Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, 8th February, 2019

PRESS RELEASE

Note on Recovery of Tax in the case of Travel Khana

It has come to the notice of CBDT, through some media reports that Rs. 36 lakh have been recovered from a startup,  namely, Travel Khana as part of recovery of outstanding demand on account of Angel Tax. It has been alleged that this was in violation of the CBDT instructions dated 24th December, 2018 pertaining to recovery of dues in Angel Tax cases.

On ascertaining the facts it is seen that the additions in the case were made under section 68 of the Income-tax Act, 1961 on account of unexplained cash credits & not under section 56(2)(viib) on account of premium on shares, as has been alleged. 

During the assessment proceedings, the assessing officer requested for confirmation of the persons from whom deposits had been received. Wherever confirmations were submitted, the same were accepted by the assessing officer and no addition was made. However, where no confirmations were furnished by the assessee, the assessing officer made the addition after issuing proper show-cause notice and obtaining reply in the matter. Thus, the addition was made only when the assessee failed to substantiate the source of the deposit resulting in demand of Rs. 2.22 crore approximately.

The assessee did not obtain any stay in respect of the demand raised. Had the stay been obtained, recovery proceedings would not have been instituted by the Department. Since there was no stay against recovery and the demand had become due, the Department recovered Rs. 36 lakh after attaching the bank accounts of the assessee. Thereafter, all the bank accounts were released. 

It may also be noted that neither the assessee nor it`s Director submitted any certificate from DIPP to indicate its status of being a startup, either during the assessment proceedings or thereafter. Had such a certificate been furnished, this situation would not have arisen.

Thus, it is clear that the case of Travel Khana is not covered by the instruction issued by CBDT dated 24th December,2018 prohibiting coercive measures for enforcing recovery of outstanding demand in Angel Tax cases, as the addition was made under section 68 of the IT Act and not under section 56(2)(viib). Therefore, the action of the assessing officer of enforcing recovery of demand is not in violation of CBDT’s instructions.

Notwithstanding the above, the benefit of doubt should and must be given to our entrepreneurs. However, when after repeated reminders, records of funds received are not provided, the Department is unfortunately left with no other choice. It is also our duty to prevent and expose suspected evasion.

(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT.

 

Press Information Bureau 
Government of India
Cabinet

Dated: 06 FEB 2019

Cabinet approves Abolition of Institution of Income-Tax Ombudsman and Indirect Tax Ombudsman

The Union Cabinet chaired by Prime Minister  Narendra Modi has approved the proposal for Abolition of Institution of Income-Tax Ombudsman and Indirect Tax Ombudsman.

 The approval comes in the wake of alternative complaint redressal mechanisms chosen by public and the institution of Ombudsman could not prove to be more effective than regular existing parallel channels of grievance redressal, both the institutions of Income-Tax Ombudsman as well as Indirect Tax Ombudsman have been abolished.

Background:

          The Institution of Income-Tax Ombudsman was created in the year 2003 to deal with grievances of public related to settlement of complaints relating to Income Tax. However, the Institution of Ombudsman failed to achieve its objectives. It was observed that institution of new complaints have in turn fallen to single digits. Also, tax payers started preferring alternate methods of grievance redressal like CPGRAMS (Centralized Public Grievance Redress and Monitoring System), AaykarSevaKendras etc. further, it was also decided in 2011 to close vacant offices of Indirect Tax Ombudsman.

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AKT/SNC/SH

 

Ministry of Finance

BUDGET SUMMARY WITH MAJOR HIGHLIGHTS OF THE INTERIM BUDGET 2019-20

INTERIM BUDGET 2019-20 PRESENTED IN PARLIAMENT TODAY HAS A MAJOR SCHEME FOR FARMERS AND PROVIDES FOR INCOME TAX SOPS

THIS INTERIM BUDGET IS TO BE VIEWED AS A MEDIUM FOR A PROGRESSIVE PATH FOR THE COUNTRY, THE FINANCE MINISTER SAYS

SHRI PIYUSH GOYAL SAYS GOVERNMENT HAS BROUGHT DOWN AVERAGE INFLATION TO 4.6%, LOWER THAN THE INFLATION DURING THE TENURE OF ANY OTHER PREVIOUS GOVERNMENT.
 

