Budget: Where does Centre collect every 1 rupee of revenue from?

Union Budget Explained: As the country awaits Finance Minister Nirmala Sitharaman's next Union Budget, the first under the Narendra Modi 3.0 government, it is prudent to learn about the basics of the annual set of documents outlining an administration's annual collections and spends. Budget 2025 will be the current finance minister's eighth in a row and the second after the 2024 general elections. All eyes will be on the finance minister's speech in the Lok Sabha, the lower house of Parliament, amid hopes for economic reforms and expectations of income tax sops.

Do you know where the central government collects its money from? 

In this article, let's look at some official data from the July 2024 Budget to learn about the revenue side of government finances. For instance, corporation tax, income tax and liabilities such as borrowings form about 64 per cent of the government's total revenue collected. Goods and Services Tax (GST), an indirect tax, on the other hand, alone forms 18 per cent of the government's overall revenue. 

Budget Explained | Where does a government collect revenue from? Where can you find these details?

These details are laid out clearly in the 'Budget at a Glance' document, part of the Budget documents that are tabled in Parliament.

It is this very document that offers an overall summary of Budget, including key aggregates.

The sole purpose of this document is to provide a clear and concise outline of the flow of money on both revenue and expenditure sides, facilitating easy understanding. 

For instance, the Budget at a Glance document offers an illustrative account of sources of receipts through a mix of infographics and tables.

Let's look at the latest Budget at a Glance to understand several revenue-side aspects of the central government's Budget profile.

Where does Government of India earn every 1 rupee of revenue from?

Income and corporate taxes, GST and other taxes, and borrowings along with other such liabilities together form the lion's share of the government's earnings.   

These four things account for more than four-fifths of the government's overall revenue collected, according to official Budget documents. 

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