Follow Us:

Arjuna (Fictional Character): Krishna, Honourable Finance Minister Mrs Nirmala Sitharaman will be declaring the Finance Budget of 2023-24 on 01st February in the Lok Sabha. Everyone is excited about the Budget. But Krishna, it is said that everyone must live within their budget, why so?

Krishna (Fictional Character): Arjuna, in simple language, Budget is a financial document used to estimate revenue and expenses for the upcoming year. The government’s finance works based on 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 (Fictional Character): Krishna, please explain different types of Budgets.

Krishna (Fictional Character): Arjuna, Budget is prepared by everyone, from a child to an old man, by Household to Nations, by profit-making entities to social working non-profit-making entities. e.g. child’s plan for a kitty party with friends or senior’s plans for a tour or medical expenses. The types of Budget were made based on 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, in this 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’s education expenses, Insurance Premiums, investments, EMI for houses or Cars, travelling, etc. Fast Changing Lifestyle has increased the expenditure on Hoteling, Hospitality, etc. Therefore, it has become the prime responsibility of families to have proper financial planning. And for this having a Budget is the Best Option. Every family has to prepare a 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 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 income and expenses. So that proper financial planning can be made. Also, through this child will get lessons in discipline and prudence.

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

Krishna (Fictional Character): Arjuna, Every Businessman has to prepare a budget to accomplish his goal of profit. If he wants to progress in his business or profession, then he has to set targets and for their accomplishment, he has to use techniques. The 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, a loan from a Bank is required. For this, a Projected Budget or projected Financial has to be prepared. The capability of Business is checked by preparing a Budget if a new Unit or Branch is to be introduced. Small Businessmen can achieve their targets by preparing a Budget and even they can keep control of the Expenditure to be made. Many big companies also prepare their department-wise Budgets and encourage the employees to achieve the target.

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

Krishna (Fictional Character): Arjuna, living within a particular Budget refers to living a Balanced Life. “Cut your cloth according to your coat” should be followed. Expenditure should be made considering the income. The 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 their 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 the Government. Likewise, of growth, if one keeps their family budget in control, then his business budget, which in turn will help for the growth of himself as well as of his country.


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

My Published Posts

Who Should File ITR even when Income is Below Tax Exemption Limit? Share Market at Record High, But my Portfolio is not ! Why !? 7 Wonders of the GST World Most Popular Recommendations from 53rd GST Council Meeting!! Don’t Slip in this Income Tax Cum Rainy Season!! View More Published Posts

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
July 2024