Dated: 01 FEB 2019

            Interim Budget 2019-20 was presented in Parliament today by the Union Minister for Finance, Corporate Affairs, Railways & Coal, Shri Piyush Goyal. Besides having a major Scheme for the farmers, it provides tax sops and sets the Developmental Agenda for the years to come.

A New Deal for 12 Crore Small and Marginal farmers with direct income support, a path breaking Pension initiative for 10 Crore unorganized sector workers, exempting income up to Rs 5 lakhs from Income Tax, reforms in stamp duty, highest ever budgetary allocation of Rs 3 lakh crore for Defence, record allocation of funds at Rs 58,166 crore for North Eastern Areas, a new AIIMS for Haryana, single window clearance for Indian film makers at par with foreigners and higher budgetary allocations for Education, Health, Infrastructure and for the welfare of weaker sections including Scheduled Castes and Scheduled Tribes, a Separate Department of Fisheries for welfare of 1.5 crore fisherman are some of the major highlights of the Interim Budget 2019-20.

Major Schemes

New Scheme- namely “Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)” to extend direct income support at the rate of Rs. 6,000 per year to farmer families, having cultivable land upto 2 hectares is announced.

While presenting the Interim Budget 2019-20, the Union Minister for Finance, Corporate Affairs, Railways & Coal, Shri Piyush Goyal said that “our Government is launching a historic programme PM-KISAN with an outlay of Rs.75,000 crore for the FY 2019-20 and Rs.20,000 crore in the Revised Estimates of FY 2018-19”.

            Under this Government of India funded Scheme, Rs.2,000 each will be transferred to the bank accounts of around 12 crore Small and Marginal farmer families, in three equal installments. This programme would be made effective from 1st December 2018 and the first installment for the period upto31st March 2019 would be paid during this year itself, Shri Piyush Goyal said.

 

To provide sustained and focused attention towards development of Fisheries, the  Government has decided to create a separate Department of Fisheries. Finance Minister said that through the measure, the Government wants to promote further growth over 7% to promote livelihood of about 1.45 crore people dependent on the sector.

The Finance Minister announced 2% interest subvention to the farmers pursuing the activities of animal husbandry and fisheries, who avail loan through Kisan Credit Card. Further, in case of timely repayment of loan, they will also get an additional 3% interest subvention.

 

 

Allocation of Rs.750 crore for Rashtriya Gokul Mission has been announced for the current year itself. Setting up of "Rashtriya Kamdhenu Aayog" to upscale sustainable genetic upgradation of cow resources and to enhance production and productivity of cows has also been announced. The Aayog will also look after effective implementation of laws and welfare schemes for cow.

 

 

To provide pensionary benefits to at least 10 crore labourers and workers in the unorganised sector a new Scheme called 'Pradhan Mantri Shram-Yogi Maandhan' is announced.  The Finance Minister said that within next five years it would be one of the largest pension schemes of the world. A sum of Rs.500 crore has been allocated for the Scheme. Additional funds will be provided as needed, Shri Goyal added. The scheme will also be implemented from the current year, he said.

Tax Benefits

 Individual taxpayers having taxable annual income up to Rs.5 lakhs will not be required to pay any income tax. The Finance Minister said that persons having gross income up to Rs. 6.50 lakhs are not required to pay any income tax if they make investments in provident funds, specified savings and insurance etc. Additional deductions such as interest on home loan up to Rs. 2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance and medical expenditure on senior citizens etc, are also provided for in the Interim Budget 2019-20. Thus tax benefit of Rs. 18,500 crore is proposed to be provided to an estimated 3 crore middle class and small taxpayers comprising self employed, small business, small traders, salary earners, pensioners and senior citizens.

For salaried persons, Standard Deduction is being raised from the current Rs.40,000 to Rs.50,000. This will provide additional tax benefit of Rs. 4,700 crore to more than 3 crore salary earners and pensioners.

Exemption on levy of income tax on notional rent on a second self-occupied house is also now proposed. Currently, income tax on notional rent is payable if one has more than one self-occupied house.

