Economy
Public Finance, Budget and Taxation
Public Finance, Budget and Taxation — Quick Revision
One-page CGPSC quick revision for Public Finance: budget classification, 2026-27 numbers, deficits, FRBM, taxes, GST and GST 2.0 in tables.
Budget, deficits, fiscal rules, taxes and GST on one page. For explanations, go back to the chapter. All 2026-27 figures are Budget Estimates presented on 1 February 2026.
How to use this sheet
Scan it top to bottom in the week before Prelims. Bold entries are the facts examiners return to most often.
Budget Basics
| Fact | Detail |
|---|---|
| Constitutional term | Annual Financial Statement, Art 112 (state: Art 202) |
| Capital receipt | Creates a liability or reduces an asset (borrowing, disinvestment, loan recovery) |
| Capital expenditure | Creates an asset or reduces a liability (roads, loans to states, loan repayment) |
| Grants to states | Revenue expenditure of the Union, even if used for assets |
| RBI surplus, spectrum charges | Non-tax revenue (revenue receipts) |
| 2017-18 reforms | 1 February date; railway budget merged; plan/non-plan abolished |
| Outcome budget / Gender budget | Both from 2005-06 |
| Zero-based budgeting | Peter Pyhrr; every programme justified afresh |
Union Budget 2026-27 (BE)
| Item | Figure |
|---|---|
| Presented | 1 February 2026 (Sunday); Nirmala Sitharaman’s 9th consecutive |
| Total expenditure | About ₹53.47 lakh crore |
| Capex | About ₹12.2 lakh crore (3.1% of GDP); effective capex about ₹17.15 lakh crore |
| Gross tax revenue | About ₹44.04 lakh crore (11.2% of GDP) |
| Fiscal deficit | 4.3% of GDP (2025-26 RE 4.4%) |
| Revenue / primary deficit | 1.5% / about 0.7% of GDP |
| Central debt | About 55.6% of GDP (2025-26 RE 56.1%) |
| Tax devolution to states | About ₹15.3 lakh crore |
| Defence | About ₹7.85 lakh crore |
| Rupee comes from | Borrowing 24, income tax 21, corporation tax 18, GST 15, non-tax 10, excise 6, customs 4, non-debt capital 2 |
| Rupee goes to | States’ share 22, interest 20, central sector schemes 17, defence 11, CSS 8, FC and other transfers 7, subsidies 6, pensions 2 |
Deficits and FRBM
| Fact | Detail |
|---|---|
| Revenue deficit | Revenue expenditure − revenue receipts |
| Effective revenue deficit | RD − grants for capital assets (Budget 2011-12; FRBM amendment 2012) |
| Fiscal deficit | Total expenditure − (revenue receipts + non-debt capital receipts) = borrowing |
| Primary deficit | FD − interest |
| Disinvestment | Cuts FD, not RD |
| FRBM Act | 2003; in force 2004; FD 3% target; RBI barred from primary G-sec purchase (2006-07) |
| N.K. Singh Committee | Report Jan 2017; debt 60% (Centre 40 + states 20); Fiscal Council — never created |
| 2018 amendment | Debt 40% (Centre) / 60% (general govt) by 2024-25; escape clause 0.5 point |
| Pandemic | FD about 9.2% of GDP (2020-21) |
| Glide path | FD below 4.5% by 2025-26 — met (4.4% RE) |
| Debt anchor | Centre’s debt 50 ± 1% of GDP by 31 March 2031 |
| Chhattisgarh | FRBM Act 2005; 2026-27 state FD about 4.1% of GSDP (PRS) |
Taxation
| Fact | Detail |
|---|---|
| Direct vs indirect | Incidence stays vs incidence shifted |
| Buoyancy vs elasticity | Includes vs excludes discretionary changes |
| Cess | Earmarked; outside divisible pool (Art 270) |
| Surcharge | Tax on tax; wholly Union (Art 271) |
| Income-tax Act, 2025 | In force 1 April 2026; “tax year”; about 536 sections |
| New regime | Default since 2023-24; slabs 0/5/10/15/20/25/30 in ₹4 lakh steps; no tax up to ₹12 lakh; unchanged in Budget 2026-27 |
| Corporate tax (2019) | 22% (25.17% effective); 15% new manufacturing (17.01%) |
| Abolished | Estate duty 1985, gift tax 1998, FBT 2009, wealth tax 2015-16, DDT 2020-21 |
| Committees | Chelliah (1991), Kelkar (2002, 2004), Shome (2013), Akhilesh Ranjan (2019) |
GST
| Fact | Detail |
|---|---|
| Amendment | 101st (2016); 122nd Bill |
| Launch | 1 July 2017 |
| Articles | 246A power, 269A IGST, 279A Council, 366(12A) definition |
| Outside GST | Alcohol (Constitution); 5 petroleum (crude, diesel, petrol, natural gas, ATF) until Council date; stamp duty, electricity duty, basic customs |
| GST 2.0 | 56th Council meeting 3 Sept 2025; effective 22 Sept 2025; 5 / 18 / 40 + nil, 0.25, 3 |
| Insurance | Individual life and health insurance exempt |
| Coal | 5% + ₹400/t cess → 18%, no cess |
| Compensation | 14% growth, 5 years to 30 June 2022; cess ended on tobacco 1 Feb 2026 |
| GSTAT | Launched 24 Sept 2025; Principal Bench New Delhi |
| Thresholds | ₹40 lakh goods / ₹20 lakh services; composition ₹1.5 crore |
Don’t Confuse
| This | vs | That |
|---|---|---|
| Disinvestment — capital receipt | vs | RBI dividend — revenue receipt |
| Loan to a state — capital expenditure | vs | Grant to a state — revenue expenditure |
| Primary deficit zero — borrowing only for interest | vs | Fiscal deficit zero — no borrowing |
| FRBM Act 2003 (Union) | vs | Chhattisgarh FRBM Act 2005 |
| Alcohol — outside GST by Constitution | vs | Petroleum — awaiting Council date |
| Compensation period ended 2022 | vs | Compensation cess ended 2025 / 1 Feb 2026 |
| Estate duty 1985 | vs | Wealth tax 2015-16 |
Favourite MCQ trap
“Disinvestment reduces the revenue deficit.” It does not. Disinvestment is a capital receipt, so it lowers only the fiscal deficit. The same logic applies to recovery of loans.
Back to topics: Union Budget · Fiscal Deficit and FRBM · Taxation · GST
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