Glossary 2026: Key Union Budget Terms Explained

23 Jan 2026

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The Union Budget 2026 is scheduled to be presented in the Parliament on February 1, 2026, by Finance Minister Nirmala Sitharaman. Also known as the Annual Financial Statement (AFS), it represents the government’s plan on expenditure and receipts for the financial year. In this article, we cover the key budget terms and definitions that one should know before this event.Key Terms About Budget

Budget Estimate (BE): The government’s projection of the estimated revenues and expenditures in the upcoming fiscal year.

Capital Expenditure (Capex): Also referred to as Capital expense, it is the allocation of funds for long-term asset creation, such as infrastructure (roads, railways, ports), machinery, buildings (Health, education), and military equipment. These expenses are planned to boost economic growth.

Revenue Expenditure: This covers the day-to-day operational costs incurred to maintain government departments and provide public services. Some of the examples of revenue expenditure are salaries and pensions for government employees, subsidies (food, fuel, fertiliser), interest payments on government debt, administrative costs (rent, utilities), grants to states and maintenance of existing assets.

Capital Receipts: The government capital receipts are funds that reduce the liabilities (debt) or reduce the government’s financial assets. These funds are non-recurring and are used specifically to finance long-term investments or cover fiscal deficits.

There are two types of debt receipts categorised within the government’s capital receipts:

Debt Capital Receipts: This includes funds raised through market borrowing, bonds, treasury bills (T-bills), and loans from RBI, banks, and foreign institutions.

Non-Debt Capital Receipts: This covers proceeds from Public Sector Undertaking (PSU) disinvestment and recovery of loans given by the government. This also includes income from the sale of assets such as land or property.

Cess: Additional tax levied on the existing taxes by the government for a specific purpose, for example, Swachh Bharat Cess, Education Cess, and Krishi Kalyan Cess.

Consolidated Fund: Created under Article 266(1), this serves as the government’s primary account for managing all its revenue and expenditure. Also referred to as the Consolidated Fund of India (CFI), it consists of all the revenues received by the government through direct taxes, indirect taxes, profits from public sector undertakings (PSUs), and other sources.

Contingency Fund: These funds are designated to meet unforeseen and urgent expenditures, such as natural disasters. It is established under Article 267 (1) of the Contingency Fund of India Act, 1950. These funds are held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India.

Direct Taxes: This is the type of tax that is to be paid by a person/entity on whom it is applicable. Direct tax focuses on the income of individuals or businesses and is administered by the Central Board of Direct Taxes (CBDT).

Indirect Taxes: This refers to the tax that is generally imposed on goods and services when sold to a customer. Some of the common types of indirect taxes in India are excise duty, customs duty, sales tax, service tax, Goods and Services Tax (GST), Octroi and Entry Tax, toll tax, and stamp duty.

Divestment: When the government sells its ownership stakes in state-owned companies (PSUs) or other assets to raise funds, reduce debt, improve efficiency, and promote private sector participation. Government pursues divestment through its Department of Investment and Public Asset Management (DIPAM).

Economic Survey: An annual report prepared by the Ministry of Finance, it is presented a day before the Union Budget. This report covers the state of the economy of the country in the past financial year, assessment of the performance of major development programs, and highlights the policy initiatives of the government.

Finance Bill: This is a bill that is introduced in Parliament, which includes provisions related to taxation, government expenditure, and financial regulations. It is governed by Article 110 (for Money Bills) and Article 117 (for other Finance Bills) of the Indian Constitution. This plays a key role in economic governance and the implementation of fiscal policies.

Fiscal Deficit: This refers to the difference between the government’s total expenditure and its total revenue (excluding money from borrowings). This is a key economic indicator, often expressed as a percentage of GDP, showing a nation’s financial health and investment in infrastructure or welfare. High deficits can lead to inflation, higher interest costs, and slower growth.

Fiscal Policy: This refers to the government’s framework for managing taxation, public spending, and borrowing to achieve economic objectives such as growth, stability, and inflation control.

Inflation: The rate at which the prices increase or fall in the purchasing value of money. The government manages inflation to encourage economic growth without reducing the prices of goods and services beyond a certain limit.

New Tax System: Introduced in the Union Budget 2020-21 and made the default tax regime from FY 2023-24. It offers lower slab rates with fewer deductions.

Old Tax Regime: Applicable before the financial year 2020-21, it allows multiple deductions and exemptions with higher slab rates.

Public Account: This refers to funds that the government holds on behalf of the contributors through provident funds, small savings schemes, court deposits, security deposits and other trust funds.

Rebate: This refers to a direct reduction in the final income tax amount payable by a taxpayer, provided their total income is below a specified limit.

Revenue Deficit: This occurs when a government’s total expenditure on day-to-day operations exceeds its regular income from taxes and other sources.

Revenue Receipts: Income earned by the government from regular sources such as taxes, fees, and interest, which do not create a liability or reduce assets.

Tax Collected at Source (TCS): Tax collected by the seller from the buyer at the time of sale of specified goods or services and deposited with the government.

Tax Deduction (TDS): Tax deducted at the time of making certain payments like salary, rent, or professional fees and paid to the government on behalf of the recipient.

Tax Surcharge: An additional tax charged on the basic tax liability, usually applicable to higher-income taxpayers or certain companies.

Open DBS Treasures AccountConclusionUnderstanding key budget terms helps you read the Union Budget with clarity and confidence. From revenue receipts and fiscal deficit to cess and capital expenditure, these concepts explain how the government raises funds, allocates resources, and manages the economy. With this glossary, you can better interpret policy announcements, assess their impact on your finances, and follow budget discussions with a clearer perspective.As you stay informed about financial developments, having the right banking partner matters. A premium savings account with DBS Treasures offers a seamless way to manage your money, access exclusive benefits, and grow your wealth with confidence, alongside expert support tailored to your financial goals.