TDS threshold on interest earned on bank/post office deposits is being raised from Rs. 10,000 to Rs.40,000.

TDS threshold for deduction of tax on rent is proposed to be increased from Rs. 1,80,000 to Rs.2,40,000 for providing relief to small taxpayers.

 

 

The Finance Minister says that the Government wants the GST burden on home buyers to be reduced and accordingly the GST Council was moved to appoint a Group of Ministers to examine and make recommendations in this regard at the earliest.

Shri Goyal said that soon, businesses comprising over 90% of GST payers will be allowed to file quarterly return.

Inflation

            The Finance Minister said that the Government has been successful in bringing down average inflation to 4.6% over last five years, which is lower than the inflation during the tenure of any other Government. In fact Inflation in December 2018 was down to 2.19% only. Shri Goyal said if we had not controlled inflation, our families would have been spending around 35-40% more today on basic necessities such as food, travel, consumer durables, housing etc. The average rate of inflation during previous five years 2009-2014 was a backbreaking 10.1%, he pointed out.

 

Fiscal Deficit

            The fiscal deficit has been brought down to 3.4% in 2018-19 RE from the high of almost 6% seven years ago, the Finance Minister mentioned.  He said, the Current Account Deficit (CAD), against a high of 5.6% six years ago, is likely to be only 2.5% of GDP this year. “We contained the fiscal deficit notwithstanding the Finance Commission's recommendations increasing the share of the States from 32% to 42% in central taxes, which we accepted in the true spirit of cooperative federalism, thereby transferring significantly higher amounts to the States”, Shri Goyal said.

Growth and FDI

The Finance Minister Shri Piyush Goyal stated that a stage for high growth in decades to come, has now been set, after a wave of next generation path breaking structural reforms over the last five years, including introduction of Goods and Services Tax (GST) and other taxation reforms.

The country witnessed its best phase of macro-economic stability during the last five years. “We are the fastest growing major economy in the world with an annual average GDP growth during last five years higher than the growth achieved by any Government since economic reforms began in 1991. From being the 11th largest economy in the world in 2013-14, we are today the 6^th largest in the world”, the Finance Minister asserted in his Opening Remarks  of his Budget speech.

Shri Goyal said that due to such a stable and predictable regulatory regime, growing economy and strong fundamentals, India could attract massive amount of as much as $239 billion of Foreign Direct Investment (FDI) during the last 5 years, when most of the FDI was allowed to come in through the automatic route.

Enhanced allocations for major Schemes

            Announcing an allocation of Rs.60,000 crores for MGNREGA for Budget Estimates 2019-20,  the Finance Minister said that additional allocations will be made, if required.

Pradhan Mantri Gram Sadak Yojana (PMGSY) is being allocated Rs.19,000 crore in BE 2019-20 as against Rs.15,500 crore in RE 2018-19. During the period 2014-18, a total number of 1.53 crore houses have been built under the Pradhan Mantri Awas Yojana, he announced.

By March, 2019, all households will be provided with electricity connection.  Till now, 143 crore LED bulbs have been provided in a mission mode which has resulted in saving of Rs.50,000 crore for the poor and middle class.

He said through the world’s largest healthcare programme, Ayushman Bharat, to provide medical treatment to nearly 50 crore people in the country,  around 10 lakh patients have already benefited through free treatment for medical treatment which would have otherwise cost them Rs. 3,000 crore. Lakhs of poor and middle class people are also benefiting from reduction in the prices of essential medicines, cardiac stents and knee implants, and availability of medicines at affordable prices through Pradhan Mantri Jan Aushadhi Kendras, the Finance Minister added.

Shri Goyal also said that 14 of the 21 AIIMS operating or being established in the country presently have been announced since 2014. He also announced setting up of a new - the 22nd AIIMS in Haryana.

 

 

Allocation for Integrated Child Development Scheme (ICDS) is being increased from Rs.23,357 crore in RE 2018-19 to Rs.27,584 crore in BE 2019-20.

