CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, Honorable Finance Minister Mr. Arun Jetley will be declaring the Finance Budget of 2015-16 on 28th February in the Loksabha. Everyone is excited for the Budget. But Krishna, it is said that everyone must live within their own budget, why so?

Krishna (Fictional Character): Arjuna, in simple language, Budget is a financial document used to estimate future revenue and expenses of the upcoming year. The Governments 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 shopping? Same logic follows. Everyone should make their own household and business budget and accordingly decide their standard of living or business strategies.       

Arjuna: Krishna, please explain different types of Budgets?

Krishna: Arjuna, Budget is prepared by everyone, by a child to an old man, by Household to Nations, by profit-making entities to social working nonprofit-making entities. e.g. child’s plan for kitty party with friends or seniors plan for tour or medical expenses. 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.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Arjuna: Krishna, Why everyone should prepare a Family Budget?

Krishna: Arjuna, in this Competitive, Fast and Technological life men and women both were earning. Every Family has to make provisions for and has to plan for Routine expenses, Non-Plan Expenditures, Children education expense, Insurance Premiums, investments, EMI for House or Cars, travelling, 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.

Arjuna: Krishna, What is the importance of Business or Profession Budget?

Krishna: Arjuna, 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: Krishna, now tell me, how Union Budget is prepared?

Krishna: Arjuna, 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. Their Mobile & Internet Connections are cut off. During the printing of Budget, the officers and other budget preparing committee members are sent to unknown places in order to keep the confidentiality. But recently the burglary related to Petroleum proposal an Transactions has been caught. This is serious treat of exposer of confidential documents. 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 28th 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: Krishna, What should one learn from this concept of Budget?

Krishna: 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. 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.

Dear Tax guru lovers, your comment please, as they are very valuable and precious.

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0 responses to “Who’s Budget First? Personal or Union”

  1. Ulhas says:

    Please send me all changes & Notification related Taxation & Company Law.

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