Income Tax 22 Jan,2020
India’s Union Budget & 20 Interesting Facts….
PRABHAKAR K.S.Proprietor, Shree Tax Chambers

"Kalangathu Kanda Vinaikkan Thulangkathu Thookkang Kadinthu Seyal"

(What clearly eye discerns as right, with steadfast will and mind unslumbering,

that should man fulfil - Thirukural)

Sri P. Chidambaram, then Finance Minister, in his Budget Speech on 28th February, 2013.



It is official that India's much awaited annual exercise of presenting of its Union Budget for 2020-21 scheduled on 1st February, 2020 at 11.00 am. To complete the process, Parliament's Budget Session (in a two phases) will be commenced from 31st January, 2020. In a strict accounting parlance, it is an 'Annual Financial Statement - AFS' of the Union Government's total income earned from taxes, say, levying directly and indirectly such levies, taxes, cesses, surcharges etc. and how it is going to spend them in a particular financial year, currently, it is from April to March of the following year. Usually, Budget preparatory work starts well two to three months in advance of prior to presentation of the Budget. According to Department of Economic Affairs (Budget Division)'s BUDGET CIRCULAR 2020-21 dated 2nd October, 2019, the exercise was commenced on 14th October, 2019. The 'Budget Estimates - BE' for 2020-21 has been provisionally finalised after the Expenditure Secretary completed all his pre-budget discussions with other Secretaries and financial advisers of the Union Government. Article 112 of the Constitution of India dealt with aforesaid 'AFS' of the Central Government which mandates the Hon'ble President caused to be laid before the both the Houses of the Parliament before giving His Assent to the Finance Bill of the respective financial year. In addition to Article 112, the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act, 2003) mandates the Union Government to carry this annual fiscal practice rigorously. The FRBM Act ensures a strict prudent fiscal policy, accountability, inter-generational- equity in fiscal management and ensures long-term stability in the economy. Key objectives of the Budget can be - to ensure economic growth, to reduce of poverty and unemployment, to ensure efficient allocation of available resources, to reduce wealth and income disparity in the Indian society, to keep a tab on essential commodities prices, to change or bring in suitable changes in 'Tax Rates' and among others. Thus, Union Budget can be termed as a 'Devise' having multiple roles as planning tool, fiscal tool, accountability tool and coordination tool between the Union and the States. A Union Budget can be divided as 'Balanced Budget when Government's estimated receipts are equal to the estimated expenditure. 'Unbalanced Budget' when its estimation is either more or less than the estimated receipts which will be divided further as 'Surplus Budget' and 'Deficit Budget' as the case may be. As said above, to complete the annual exercise, the Parliament's Budget Session has been scheduled in two phases with a short break of about twenty days, first phase will be commenced from 31st January, 2020 to 11th February, 2020 and second phase from 2nd March, 2020 to 3rd April, 2020 i.e. Just starting of the new financial year. Since this author's very detailed article titled 'India - Know Your Budget..!!' has been already published in the Taxmann's in-print weekly 'Corporate Professionals Today' Issue dated 29th June, 2019 and its web version having citation [2019] 106 372 (Article) dated 28th June 2019, the following lines will try to throw some lights on '25 interesting facts' surrounding with India's Union Budget.

India's Union Budget & 20 Interesting Facts….

 1.  First Union Budget - Independent India's first Union Budget was presented on 26th November, 1947 by Sri. R K Shanmukham Chetty, the then or first Finance Minister of India.

 2.  A Budget speech that inspired to pay taxes..!! - Union Budget for 1951-52 presented on 28th February, 1951 by Sri. Chintaman Dwarakanath Deshmukh, then Finance Minister was termed as first Union Budget of Republic of India. More interestingly, in his Budget Speech, the Finance Minister has tried to persuade people to pay taxes by quoting a villager's honest intention to pay taxes though he was not an employer or businessman.