A substantial increase is proposed in the allocation for welfare of the Scheduled Castes  and Scheduled Tribes. The allocation of  Rs.56,619 crore  made in BE of 2018-19 for Scheduled Caste, further increased to Rs.62,474 crore in RE is proposed to be enhanced to Rs.76,801 crore in BE for 2019-20, an increase of 35.6% over BE of 2018-19. For the Scheduled Tribes also, proposed allocation in 2019-20 BE is Rs.50,086 crore as against Rs.39,135 crore in BE 2018-19, an increase of 28%.

The Finance Minister said that a Welfare Development Board to frame special strategies for the benefit of the  hard-to-reach De-notified, Nomadic and Semi-Nomadic communities will be set up under the Ministry of Social Justice and Empowerment. He said that a Committee under NITI Aayog will also be set up to complete the task of identifying De-notified, Nomadic and Semi-Nomadic communities not yet formally classified.

 

Shri Goyal said under the Ujjwala Yojana aiming delivery  of 8 crore free LPG connections, more than 6 crore connections have already been given and the remaining will get free gas connections by next year.

 

The Finance Minister announced that a National Artificial Intelligence Portal will also be developed soon as a part of the National Programme on 'Artificial Intelligence'.

 

 

The Department of Industrial Policy and Promotion will now be renamed as the Department for Promotion of Industries and Internal Trade.

The Finance Minister stated that the Government e-Marketplace (GeM), created by the present Government two years ago, resulted in average savings of 25-28% and the platform will now be extended to all CPSEs. Transactions of over Rs. 17,500 crore have taken place so far.

The Finance Minister announced that for the first time, the country’s Defence Budget will be of over Rs.3 lakh crore.  

The Finance Minister, Shri Piyush Goyal pointed-out that domestic air traffic passengers have doubled during the last five years, leading to large number of jobs also being created. The number of operational airports has crossed 100 with the commissioning of the Pakyong airport in Sikkim.  Arunachal Pradesh came on the air map recently and Meghalaya, Tripura and Mizoram have come on India’s rail map for the first time.

Capital support from the budget for Indian Railways is proposed at Rs.64,587 crore in 2019-20 (BE). The Railways’ overall capital expenditure programme is of Rs. 1,58,658 crore. The Finance Minister, who is also holding the portfolio of Railway Ministry, announced that the Operating Ratio is expected to improve from 98.4% in 2017-18 to 96.2% in 2018-19 (RE) and further to 95% in 2019-20 (BE).

 

 

India’s installed solar generation capacity has grown over ten times in last five years. Stating this, Shri Goyal said that “our commitment to promote renewable energy is reflected in setting up the International Solar Alliance, the first treaty based international inter-governmental organisation headquartered in India. This sector is now creating lakhs of new age jobs, he added.

The Finance Minister announced that in Entertainment industry, which is a major employment generator, regulatory provisions will now rely more on self-declarations. To promote entertainment industry, the Single window clearance for ease of shooting films, now available only to foreigners, will also be made available to Indian filmmakers. “We will also introduce anti-camcording provisions in the Cinematograph Act to control the menace of piracy”, he said.

Saying that “We are poised to become a Five Trillion Dollar Economy in the next five years and aspire to become a Ten Trillion Dollar Economy in the next 8 years thereafter”, Shri Piyush Goyal said that there has been a Growth of 18% in Direct Tax Collections in 2017-18 and increase in tax base by as many as 1.06 crore people filing income tax returns for the first time in FY 2017-18, mainly on account of demonetization.

Shri Goyal said that he is proposing, through the Finance Bill, necessary amendments to levy Stamp duties on one instrument relating to one transaction and get collected at one place through the Stock Exchanges. The duty so collected will be shared with the State Governments seamlessly on the basis of domicile of buying client, he said.

In all the total expenditure is to increase from Rs.24,57,235 crore in 2018-19 RE to Rs.27,84,200 crore in 2019-20 BE.  A rise of Rs.3,26,965 crore or approximately 13.30%. This reflects a high increase considering low inflation. The fiscal deficit of year 2019-20 is estimated to be 3.4% of GDP.

