“It is a matter of truth that the February 1, 2024, Budget that will be just be a vote on account… we will be in election mode… so the Budget will just be to meet the expenditure no spectacular announcements are made at that time” – Nirmala Sitharaman
The Finance Minister is all set to present her sixth Budget in a row on February 1, 2024. Since it is general elections year, the outgoing government will be allowed only to present an Interim Budget or Vote-on-account instead of a regular full Budget. Up on presenting, the Finance Minister will become the first woman finance minister to have presented six Budgets including an Interim Budget and surpass her ‘Guru’ late Arun Jaitley. A regular full Budget is likely to be tabled in July after the newly elected government takes charge.
As per the Finance Minister’s own words, this will be a vote-on-account rather than an Interim Budget. Though we use these two interchangeably, there are some differences between them. An interim Budget generally includes the current state of the economy, plan and non-plan expenditures and receipts, changes in tax rates, revised estimates of the current financial year and estimates for the coming financial year and in the latter case, the Parliament passes Vote-on-account to meet the essential expenditures such as salaries of central government staff, funding of ongoing projects, and other government expenditures. In other words, it accounts only expenditures to be bared by the outgoing government for a period of two months, which may be extended to four months on special circumstances.
Also Read: Interim Budget 2024: Sector-wise wishlist, stock market tax sops, divestments & more
Like a full Budget, an interim Budget will be discussed and passed in the Lok Sabha and in the case of vote-on-account, it will be passed without any formal discussion as such. An interim Budget can propose changes in the tax regime whereas the vote-on-account cannot change the tax regime under any circumstances. It is a Parliamentary approval for withdrawing money from the Consolidated Fund of India from April to June/July or until the new Government presents its full-fledged Budget. It can be termed as an advance grant, interim arrangement and authorisation for the outgoing government to draw the money from the above-said fund and meet short-term expenditures. As far as validity is concerned, interim Budget is valid throughout a year whereas vote-on-account is valid only for a period of two to four months.
As per the code of conduct of the Election Commission of India, the outgoing government will not be allowed to propose any major tax and economy related policies to avoid its influence on electors. In addition, as the Finance Minister herself quoted, taxpayers will have to wait until the new government comes in July.
Views are personal. The author is founder and chief executive officer of tax advisory firm Shree Tax Chambers.
Also Read: Union Budget 2024: More clarification on the New Tax Regime is the need of the hour