indirect Taxes & Customs (CBIC)

Trick: Indirect = You pay when you buy.

C. Goods and Services Tax (GST)

Introduced On

1st July 2017 (101st Constitutional Amendment Act)

Objective

To create “One Nation, One Tax, One Market.”

Replaced Taxes Like

VAT, Service Tax, Excise Duty, Entry Tax, etc.

Structure of GST

Type	Levied By	Example
CGST	Central Govt	Collected on intra-state sales
SGST	State Govt	Collected on intra-state sales
IGST	Central Govt	On inter-state sales

Trick: CGST + SGST = Inside State | IGST = Interstate.

GST Council

Headed By	Union Finance Minister
Members	State Finance Ministers
Decides	GST rates, exemptions, implementation
Headquarters	New Delhi
Motto	Good and Simple Tax

D. Fiscal and Revenue Deficit

Fiscal Deficit

Occurs when total expenditure exceeds total revenue and non-debt receipts.

Formula:
Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-Debt Capital Receipts)

Trick: Fiscal = Financial gap in government account.

Revenue Deficit

Difference between Revenue Expenditure and Revenue Receipts.

Formula:
Revenue Deficit = Revenue Expenditure – Revenue Receipts

Trick: Revenue Deficit = Routine loss.

Primary Deficit

Fiscal Deficit – Interest Payments = Primary Deficit

Shows how much of the fiscal deficit is due to past debt obligations.

Deficit Summary Table

Type	Meaning	Indicates
Revenue Deficit	Routine income < Routine spending	Poor financial health
Fiscal Deficit	Govt spending > Income	Borrowing required
Primary Deficit	Fiscal deficit – Interest payments	Debt-free gap

E. Subsidies and Public Expenditure

Subsidies

A financial assistance given by the government to reduce the price of essential goods or services for the public.

Type	Example
Food Subsidy	PDS (Public Distribution System)
Fertilizer Subsidy	Cheap fertilizers for farmers
Fuel Subsidy	LPG, Kerosene
Education/Health Subsidy	Midday Meal, Ayushman Bharat

Trick: Subsidy = Support for Society.

Public Expenditure

Government spending on public goods and welfare.

Category	Examples
Developmental	Roads, schools, hospitals
Non-Developmental	Salaries, pensions, defense
Plan Expenditure	Under NITI Aayog projects
Non-Plan Expenditure	Interest, subsidies, defense

F. PYQs (Delhi Police, SSC & State Exams)

The Union Budget is presented under which Article of the Constitution?

A) Article 108 B) Article 110 C) Article 112 D) Article 117

PYQ No.1

Show Answer

C) Article 112

Fiscal Deficit means —

A) Total revenue = total expenditure B) Expenditure exceeds income C) Income exceeds expenditure D) Equal balance of budget

PYQ No.2

Show Answer

B) Expenditure exceeds income

GST was implemented in India in —

A) 2014 B) 2015 C) 2016 D) 2017

PYQ No.3

Show Answer

D) 2017

The 101st Constitutional Amendment Act is related to —

A) NITI Aayog B) GST C) FRBM Act D) RBI autonomy

PYQ No.4

Show Answer

B) GST

The “Fiscal Deficit” of the government represents —

A) Borrowing requirement B) Surplus fund C) Capital gain D) Extra income

PYQ No.5

Show Answer

A) Borrowing requirement

Direct taxes in India are administered by —

A) CBDT B) CBIC C) SEBI D) RBI

PYQ No.6

Show Answer

A) CBDT

Indirect taxes are collected by —

A) RBI B) CBIC C) CBDT D) NITI Aayog

PYQ No.7

Show Answer

B) CBIC

Which of the following is an example of capital expenditure?

A) Salary to employees B) Subsidy C) Loan to states D) Pension

PYQ No.8

Show Answer

C) Loan to states

Which one of the following is NOT a component of GST?

A) CGST B) SGST C) IGST D) PGST

PYQ No.9

Show Answer

D) PGST

Which body decides the GST rates in India?

A) Parliament B) NITI Aayog C) GST Council D) Finance Ministry

PYQ No.10

Show Answer

C) GST Council

G. Quick Comparison Tables

Direct vs Indirect Taxes

Feature	Direct	Indirect
Who pays	Person/Company	Consumer
Shiftable?	No	Yes
Examples	Income Tax, Corporate Tax	GST, Customs
Admin Body	CBDT	CBIC
Nature	Progressive	Regressive

Trick: Direct = Pay directly, Indirect = Pay indirectly.

Deficit Types at a Glance

Deficit Type	Formula	Meaning
Revenue	Rev. Exp – Rev. Rec	Regular shortfall
Fiscal	Total Exp – (Rev Rec + Non-Debt Rec)	Govt borrowing need
Primary	Fiscal – Interest	Non-debt deficit

H. Final Concept Recap

Budget = Annual Financial Statement (Article 112)
Direct Tax → CBDT | Indirect Tax → CBIC
GST = “One Nation, One Tax” (2017)
Fiscal Deficit → Borrowing indicator
Revenue Deficit → Routine income shortfall
Subsidies = Govt support for welfare

One-Line Memory: Budget balances books; Taxes fill them; Deficits drain them.

Developed By Jan Mohammad

Master Budget & Taxation Concepts for Delhi Police Exam!

Join Courage Library for comprehensive study materials and expert guidance.

Be a Couragian!