The Finance Minister pointed out that after completion of the fiscal deficit consolidation programme, the Government would now focus on Debt consolidation. He said “We have maintained the glide path towards our target of 3% of fiscal deficit to be achieved by 2020-21. India’s Debt to GDP ratio was 46.5% in year 2017-18. The FRBM Act prescribes that the Debt to GDP ratio of the Government of India should be brought down to 40% by 2024-25. “Along with completion of the fiscal deficit consolidation programme, we will now focus on Debt consolidation”, he added.

***

GG/DSM/RM/KSP/SNC/NB
(Release ID: 1562145)

 

KEY TO BUDGET DOCUMENTS

BUDGET 2019-2020

1. The list of Budget documents presented to the Parliament, besides the Finance Minister's Budget Speech, is given below:

A. Annual Financial Statement (AFS)

B. Demands for Grants (DG)

C. Finance Bill

D. Statements mandated under FRBM Act:

i. Macro-Economic Framework Statement

ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

E. Expenditure Budget

F. Receipt Budget

G. Expenditure Profile

H. Budget at a Glance

The documents shown at Serial A, B, and C are mandated by Art. 112,113, and 110(a) of the Constitution of India respectively, while the documents at Serial No. D (i) and (ii) are presented as per the provisions of the Fiscal Responsibility and Budget Management Act, 2003. Other documents are in the nature of explanatory statements supporting the mandated documents with narrative in a user-friendly format suited for quick or contextual references. Hindi version of all these documents is also presented to the Parliament. A web version is hosted at http:// indiabudget.gov.in, with hyperlinks, intended to make more efficient and userfriendly access to all documents.

2.1 A brief description of the Budget documents listed in para 1 is given below.

A. Annual Financial Statement (AFS)

The Annual Financial Statement (AFS), the document as provided under Article 112, shows the estimated receipts and expenditure of the Government of India for 2019-20 in relation to estimates for 2018-19 as also actual expenditure for the year 2017-18. The receipts and disbursements are shown under three parts in which Government Accounts are kept viz.,

(i) The Consolidated Fund of India, (ii) The Contingency Fund of India and (iii) The Public Account of India. The Annual Financial Statement distinguishes the expenditure on revenue account from the expenditure on other accounts, as is mandated in the Constitution of India. The Revenue and the Capital sections together, therefore make the Union Budget. The estimates of receipts and expenditure included in the Annual Financial Statement are for expenditure net of refunds and recoveries. The Union Government Finance Accounts also reflect expenditure in a similar manner.

The significance of the Consolidated Fund, the Contingency Fund and the Public Account as well as the distinguishing features of the Revenue and the Capital portions are given below briefly:

(i) The Consolidated Fund of India (CFI) draws its existence from Article 266 of the Constitution. All revenues received by the Government, loans raised by it, and also receipts from recoveries of loans granted by it, together form the Consolidated Fund of India. All expenditure of the Government is incurred from the Consolidated Fund of India and no amount can be drawn from the Consolidated Fund without due authorization from the Parliament.

(ii) Article 267 of the Constitution authorises the existence of a Contingency Fund of India which is an imprest placed at the disposal of the President of India to facilitate meeting of urgent unforeseen expenditure by the Government pending authorization from the Parliament. Parliamentary approval for such unforeseen expenditure is obtained, expost-facto, and an equivalent amount is drawn from the Consolidated Fund to recoup the Contingency Fund after such ex-post-facto approval. The corpus of the Contingency Fund as authorized by Parliament presently stands at ` 500 crore.

(iii) Moneys held by Government in trust are kept in the Public Account. The Public Account draws its existence from Article 266 of the Constitution of India. Provident Funds, Small Savings collections, income of Government set apart for expenditure on specific objects such as road development, primary education, other Reserve/Special Funds etc., are examples of moneys kept in the Public Account. Public Account funds that do not belong to the Government and have to be finally paid back to the persons and authorities who deposited them, do not require Parliamentary authorisation for withdrawals. The approval of the parliament is obtained when amounts are withdrawn from the Consolidated Fund and kept in the Public Account for expenditure on specific objects. The actual expenditure on the specific object is again submitted for vote of the Parliament for withdrawal from the Public Account for incurring expenditure on the specific objects.

