The upcoming Budget scheduled for February 1, 2024, is poised to be a unique event, primarily due to the impending general elections. Finance Minister Nirmala Sitharaman, set to present her sixth consecutive Budget, will be constrained to deliver a Vote-on-account instead of a comprehensive Budget, given the election year protocol.
Sitharaman, aiming to surpass the late Arun Jaitley, will make history as the first woman finance minister presenting six Budgets, including an Interim Budget. The distinction between an Interim Budget and a Vote-on-account, as clarified by the Finance Minister, is crucial. While both terms are often used interchangeably, an Interim Budget provides a comprehensive overview of the current economic status, plan and non-plan expenditures, tax rate adjustments, revised estimates for the ongoing fiscal year, and projections for the upcoming fiscal year.
On the other hand, a Vote-on-account, as highlighted by Sitharaman, is more specific. It primarily addresses essential expenditures that the outgoing government must cover for a limited period, usually two to four months. This includes salaries for central government employees, funding for ongoing projects, and other critical expenditures.
The parliamentary process for passing these budgets also differs. An Interim Budget undergoes thorough discussion and approval in the Lok Sabha, whereas a Vote-on-account is passed without formal deliberation. Furthermore, an Interim Budget can propose changes in the tax structure, while a Vote-on-account is restricted from altering the existing tax regime.
The purpose of both budgets is to secure parliamentary approval for withdrawing funds from the Consolidated Fund of India until the new government presents a comprehensive Budget. The Vote-on-account serves as an advance grant, interim arrangement, and authorization for the outgoing government to access funds for short-term expenditures during the transitional period.
Another notable distinction lies in the validity period; an Interim Budget remains in effect throughout the entire year, while a Vote-on-account holds validity for a limited period of two to four months.
In line with the Election Commission of India’s code of conduct, the outgoing government is prohibited from proposing major tax and economic policy changes to prevent influencing voters. As reiterated by Finance Minister Sitharaman, taxpayers will need to wait until the new government assumes office in July for any significant developments in tax policies.