Hantgo.com

Stay Informed Stay Ahead

Finance

Budget FAQ 2024: Interim Budget vs Vote on Account – How two are different?

Ahead of the Lok Sabha elections 2024, Finance Minister Nirmala Sitharaman will present the interim budget of the Modi government on February 1, 2024.

Before this, Piyush Goyal, then serving as the acting Finance Minister, presented the interim budget preceding the 2019 General Elections. Goyal had stepped in for Arun Jaitley, who was not well during that period.

Following the reelection of the Narendra Modi-led government in 2019, Sitharaman assumed the role of finance minister and delivered the comprehensive budget on July 5, 2019.

But what is an interim budget and how is it different from the vote on account?

Interim Budget
An interim budget serves as a framework for managing provisional expenditures over a short duration, usually spanning a few months, until a new government takes office at the central level.

The conclusion of the fiscal year on March 31 corresponds with the typical transition period to a new government in late May or early June. The interim budget is strategically crafted to meet the financial requirements and tackle revenue considerations of the recently established government during this interim period. Following the inauguration of the new government, a comprehensive budget for the remaining portion of the fiscal year is typically presented in July.

Despite being presented for the entire year, similar to a regular budget, the interim budget is subject to constraints imposed by the Election Commission. These constraints aim to prevent the government from implementing policies that could unduly influence the general public before the commencement of voting.

Vote on Account
Vote on Account is passed through the interim budget, enabling the government to address expenses in the period leading up to elections. This procedure is conducted as a customary practice, devoid of any major deliberations. Essentially, it serves as an upfront allocation necessary for the government’s operational continuity until the formal approval of demands for grants and the subsequent passage of the Finance Bill and Appropriation Bill.

In essence, a vote on account refers to the temporary authorization granted by the parliament to the government for expenditure. This stands in contrast to the full budget, which serves as a detailed financial declaration encompassing expenditures, revenue, as well as modifications in taxes and governmental policies.

Interim Budget vs Vote on Account: Key Points
In the lead-up to elections, it becomes impractical to a present comprehensive budget. As a result, the government introduces an interim budget. The vote-on-account is a mechanism through which the government requests Parliament’s endorsement for funds adequate to cover expenses until the establishment of a new government.

The interim budget comprises both expenditures and receipts, encompassing the financial aspects of the government. In contrast, a vote-on-account specifically details the government’s incurred expenditures, providing a focused overview.

The Lok Sabha needs to deliberate on and subsequently approve the interim budget before its passage. The vote-on-account is considered a formal procedure, allowing it to be passed by the Lok Sabha without the need for extensive discussion.

The government has the authority to modify the tax system even in the interim budget. However, the vote on account is incapable of altering direct taxes under any circumstances. Any adjustments to direct taxes can only be implemented through the enactment of the Finance Bill.

The interim budget serves as a financial plan during a transitional period, typically when there are only a few months left in the current government’s tenure. The vote-on-account can be approved within the framework of the interim budget.

An interim budget remains in effect for a full year, while a vote on account typically holds validity for a period of two months.

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *