Union Budget Explained: 20 Terms You'll Hear on February 1, in Plain English

The basics

1. Union Budget. Officially the Annual Financial Statement, required by Article 112 of the Constitution. It sets out estimated receipts and spending for the next financial year.

2. Economic Survey. A report card on the economy, prepared by the Chief Economic Adviser and usually tabled a day or so before the Budget. It reviews growth, inflation, jobs and trade, and often hints at policy ideas.

3. Finance Bill. The bill that puts the Budget's tax proposals into law: changes in income tax, customs duties and other levies. When people say "the Budget changed the tax slabs", it is the Finance Bill that does it.

4. Appropriation Bill. The bill that gives Parliament's approval for the government to spend money from the Consolidated Fund.

Money coming in

5. Direct taxes. Taxes paid directly by the person or company that earns the income: income tax and corporate tax.

6. Indirect taxes. Taxes built into the price of goods and services: GST, customs duty and excise duty on items like fuel. GST rates are set by the GST Council, not in the Budget, but customs duty changes in the Budget can make imported phones, gold or electronics cheaper or costlier.

7. Cess and surcharge. Extra levies on top of tax. A cess is collected for a specific purpose, such as health and education. A surcharge is an extra percentage on the tax of high earners. Neither is shared with states in the same way as regular taxes, which is why states watch them closely.

8. Disinvestment. Money the government raises by selling its stake in public-sector companies, such as through share sales.

9. Non-tax revenue. Income other than taxes: dividends from public-sector companies and the RBI, spectrum auction proceeds, and fees.

Money going out

10. Revenue expenditure. Spending that does not create assets: salaries, pensions, interest payments and subsidies.

11. Capital expenditure (capex). Spending that creates assets: roads, railways, ports, defence equipment, buildings. Economists like capex because it boosts growth in the long run and creates jobs during construction.

12. Subsidies. Payments to keep prices low, mainly for food, fertiliser and fuel.

13. Centrally sponsored schemes. Programmes funded partly by the Centre and partly by states, such as rural housing and drinking-water schemes.

Deficits and debt

14. Fiscal deficit. The gap between the government's total spending and its total receipts excluding borrowing. In other words, how much it has to borrow in a year. It is usually expressed as a percentage of GDP, and it is the most closely watched number in the Budget.

15. Revenue deficit. The gap between revenue receipts and revenue expenditure. A revenue deficit means the government is borrowing to pay for day-to-day costs, not just for building assets.

16. Primary deficit. The fiscal deficit minus interest payments. It shows how much of the borrowing is for current needs rather than paying for past debt.

17. Debt-to-GDP ratio. Total government debt as a share of the economy. The government has said it will use this as its main target from 2026-27, aiming to bring central government debt to about 50% of GDP by March 2031.

18. FRBM Act. The Fiscal Responsibility and Budget Management Act, 2003, which sets the framework for keeping deficits and debt under control.

Process and politics

19. Vote on account / interim budget. In an election year, the outgoing government presents an interim budget and seeks a vote on account: permission to spend for a few months until the new government presents a full Budget.

20. Budget estimates vs revised estimates. Budget estimates (BE) are this year's projections. Revised estimates (RE) update last year's numbers with what actually happened. Comparing the two shows whether the government met its own targets.

What to watch for as a taxpayer

• Income tax slabs, rebate and standard deduction under the new and old regimes. Our guide to the new Income-tax Act's section numbers explains how the law itself has been reorganised.
• Capital gains tax on shares, mutual funds and property.
• Customs duty on gold, phones, electronics and cars.
• Spending on housing, health and education schemes you use.
• The fiscal deficit target, which affects interest rates. Lower borrowing can ease pressure on rates; our repo rate guide explains the link to your EMIs.

A few traditions

• Since 2017, the Budget has been presented on February 1, instead of the last working day of February, and the separate Railway Budget has been merged into it.
• The halwa ceremony marks the start of the final printing and lock-in of the Budget team, who stay isolated until the speech.
• Since 2021, the Budget has been presented paperless, read from a tablet, with documents published on the official Budget website and app.

This article is for information only and is not tax advice.

Related reading

• Income Tax Act 2025 Section List: Old vs New Section Numbers
• The New Income-tax Act, 2025, Explained: 'Tax Year' Replaces Assessment Year
• What Is the Repo Rate? How the RBI's Key Rate Moves Your EMI, FD, Gold and Savings