 3.  People's Budget - Union Budget for 1968-69 presented on 29th Februray, 1968 by Sri. Morarji Desai, then Finance Minster was termed as 'People's Budget' due to its ground breaking proposals such as simplified assessment for manufacturers under erstwhile Excise Law regime, abolition of spouse allowance, discontinuance of separate surcharges on earned and unearned incomes, reducing the tax assessment time to two years from 4 years, heavy penalty for tax evaders and among others.

 4.  Carrot & Stick Budget - Union Budget for 1986-87 presented on 28th Februry, 1986 by Sri. V.P. Singh, then Finance Minister got this nick name due to its serious attempts to removal of license raj from the administration, long-term fiscal policy in-line with five year plans, a beginning of major indirect tax reforms including Excise laws related proposals, introduction of modified value added tax (MODVAT), etc.

 5.  New India's foundation stone laying Budget - Union Budget for 1991 - 92 presented on 24th July, 1991 by Sri. Manmohan Singh, then Finance Minister could be termed as 'New India's foundation stone laying ceremony' due to its path breaking proposals such attempts to overhaul India's Export & Import policy, trade policy, slashing of import license, promotion of export sector to enable the Indian industry to compete with its global players, increase in foreign investment limits among others have shown a totally new path for the Indian economy.

 6.  Dream Budget - Union Budget for 1997 - 98 presented on 28th February, 1997 by Sri. P. Chidambaram, then Finance Minister was called the Dream Budget due to its significant proposals on personal income tax (PIT) and corporate tax (CT) regime. With respect to PIT, the Finance Minister has brought down the highest PIT rate from 40 percent to 30 percent, done away with number of surcharges, reduced royalty rates which were welcomed by larger section of the society. Another unconventional but path breaking proposal was 'The Voluntary Disclosure of Income Scheme (VDIS) - 1997' to allow people to come forward to disclose their undeclared wealth either in the form of cash or shares or gold or real estate assets, held in India or abroad without disclosing its source of funds. Since Scheme allowed to pay barely 30 and 35 percent of tax on such declared income, waiver hefty interest, penalty and immunity under various laws say, the Income tax law, wealth tax law and the foreign exchange law fetched very good response where more than 3,50,000 ordinary Indians came forward to declare their undisclosed income or assets and committed to pay tax about Rs. 7,800 crore. The VDIS Scheme has laid the foundation for many more such schemes down the years.

 7.  Millennium Budget - Union Budget for 2000-01 presented on 29th February, 2000 by Sri. Yashwant Sinha, then Finance Minister was a first Budget of the millennium. Finance Minister through this budget laid out a path to make India as a software hub. As far as Tax proposals concerned, introduction of Transfer Pricing Regulation under Income Tax Law to curb erosion of tax base India, phasing out of exemptions / subsidies granted for export regime, reduction in customs duty on computers from 20 per cent to 15 percent, mother boards from 20 per cent to 15 per cent, on specified capital goods for manufacture of semiconductors from 15 per cent to 5 per cent were truly shot in the arm for ever growing software industry.

 8.  Ordinary Indians Budget - Union Budget for 2005 - 06 was presented 28th February, 2005 by Sri P. Chidambaram, then Finance Minister due to its pro poor and people oriented proposals known as Ordinary Indians or Aam Aadmi Budget. Hon'ble Finance Minister has presented one of the best union budgets in recent times. Tax proposals including upward changes in tax slabs, lowered corporate tax rates, reduction in customs duty on crude petroleum, collective Fringe Benefit Tax for employees, allowing Minimum Alternate Tax (MAT) Credit, introduction of National Rural Employment Guarantee Act (NREGA) and Right To Information Act (RTI) were truly common man's needs.

 9.  Coining of GST word - On 1st January, 2020, India's GST Laws have completed its 30 months or 900 days of pan-India implementation. It is interesting to know exactly 14 years ago, the Union Budget for 2006-07 tabled on 28th February, 2006, by Sri. P. Chidambaram, then Finane Minister, had mentioned his government's intention of introducing pan-India integrated Goods & Service Tax and Value Added Tax regime from 1st April, 2010 however, due to political and other administration issues, same was delayed by 7 years 3 months and saw the light of the day on 30th June, 2017 midnight.