The Union Budget can be demarcated into the part pertaining to revenue which is for ease of reference termed as Revenue Budget in (iv) below and the part pertaining to Capital which is for ease of reference termed as Capital Budget in (v) below.

(iv) The Revenue Budget consists of the revenue receipts of the Government (Tax revenues and other Non Tax revenues) and the expenditure met from these revenues. Tax revenues comprise proceeds of taxes and other duties levied by the Union. The estimates of revenue receipts shown in the Annual Financial Statement take into account the effect of various taxation proposals made in the Finance Bill. Other non-tax receipts of the Government mainly consist of interest and dividend on investments made by the Government, fees and other receipts for services rendered by the Government. Revenue expenditure is for the normal running of Government departments and for rendering of various services, making interest payments on debt, meeting subsidies, grants in aid, etc.

Broadly, the expenditure which does not result in creation of assets for the Government of India, is treated as revenue expenditure. All grants given to the State Governments/Union Territories and other parties are also treated as revenue expenditure even though some of the grants may be used for creation of capital assets.

(v) Capital receipts and capital payments together constitute the Capital Budget. The capital receipts are loans raised by the Government from the public (these are termed as market loans), borrowings by the Government from the Reserve Bank of India and other parties through the sale of Treasury Bills, the loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties. Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by the Central Government to the State and the Union Territory Governments, Government companies, Corporations and other parties.

(vi) Accounting Classification

. The estimates of receipts and disbursements in the Annual Financial Statement and of expenditure in the Demands for Grants are shown according to the accounting classification referred to under Article 150 of the Constitution.

. The Annual Financial Statement shows, certain disbursements distinctly, which are charged on the Consolidated Fund of India. The Constitution of India mandates that such items of expenditure such as emoluments of the President, salaries and allowances of the Chairman and the Deputy Chairman of the Rajya Sabha and the Speaker and the Deputy Speaker of the Lok Sabha, salaries, allowances and pensions of the Judges of the Supreme Court, the Comptroller and Auditor-General of India and the Central Vigilance Commission, interest on and repayment of loans raised by the Government and payments made to satisfy decrees of courts etc., may be charged on the Consolidated Fund of India and are not required to be voted by the Lok Sabha.

B. Demands for Grants

(i) Article 113 of the Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement and required to be voted by the Lok Sabha, be submitted in the form of Demands for Grants. The Demands for Grants are presented to the Lok Sabha along with the Annual Financial Statement. Generally, one Demand for Grant is presented in respect of each Ministry or Department. However, more than one Demand may be presented for a Ministry or Department depending on the nature of expenditure. With regard to Union Territories without Legislature, a separate Demand is presented for each of such Union Territories. In budget 2018-19 there are 99 Demands for Grants. Each Demand initially gives separately the totals of (i)'voted' and 'charged' expenditure; (ii) the 'revenue' and the 'capital' expenditure and (iii) the grand total on gross basis of the amount of expenditure for which the Demand is presented. This is followed by the estimates of expenditure under different major heads of account. The amounts of recoveries are also shown. The net amount of expenditure after reducing the recoveries from the gross amount is also shown. A summary of Demands for Grants is given at the beginning of this document, while details of 'New Service' or 'New Instrument of Service' such as, formation of a new company, undertaking or a new scheme, etc., if any, are indicated at the end of the document.

(ii) Each Demand normally includes the total provisions required for a service, that is, provisions on account of revenue expenditure, capital expenditure, grants to State and Union Territory Governments and also loans and advances relating to the service. Where the provision for a service is entirely for expenditure charged on the Consolidated Fund of India, for example, interest payments (Demand for Grant No. 37), a separate Appropriation, as distinct from a Demand, is presented for that expenditure and it is not required to be voted by the Lok Sabha. Where, however, expenditure on a service includes both 'voted' and 'charged' items of expenditure, the latter are also included in the Demand presented for that service but the 'voted' and 'charged' provisions are shown separately in that Demand.

C. Finance Bill

At the time of presentation of the Annual Financial Statement before the Parliament, a Finance Bill is also presented in fulfillment of the requirement of Article 110 (1)(a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. It also contains other provisions relating to Budget that could be classified as Money Bill. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution.

