A glossary of terms used in Budget

(Following is an extract from The Hindu Newspaper)

Following are the terms used in the Budget. Learn these terms and their meaning. Sometimes UPSC can ask questions like

Q.Securities Transaction Tax is
a. Tax levied on companies that pay out dividends to its shareholders.
b.Tax levied on startups
c. Tax levied on all transactions done over the stock exchanges
d. None of the above

If you just know the meaning of such terms you can answer such questions without difficulty.

Disinvestment Receipts - The term refers to the money raised by the Government through disinvestment, or the sale of its equity stake in companies it owns.

Fiscal Responsibility and Budget Management Act- The Act is an attempt to make the Government adhere to a phased plan to reduce fiscal deficit, which denotes an excess of expenditure over revenue.

Dividend Distribution Tax- This is a tax levied on companies that pay out dividends to its shareholders, i.e. share a portion of earnings with them.

Venture Capital Funds- These are funds that invest in startups, a financially riskier proposition than investing in established companies.

Securities Transaction Tax- It is a tax on all transactions done over the stock exchanges involving securities such as shares, derivatives, and equity-linked mutual funds.

Wholesale Price Index (WPI)- It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of wholesale goods.

Consumer Price Index (CPI)- It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of household goods and services.

Capital Gains Tax- It is a tax on the gains that ensue when an asset is sold for a price higher than what it was bought for.

Value-Added Tax (VAT)- It is a tax on the value added to a product at each stage of distribution, so that inputs that go into making the product aren’t taxed more than once.

Ad Valorem Tax- This is charged as a percentage of the value of a good or service, not at a specific rate per unit.

Advance Pricing Agreement (APA)- It is an agreement between a taxpaying entity and the taxman that indicates how the former will price transactions with its associates.

Fiscal Policy- It is what a Government does to influence the course of an economy through decisions on taxes and spending.

Monetary Policy- It is what a central bank does to influence the course of an economy through decisions on money supply and interest rate.

Direct Tax- A tax such as the income-tax, which has to be borne by the person it or entity it is imposed on.

Indirect Tax- A tax on goods and services, typically, levied on an entity but paid by another.

Direct Taxes Code (DTC)- India’s likely replacement to the long-standing Income Tax Act, the Direct Taxes Code is meant to make direct tax laws simpler and more efficient.

Goods and Services Tax (GST)- Proposed to be rolled out in India from April 1, 2016, the GST seeks to make the indirect tax structure simpler and efficient by replacing a slew of levies such as octroi, central sales tax, State sales tax, entry tax and so on.

External Commercial Borrowing (ECB)- ECBs refer to commercial loans with a minimum three-year maturity that can be raised from lenders from overseas where interest rates are lower than in India.

Fiscal Consolidation- The term refers to the things a Government does to maintain good fiscal health — cut debt and wasteful expenditure and improve revenue opportunities.

Current Account Deficit- It is a trade measure that shows the value of a country’s imports of goods and services to be higher than the value of its exports.

For original source you can follow the link given below

http://www.thehindu.com/business/budget/budget-basics-a-glossary-of-terms-used-in-budget/article6940827.ece