India Budget – explained differently

What is India Budget 2020 – It is a statement showing the estimated income and projected expenses
from 1st April 2020 to 31st March 2021.

How much money does the Government of India estimate to earn/(get) and spend in the coming
year?
Rs. In Crores
Proposed to spend 30,42,230

Estimated to earn (Income or Receipts) 30,42,230

Break-up of Income
 from Taxes (Central government share) 16,35,909
 from other income like dividends 6,09,984
 from loans and Borrowings 7,96,337

All of us know that the main source of income is the ‘TAXES” collected from the citizens.

What are the types of taxes?

 Corporate Tax (nothing but Income Tax) paid by the companies on their Profits. Suppose,
Sale is Rs.100,000, Expenses is Rs.90,000, the Profit (Rs.100000-Rs.90000) is Rs.10,000.
Corporate Tax on Rs.10,000 at the current tax rate of 25.17% is Rs.2,517
Total Corporate Tax estimated is Rs.6,81,000 Crores

 Income Tax (yes, you know, same thing! what is deducted from salary as TDS by the
employer). We file IT return of employee working in an MNC in Bangalore, who earns
Rs.2,10,00,000 this year. Can you guess how much income tax he would be paying? Don’t
guess and waste your time, let me tell you, it is Rs.75,00,000. Don’t search for the Calculator
– it is close to 36%.
Total of such Income Tax estimated is Rs.6,38,000 Crores

 Customs Duty (This is what you pay when goods are imported from abroad like Television,
Plant and Machinery, etc.)
Total Customs Duty is Rs.1,38,000 Crores

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  Goods and Service Tax (GST) – who won’t know about this tax? Everyone talks about GST
now-a-days. For example, your restaurant bill will have 5% GST, Architect fee will have 18%
GST, Insurance premium, hotel accommodation, soap, paste, pasta, pizza, everything will have
GST on the base price.

GST is divided among Central Government and State Governments. GST collected by Central
Government is
GST (Central Govt share) is Rs.6,90,500

 Excise Duty on petrol – Still there is no GST on petrol and diesel. So, the old ED is applicable
Excise Duty is Rs.2,67,000 Crores

 Other Income such as dividend (distribution of profits earned by a company is called dividend)
from government owned establishments such as SBI, Canara Bank, BEL, BHEL, Air India, etc.
(Sorry, Air India can’t give dividends! They are making a loss of over Rs.8500 Crores per year. In
fact, Air India gets money from our taxes)

Secondly, income from dis-investments (this means sale of properties / share in the
properties owned by the Government)

Finally, miscellaneous income such as interest on deposits, grants, etc.

Other Income for the Year is Rs.6,09,984 Crores

Now the best part of the story – where these guys spend so much money? Crazy!
It is a million-dollar question! Take examples (a) Roads – you guys collect toll and road tax, even after
10 – 15 years of it being built) (b) water – we pay for it (c) Electricity – we pay (d) street lights – we
pay corporation tax. So, please, where is so much money going?

Here you go –
Salary towards Government employees, rent to government offices, travelling cost, staff welfare,
pension for the retired staff, etc., all put together we call it as Establishment Expenditure
Establishment Expenditure Rs 6,09,585 Crores
(This means –- 95.95.% of Income tax what we pay is going towards paying these guys)

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Interest Payment
Like you and me, the Government has also borrowed, in fact a lot. Don’t ask me ‘how much’, It’s huge,
16-digit Casio Calculator to be used to put the numbers!
Total Loan taken and pending payable by Rs.85,00,000 Crores (ie., 8500000,00,00,000)
Government of India is
Toooo many digits, lets simplify this dividing Population of India estimated 135,00,00,000
the total loan by population
Loan per Indian Citizen Rs.62,963

What does it mean? It means if every Indian pay Rs.62,963/- (as one-time cost) back to the
government, the entire loan of Central Government will get paid off.

Sorry for deviating from the topic – On the above loan amount, the Government is paying
(Government - feel sorry for you, ya!!) Rs 7,08,203 Crores as interest per year
This means 100 % of Corporate tax paid by the companies is going towards payment of Interest. Poor
corporates, struggle so much to earn and pay the taxes and the entire money goes towards interest
on loan! Sad, isn’t it? In addition to this, 20% of customs duty is also going towards interest payment

Where else is the money going? Scams, oh no!, Scheme Expenditure, Subsidies, etc. Sorry, If I start
dissecting the numbers, the article will be boring. You may stop reading further. I will not take more
than 150 words from here – deal? Okay?

Major Expense heads are -

Rs. In Crores
Pension 2,10,682
Defence Cost 3,23,053
Subsidy Fertilizer 71,309
Subsidy Food (Rs.2/- Rice per kg type of schemes) 1,15,570
Subsidy Petroleum 40,915
Transport 1,69,637
Interest on Loan 7,08,203
Education 99,312
Healthcare 67,484

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So, what is left for development activities? (in the above list, minor portion may go towards building
facilities). Looks like everything is spent on running expenses. Wait, something is also spent for
development

Agriculture Rs. In Crores % of total revenue

Rural Development 1,44,817 4.82%
Scientific Departments 30,023 1.00%
Urban development 50,040 1.67%

Mother India and Poor Indians – We don’t have enough money for development work. All our tax
collections, sale of property by the government is going towards meeting day-to-day expenses. We
don’t have money to build bridges, roads, airports, railway stations, public toilets, garbage disposal
units, drainage systems, power plants, etc. That is one of the reasons why our infrastructure is not
world-class, yet. (Of course, you may list many reasons for poor infrastructure, but this is one of the
main reasons)

When I say - I am a typical middle-class Indian. India also says ‘me too’! yes, India is leading a middle-
class type living! All the earnings are going towards meeting the monthly expenses. A very little is left
to buy Assets or create wealth. he! India, don’t worry ya, many of us are like you and with you!!

I am not sarcastic; the above data is released today in the Union Budget 2020. There is nothing cooked
up by me. This is not about BJP or Congress; Modi or Rahul, good or bad, past or present comparison.
It is a simple analysis of facts. More detailed information is available about taxes and other things.
We will have another document for that. For now, TATA, see you soon.

Hope you liked this document

CA Prasad, Bangalore
1st February 2020

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