Q. 1

Why does the government need a budget? Why does the budget talks of taxes?

Answer :

Budget is a future estimation of all the revenues and expenditure over a specific period of time. It is used to allocate the scarce resources in the best designed economic use. The budget is used as the tool of decision making by the government. Most of the economic decisions are being dependent on the budget. The economic decision includes the investment spending and allocation of resources.

One of the main components of the budget is the tax. Tax includes the major part of the revenue. In India, the tax is collected in the unified tax system known as Goods Service Tax (GST). This tax is collected by both the state governments and central governments with a single rate. Thus it constitutes a major part of the revenue for the government.

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