Finmin to initiate Budget exercise next week
Work on India’s first post-GST Union Budget 2018-19 will start next week with the finance ministry issuing timelines for different processes that will culminate with its presentation in February.
Finance Minister Arun Jaitley arrived at the parliament on Wednesday for Budget.
It may also be the current government’s last full-fledged Budget as general elections are due in 2019.
Even though independent India’s biggest tax reform of GST was implemented from July 1, the Budget for 2017-18 (April- March), had followed the practice of tax revenue projections under the heads of customs duty, central excise and service tax alongside direct tax numbers.
With excise duty and service tax being subsumed in the Goods and Services Tax (GST), the classifications will undergo change, an official said.
While a new classification for revenues to be accrued from GST will be included in the Budget for next fiscal, for the current year two sets of accounting may be presented – one for actual accruals during April-June for excise, customs and service tax, and the other for July-March period for GST and customs duty.
The official said that since the GST rates are decided by a GST Council, headed by Union Finance Minister and comprising of representatives of all states, the Budget for 2018-19 will not have any tax proposals concerning excise and service tax levies.
Only proposals for changes in direct taxes – both personal income tax and corporate tax, besides customs duty – are likely to be presented in the Budget along with new schemes and programmes of the government.
This will be Finance Minister Arun Jaitley’s 5th Budget in a row.
It would also be the last full Budget of the BJP-led NDA government before the 2019 General Elections. As per practice a vote-on-account or approval for essential government spending for a limited period is taken in the election year and a full-fledged budget presented by the new government.
While P Chidambaram had presented the previous UPA government’s vote- on-account in February 2014, Jaitley had presented a full budget in July that year.
The official said the finance ministry will next week issue the Budget circular and start consultations with other ministries from October for Revised Estimates (RE) of expenditure for the current fiscal.
The Budget Circular contains the timelines for submission of information of budget requirements to the Ministry of Finance along with prescribed formats.
The ministries will have to provide the actual money spent in 2016-17 along with the budget estimates and Revised Estimates for current fiscal.
Along with this, they have to give the Budget they are expecting for 2018-19 as well, the official added.
Scrapping a colonial-era tradition of presenting the Budget at the end of February, Jaitley had for the first time presented the annual accounts on February 1, 2017.
With the preponement of Budget, ministries are now allocated their budgeted funds from the start of the financial year beginning April.
This gives government departments more leeway to spend as well as allow companies time to adapt to business and taxation plans.
Previously, when the Budget was presented at the end of February, the three-stage Parliament approval process used to get completed some time in mid-May, weeks ahead of onset of monsoon rains.
This meant government departments would start spending on projects only from August-end or September, after the monsoon season ended.
Besides advancing the presentation date, the Budget scrapped the Plan and non-Plan distinction and merged the Railway Budget with it, ending a nearly century-long practice.