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CA Umesh Sharma

Arjuna (Fictional Character): Krishna, Honorable Finance Minister Mr. Arun Jetley will be declaring the Finance Budget of 2017-18 on 1st February in the Loksabha. Every citizen of this country is curiously waiting for the Budget. The Budget has to face the problems like Elections, Demonetarization of currency etc. while it is presented. The situation of Budget is same as the person running in theJallikutti. Krishna tell me how the bull of Inflation will be stopped and what is the importance of budget?

Krishna (Fictional Character): Arjuna, really there are many fun similarities in the budget and the Jallikutti i.e. bull race. The wild bull is difficult to control. It’s very difficult for budget to control the bull of finance as it attacked by Tax collection, government expenditure, demonetarization of currency etc. In simple language, Budget is a financial document used to estimate future revenue and expenses of the upcoming year. The Government’s finance works on the basis of this document. This means that efforts are taken to either earn projected or more revenue. Also plans are made to manage the expenditure up to the projected limit. Arjuna, doesn’t an individual check whether a thing is in his budget or not when they go for shopping? Same logic follows here. Everyone should make their own household and business budget and accordingly decide their standard of living or business strategies. As while controlling the bull the person may get hurt and help is to be given like that financial help is to be provided to damaged sectors while preparing the Budget.

The Jallikutti of Budget

Arjuna (Fictional Character): Krishna, please explain different types of Budgets and their importance?

Krishna (Fictional Character): Arjuna, Like the preparation of Jallikutti is done by everyone in the similar manner the Budget is prepared by everyone, by a child to an old man, by Household to Nation, by profit-making entities to social working nonprofit-making entities. The types of Budget were made on the basis of the uses. e.g. Personal Budget, Zero Budget, performance Budget, Revenue Budget, Capital Budget, Cash Budget, etc. From this we can conclude three major types of budgets ; they are 1) Family Budget, 2)Business or Profession Budget and 3) Union or State Budget.

Arjuna (Fictional Character): Krishna, Why everyone should prepare a Family Budget?

Krishna (Fictional Character): Arjuna, After demonetarization of currency, today there  is  Competitive, Fast and Technological life. Men and women both are  earning. Every Family has to make provisions for and has to plan for Routine expenses, Non-Plan Expenditures, Children education expense, Insurance Premiums, EMI etc. Fast Changing Lifestyle has increased the expenditure of Hoteling, Hospitality, etc. Therefore it has become the prime responsibility of the families to have a proper financial planning. And for this having a Budget is the Best Option. Every family has to prepare Budget according to their lifestyles, their sources of Income and also according to their expenditures. This Budget should be prepared on an annual basis and it should be broken down into a monthly. At every month-end projected expenditure and actual expenditure should be verified and appropriate changes in the next month’s budget should be made. So that one can have control over incomes and expenses. So that proper financial planning can be made. Also, through this children will get lessons of discipline and prudence. The inflation bull is to be controlled right from our homes itself that’s why it is said that family budget is the most important budget.

Arjuna (Fictional Character): Krishna, What is the importance of Business or Profession Budget?

Krishna (Fictional Character): Arjuna, There are many people who come to watch the Jallikutti but in hurry they fall down. Every Businessman has to prepare budget in order to accomplish his Goal of profit. If he wants progress in his business or profession then he has to set targets and for their accomplishment he has to use techniques. Budget is prepared by considering the previous year’s Turnover, Profit and Expenditure. Capital is required for every business. For running a business or profession, loan from a Bank is required. For this a Projected Budget or projected Financial has to be prepared. Capability of Business is checked by preparing Budget if new Unit or Branch is to be introduced. Small Businessmen can achieve their targets by preparing Budget and even they can keep control on the Expenditure to be made. Many big companies also prepare their department wise Budget and encourage the employees to achieve the target.

Arjuna (Fictional Character): Krishna, now tell me, how Union Budget is prepared and what are the factors considered while preparing budget?

Krishna (Fictional Character): Arjuna, there are two important features of Budget 2017, First is the Railway budget is also included in it and second is that the budget will be presented on 1st February instead of 28th February. Basically, Country’s Budget is divided into two main categories; Financial Budget and Rail Budget.  Further into Central and State Govt Budgets. This work of Ministry of Finance starts from the month of August. While preparing the Budget, the discussion with well-known institutions, Individuals, Economists, and Government Departments etc. is made for proposals to be made in the budget. There is a separate department in the Ministry of Finance for preparing Budget. To keep the confidentiality of Budget the officers stay away from the Media. During the printing of Budget, the officers and other budget preparing committee members are sent to unknown places in order to keep the confidentiality. This is a very confidential matter. In the Budget there are two types Revenue and Expenditure. Revenue is collected in the form of Tax from the Taxpayer and expenditure is made towards the development of Nation and to run various departments. The expected changes in Tax laws are mentioned in the Budget and the Finance Minister will be presenting this Budget on 1st February in Loksabha. This is also called the “Finance Bill”. On this Budget lots of discussion is done in both the houses of Parliament. After taking care of all the suggestions, the Budget comes in effect after the signing of the Honorable President and it takes shape of Law. According to this all the changes are made in Tax laws.

Arjuna (Fictional Character): Krishna, What should one learn from this concept of Budget?

Krishna (Fictional Character): The game of Jallikutti is to be understood by the individual himself. Living within a particular Budget will lead to a Balanced Life. “Cut your cloth according to your coat” should be followed. Expenditure should be made considering the income. Loan should be taken up to a certain extent otherwise financial complications may arise. Keeping a Budget is the best way to run a Home, a Business and a Country. An individual many times is worried about the Country’s Budget, Business Budget and forgets about own Family Budget. Most important is the Family Budget because it can be controlled by us. Whereas others have control over the Business Budget and the Union Budget is completely in the hands of Government. Likewise of growth, if one keeps its own family budget in control, then his business budget, which in turn will help for growth of himself as well as of his country. Let’s see how the uncontrolled bull of finance will be controlled after facing the problems of GST, Income tax, Banking, Cashless transactions , Election etc.


Author Bio

1. Central Council Member of ICAI. 2. Vice-Chairman of WIRC of ICAI for the period 2015-2021. 3. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 4. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNEETI” published in Lokmat on every View Full Profile

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July 2024