10. Roll Back Budget - Union Budget for 2019-20 presented on 5th July, 2019 by Smt. Nirmala Sitharaman, the current and first lady Finance Minister could be termed as 'Roll Back Budget' due to withdrawal of number of proposals after getting President's Assent on the Finance (No.2) Act, 2019, such as Surcharge on long and short-term capital gains for portfolio investors both domestic and foreign, angel tax, Criminalization of CSR violations by companies, etc.

11. Union Budgets & Birthdays - Sri. Morarji Desai, the only Finance Minister to present two Budgets on his Birhtday i.e. February 29, 1964 and 1968.

12. Highest number of Budget Presentations - Again Sri. Morarji Desai named as highest number with 10 Union Budgets including 02 Interim Budgets followed by Sri. P. Chidambaram's name for his 09 Union Budgets.

13. 11.00 A.M. or 5.00 P.M. ?! Time Matters..!! - Only from Union Budget for 1999-00, Budget presentations were started at 11.00 a.m. till then i.e. upto 1998-1999, the presentations were happened at 5 p.m. on the last working day of the February. Sri. Yashwant Sinha, then Finance Minister has changed the timings from 5 p.m. to 11.00 a.m.

14. First Day or Last Day of the Month?! Day matters..!! - Up to Union Budget for 2016- 17, the Budgets used to present on the last working day of the February. Late Sri. Arun Jaitley, then Finance Minister changed the tradition in 2017 by presenting his Budget for 2017-18 on 1st February, 2017.

15. The End of 92 years old Practice - Up to Union Budget for 2016- 17, the railway budget was presented a couple of days before the Union budget. However, only from 2017-18, the railway budgets being presented as part of the Union Budget, thus, a 92-year-old practice saw its end.

16. Interim Budgets - Similar to full-pledged Budget, an Interim Budget (in other words, approval obtained on vote-on-accounts basis) will be presented by an incumbent Government in its last year of the five-year term or few months before the General Elections. Since India's general elections fall after starting of the new fiscal year, say, during April to June, but to meet the day-to-day expenses and requisite funds to run the economy, the Government shall be allowed to draw the funds from the Consolidated Funds of India. For instance, recently, the previous Government has presented its Interim Budget on 1st February, 2019. Thus, an Interim budget is a temporary measure to the run-up to the General Elections passed by an outgoing Government under the conditions of lack of time and full-fledged Budget by the incoming Government.

17. Economic Survey In 2 Volumes..!! - Since Independence, the Central Government is bringing an 'Economic Survey' indicating survey on economic trends of the country. The Survey throw much needed lights on agricultural, industrial production, infrastructure, employment, money supply, prices, imports, exports, foreign exchange reserves and other relevant macro and micro economic factors which have a direct impact on the Union Budget. Generally, Economic Survey - in two volumes - will be tabled in the Parliament just one day early of presenting of the Union Budget. This year it is reported that 'Economic Survey 2020' will be tabled on 31st Janaury, 2020.

18. Departments and Officials - No doubt, preparing of 6th largest Economy of the World's 'Budget Documents' is tedious and lengthy task which involves hundreds of officials from the Finance and other Central Ministries to name few Industry, Law, Comptroller of Auditor General of India, NITI Aayog and other Administrative Ministries of the Central Government. High- profile team of Union Budget for 2020-21 consist Smt. Nirmala Sitharaman, Hon'ble Finance Minister and Sri. Anurag Thakur, Minister of State for Finance and other top ten officials, they are -

  1.  Sri. Rajiv Kumar, Finance Secretary,

  2.  Sri. Ajay Bhushan Pandey, Revenue Secretary,

  3.  Sri. Atanu Chakraborty, Economic Affairs Secretary

  4.  Sri. Tuhin Kanta Pandey, DIPAM Secretary,

  5.  Sri. TV Somanathan, Expenditure Secretary

  6.  Sri. Sanjeev Sanyal, Principal Economic Adviser,

  7.  Sri. Krishnamurthy Subramanian, Chief Economic Adviser,

  8.  Sri. Pramod Chandra Mody, CBDT Chairman,

  9.  Sri. John Joseph, CBIC's Interim - Chairman / filled upon Sri. Pranab Kumar Das, immediate past Chairman's voluntary retirement effectuated on 31st December, 2019,

10.  Sri.................. Joint Secretary (Budget), though most important person involved in the Budgetary Exercise, his or her position remains vacant as of 10th Janaruy, 2020.

