Public Finance, Fiscal Policy and Fiscal Consolidation

Direct Taxes of the Union

1. Income Tax
2. Corporate Tax
3. Wealth Tax 
4. Securities Transaction Tax
5. Fringe Benefit Tax
6. Hotel Receipts Tax
7. Interest Tax (on Banks)
8. Gift Tax
9. Estate Duty
10. Banking Cash Transaction Tax

Direct Taxes of the States

1. Agricultural Income Tax
2. Professional Tax
3. Stamp Duty
4. Property Tax
5. Land Revenue

Indirect Taxes of the Union

1. Central sales Tax (given entirely to states)
2. Excise Duty
3. Customs Duty
4. Service Tax

Indirect Taxes of the States

1. Sales Tax (VAT system)
2. Excise Duty on liquor and narcotics
3. Toll Tax
4. Electricity Tax
5. etc

Budget should distinguish revenue expenditure from other expenditure. So,

i) Revenue Budget

ii) Capital Budget

Revenue Budget

Budget is just a financial statement having record of both receipts and expenditure. So here

Revenue Receipts

• Tax 
• Direct
• Indirect
• Non-tax
• Other incomes (from sale of goods and services)
• Interest received on Loans given
• Dividends & Profits
• Grants, aids received

Revenue Expenditure

• Salaries etc. (expenses in producing goods and services)
• Interest paid on loans
• Grants given
• Subsidies
• etc.

Revenue Deficit = Revenue Expenditure - Revenue Receipt

Effective Revenue Deficit = Revenue Deficit - grants given to states/ UTs for generating capital assets

Capital Budget

Revenue part

• Debt 
• Internal
• External
• Non-debt
• from Disinvestment
• loan (principal) recovered

Expenditure Part

• on capital goods/ assets
• loan (principal) given to states