D. Statements mandated under FRBM Act.

i. Macro-Economic Framework Statement

The Macro-economic Framework Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003 and the rules made thereunder. It contains an assessment of the growth prospects of the economy along with the statement of specific underlying assumptions. It also contains an assessment regarding the GDP growth rate, the domestic economy and the stability of the external sector of the economy, fiscal balance of the Central Government and the external sector balance of the economy.

ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

The Medium-Term Fiscal Policy Statement cum Fiscal Policy Strategy Statement is presented to Parliament under Section 3 of the Fiscal Responsibility and Budget Management Act, 2003. It sets out the three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices, namely (i) Fiscal Deficit, (ii) Revenue Deficit, (iii) Primary Deficit (iv) Tax Revenue (v) Non-tax Revenue and (vi) Central Government Debt. The Statement includes the underlying assumptions, an assessment of the balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for the creation of productive assets. It also outlines for the existing financial year, the strategic priorities of the Government relating to taxation, expenditure, lending and investments, administered pricing, borrowings and guarantees. The Statement explains how the current fiscal policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.

2.2 Explanatory Documents:

To facilitate a more comprehensive understanding of the major features of the Budget, certain other explanatory documents are presented. These are briefly summarized below:

E. Expenditure Budget

The provisions made for a scheme or a programme may be spread over a number of Major Heads in the Revenue and Capital sections in a Demand for Grants. In the Expenditure Budget, the estimates made for a scheme/programme are brought together and shown on a net basis on Revenue and Capital basis at one place. To understand the objectives underlying the expenditure proposed for various schemes and programmes in the Expenditure Budget, suitable explanatory notes are included in this volume.

F. Receipt Budget

Estimates of receipts included in the Annual Financial Statement are further analysed in the document "Receipt Budget". The document provides details of tax and non-tax revenue receipts and capital receipts and explains the estimates. The document also provides a statement on the arrears of tax revenues and non-tax revenues, as mandated under the Fiscal Responsibility and Budget Management Rules, 2004. Trend of receipts and expenditure along with deficit indicators, statement pertaining to National Small Savings Fund (NSSF), Statement of Liabilities, Statement of Guarantees given by the government, statements of Assets and details of External Assistance are also included in Receipts Budget. This also includes the Statement of Revenue Impact of Tax Incentives under the Central Tax System which seeks to list the revenue impact of tax incentives that are proposed by the Central Government. This document also shows liabilities of the Government on account of securities (bonds) issued in lieu of oil and fertilizer subsidies in the past. This was earlier called 'Statement of Revenue Foregone' and brought out as a separate statement in 2015-16. This has been merged in the Receipts Budget from 2016-17 onwards.

G. Expenditure Profile

(i) This document was earlier titled Expenditure Budget - Vol-I. It has been recast in line with the decision on Plan-Non plan merger. It gives an aggregation of various types of expenditure and certain other items across demands.

(ii) Under the present accounting and budgetary procedures, certain classes of receipts, such as payments made by one Department to another and receipts of capital projects or schemes, are taken in reduction of the expenditure of the receiving Department. While the estimates of expenditure included in the Demands for Grants are for the gross amounts, the estimates of expenditure included in the Annual Financial Statement are for the net expenditure, after taking into account the recoveries. The document, makes certain other refinements such as netting expenditure of related receipts so that overstatement of receipts and expenditure figures is avoided. The document contains statements indicating major variations between BE 2018-19 and RE 2018-19 as well as between RE 2018-19 and BE 2019-20 with brief reasons. Contributions to International bodies and estimated strength of establishment of various Government Departments and provision thereof are shown in separate Statements. A statement each, showing (i) Gender Budgeting and (ii) Schemes for Development of Scheduled Castes and Scheduled Tribes including Scheduled Caste Sub Scheme (SCSS) and Tribal Sub Scheme (TSS) allocations and (iii) Schemes for the Welfare of Children are also included in this document. It also has statements on (i) the expenditure details and budget estimates regarding Autonomous Bodies and (ii) the details of certain important funds in the Public Account.