19. Halwa Ceremony - Post pre-budget consultations, the printing of 'Budget Documents' starts with 'Halwa Ceremony (this year the ceremony is likely to be held on 21st or 22nd Jnauary, 2020). In the ceremony, the Hon'ble Finance Minister himself / herself will attend and serve the 'Halwa or Sweet Dish' to the finance ministry officials who are involving in the preparation and printing of the Budget Documents.


Halwa Ceremony in North Block - Image Credit Finance Ministry

20. Secrecy and Security at Highest Level..!! - The special 'Printing Press' with all the modern security features to maintain the highest level of 'secrecy' is located in the basement of North Block, the Seat of India's Finance Ministry. According to media reports, post 'Halwa ceremony', the officials (more than 100) are kept in total isolation to maintain the secrecy of finalised Budget proposals. Even the Hon'ble Finance Minister also not allowed to carrying his/ her own smartphones..!!. Only after 11.00 am on the Budget day, the Officials will be allowed to communicate with their dear ones and outside world. Even though very 'Secretive Document of the Season' it is appropriate to mention here, a secret sheet called 'Blue Sheet' will be maintained throughout the Budget process which normally starts in the first week of December of the previous year and thereafter the entire North Block will be in 'Quarantine' or no access to Press' till 1st Feburary, 2020 at 11.00 a.m. The Blue Sheet contains all the significant numbers, figures and statistics of the Indian economy. The sole guardian of the 'Blue Sheet' is entrusted with Joint Secretary of the Finance Minister. On the Budget day, the Finance Minister with his/ her team first visits the Rashtrapati Bhawan to brief the significant points to the Hon'ble President. Then in the Cabinet, the Finance Minister repeats the same process with the Hon'ble Prime Minister and his Cabinet Ministers. From Cabinet, the Finance Minister accompanied by the Prime Minister will visit the Lok Sabha to present the Budget.


Tight Security for Budget Documents outside Parliament on 01.02.2019 - Image Credit ANI

Budget Documents & Its list - Besides the Finance Minister's Budget Speech, there will be a set of Documents which also presented in the Parliament. They are -

  1.  Annual Financial Statement (AFS)

  2.  Demands for Grants (DGs)

  3.  Finance Bill of the coming Financial year

  4.  Statements mandated under FRBM Act-

  ♦  Macro-Economic Framework Statement

  ♦  Fiscal Policy Strategy Statement

  ♦  Medium Term Fiscal Policy Statement

  5.  Expenditure Budget

  6.  Receipts Budget

  7.  Memorandum Explaining the Provisions in the Finance Bill

  8.  Budget at a Glance

  9.  Outcome Budget

10.  Economic Survey


It is widely expected that the lady Finance Minister in her second but first full year Budget may announce number of tax proposals under both Direct and Indirect Taxes after serious thought of 'NO' roll back..!! later. With respect to Indirect Tax proposals, the only 'Customs' regime is required budgetary attention or announcements. However, the GST Council in its last meeting held on 18th December, 2019 has approved various law related amendments which will also be tabled along with the Union Budget 2020. As part of its pre-Budget consultations, the Prime Minister's Office, the Finance Ministry, the Commerce Ministry and other key Ministries have started to consult all the stakeholders to hear their words on a daily basis. No doubt that coming Budget will be great opportunity for the Hon'ble Finance Minster not only to set right the Direct Tax regime and GST regime but also Indian economy on the growth trajectory. Being a budding International Tax Professional, curiously waiting for 1st Feburary, 2020 11.00 a.m. to know the fresh set of Tax proposals or Direct Tax (mention about proposed Direct Tax Code - 2020), Indirect Tax (new vibrant Customs Regime) and Good and Simpler Tax regimes version 0.2..!!