Union Budget 2026: 27 key financial terms explained for beginners

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The Union Budget 2026 will be presented in Parliament on February 1, 2026, by Finance Minister Nirmala Sitharaman. Also called the Annual Financial Statement (AFS), it outlines the government’s plan for income and spending for the coming financial year. To help understand the announcements better, here is a guide to important budget terms and their meanings.

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Key Budget Terms Explained: Budget Estimate (BE): Forecast of expected government income and expenditure for the year. Capital Expenditure (Capex): Spending on long-term assets like roads, schools, hospitals, machinery, and defence. Revenue Expenditure: Day-to-day expenses to run government services, e.g., salaries, pensions, subsidies, and maintenance.

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Capital Receipts: Funds that reduce debt or add to assets. Includes: Debt Capital Receipts: Borrowings via bonds, treasury bills, or loans from banks and institutions. Non-Debt Capital Receipts: Money from disinvestment, asset sales, or loan recoveries.

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Cess: Extra tax collected for a specific purpose, e.g., Education Cess or Swachh Bharat Cess. Consolidated Fund of India (CFI): Main government account where all revenues are deposited and spending occurs. Contingency Fund: Emergency fund for natural disasters, managed by the Finance Secretary. Direct Taxes: Taxes paid directly on income by individuals or businesses (CBDT oversees

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Indirect Taxes: Taxes on goods and services, e.g., GST, customs, excise duty. Divestment: Selling government shares in public sector companies to raise funds.

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Fiscal Deficit: Gap between government spending and income (excluding borrowings), shown as % of GDP. Fiscal Policy: Government’s plan for taxation, spending, and borrowing for growth and stability. Public Account: Government funds held on behalf of citizens, e.g., provident funds, small savings.

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Inflation: Rate at which prices rise, affecting purchasing power. New Tax Regime: Lower tax rates with fewer exemptions, default from 2023-24.

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Rebate: Reduction in tax payable if income is below a certain limit. Revenue Deficit: When routine government income is less than routine expenses. Revenue Receipts: Money earned from taxes, fees, and interest, not creating debt.

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Economic Survey: Annual report reviewing the country’s economy before the Budget. Finance Bill: Bill with tax proposals and financial rules introduced in Parliament.

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Tax Collected at Source (TCS): Tax collected by sellers at the time of sale. Tax Deducted at Source (TDS): Tax deducted from payments like salaries, rent, or fees. Tax Surcharge: Extra tax on top of basic tax for high-income earners or certain companies.