When it is about money, you should know it all.

For people in finance or a normal taxpayer, 1^st of February, that was a normal day until 2016, has become a day of much more importance for a very basic and impactful reason. The union budget of India, which used to be presented on last working day of February until 2016, is now presented on 1^st of February from 2017.

This week, our Finance Minister, Mr Arun, Jaitley, presented the union budget, which is the last full term budget for current tenure of government. Important in many aspects like being first budget after GST implementation and last full term budget for the tenure, the budget got all the eyeballs glued to the television screens for the budget speech by our FM.

The budget speech, as it was delivered, was scrutinized word by word by the finance pundits, not just in India but globally. But they are called pundits for a reason. They understand all the fancy terms and jargons of finance. But what about us, the common people: the regular salaried employee or a small business owner?

We have attempted to pick and explain few technical finance terms, that are used frequently but may need more explanation for common person to understand. Here are a few of them.

Fiscal deficit: This, in simple terms, means the difference between government’s earnings and expenditure. It is usually a negative difference, which means the expenditure exceeds the earnings, thus called deficit. 

Long Term Capital Gain: Referred as LTCG in short, is the gain that a person makes by investing in qualifying investment instrument by keeping investment for a duration of more than 36 months for assets and more than 12 months for stocks. The most popular investment instruments that fall under qualifying instruments are stocks and equity based mutual funds, real state property and gold.

Short Term capital Gain: Referred as STCG in short, it is the gain realized by a person for a duration less than 36 months for assets and less than 12 months for stocks. The qualifying instruments are same as LTCG above.

Repo Rate and Reverse Repo Rate: This  is the rate of interest at which the RBI lends money to its clients (commercial banks). Reverse repo rate is the rate at which RBI borrows from commercial banks. RBI monitors the policies by adjusting the repo rates thus making borrowing more or less favorable for the public. An increase in repo rate means an increase in cost of borrowing, thus discouraging the public to take loans and encouraging them to deposit their money in banks.

Cash Reserve Ratio:  Also known as CRR, it is the minimum amount of cash deposit that the commercial banks have to maintain with the central bank(RBI) to ensure their liquidity. RBI enforces the CRR to ensure that banks will not run out of cash and can return the money to their customers when required.

Difference between Tax and Cess:  Cess are the taxes levied for a specific purpose. For example, the entire amount collected by government through Krishi Kalyan Cess will be spent on welfare of crops and cannot be spent on other heads.

While WittyScribble refrains itself from commenting on pros and cons of current union budget, it strongly encourages its readers to pay taxes in a transparent and timely manner. This small commitment from us goes a long way in building of a strong and prosperous nation and a strong economy.

And as always, Thanks for reading.

Ayush!!!