(iii) Scheme Expenditure

Scheme expenditure forms a sizeable proportion of the total expenditure of the Central Government. The Demands for Grants of the various Ministries show the Scheme expenditure under the two categories of Centrally Sponsored Schemes and Central Sector Schemes separately. The Expenditure Profile also gives the total provisions for each of the Ministries arranged under the various categories- Centrally Sponsored Schemes, Central Sector Schemes, Establishment, Other Central Expenditure, Transfer to States etc. and highlights the budget provisions for certain important programmes and schemes. Statements showing externally aided projects are also included in the document.

(iv) Public Sector Enterprises

A detailed report on the working of public sector enterprises is given in the document titled 'Public Enterprises Survey' brought out separately by the Department of Public Enterprises. A report on the working of the enterprises under the control of various administrative Ministries is also given in the Annual Reports of the various Ministries circulated to the Members of Parliament separately. The annual reports along with the audited accounts of each of the Government companies are also separately laid before the Parliament. Besides, the reports of the Comptroller and Auditor General of India on the working of various public sector enterprises, are also laid before Parliament.

(v) Commercial Departments

Railways is the principal departmentally-run commercial undertaking of Government. The Budget of the Ministry of Railways and the Demands for Grants relating to Railway expenditure are presented to the Parliament together with the Union Budget from the financial year 2017-18 onwards. The Expenditure Profile has a separate section on Railways to capture all the salient aspects of the demand for grants of Railways and other details of interest regarding Railways. The total receipts and expenditure of the Railways are, incorporated in the Annual Financial Statement of the Government of India. Details of other commercially run departmental under takings are also shown in a statement. Expenditure is depicted in the Expenditure Profile and Expenditure Budget, net of receipts of the Departmental Commercial Undertakings, in order to avoid overstatement of both receipts and expenditure.

(vi) The receipts and expenditure of the Ministry of Defence Demands shown in the Annual Financial Statement, are explained in greater detail in the document Defence Services Estimates presented with the Detailed Demands for Grants of the Ministry of Defence.

(vii)The details of grants given to bodies other than State and Union Territory Governments are given in the statements of Grants-in-aid paid to non-Government bodies appended to Detailed Demands for Grants of the various Ministries.

H. Budget at a Glance

(i) This document shows in brief, receipts and disbursements along with broad details of tax revenues and other receipts. This document provides details of resources transferred by the Central Government to State and Union Territory Governments. This document also shows the revenue deficit, the gross primary deficit and the gross fiscal deficit of the Central Government. The excess of Government's revenue expenditure over revenue receipts constitutes revenue deficit of Government. The difference between the total expenditure of Government by way of revenue, capital and loans net of repayments on the one hand and revenue receipts of Government and capital receipts which are not in the nature of borrowing but which accrue to Government on the other, constitutes gross fiscal deficit. Gross primary deficit is gross fiscal deficit reduced by the gross interest payments. In the Budget documents 'gross fiscal deficit' and 'gross primary deficit' have been referred to in abbreviated form 'fiscal deficit' and 'primary deficit', respectively.

(ii) The document also includes a statement indicating the quantum and nature (share in Central Taxes, grants/loan) of the total Resources transferred to States and Union Territory Governments. Details of these transfers by way of share of taxes, grants-inaid and loans are given in Expenditure Profile (Statement No.18). Bulk of grants and loans to States are disbursed by the Ministry of Finance and are included in the Demand 'Transfers to States' and in the Demand 'Transfer to Delhi' and Transfer to Puducherry'. The grants and loans released to States and Union Territories by other Ministries/ Departments are reflected in their respective Demands.

The Budget of the Central Government is not merely a statement of receipts and expenditure. Since Independence, it has become a significant statement of government policy. The Budget reflects and shapes, and is, in turn, shaped by the country's economy. For a better appreciation of the impact of government receipts and expenditure on the other sectors of the economy, it is necessary to group them in terms of certain economic magnitudes, for example, how much is set aside for capital formation, how much is spent directly by the Government and how much is transferred by Government to other sectors of the economy by way of grants, loans, etc. This analysis is contained in the Economic and Functional Classification of the Central Government Budget which is brought out by the Ministry of Finance separately.