New Delhi | Jagran Business Desk: Finance Minister, Nirmala Sitharaman is going to present Union Budget 2021 on 1st February. This year's budget is going to hold significant importance as its being prepared to revive the economy after its plunge due to COVID-19 pandemic in 2020.

Like the Union budget, even state governments present its budget every year, however, not many know the difference between the two budgets. So here we are with detailed information regarding Union and State budget ahead of the beginning of the Budget session.

Union Budget

In the Article 112 of the Constitution of India, Union Budget of India is also known as Annual Financial Statement. It is the annual budget of the Republic of India. Union budget holds the account of the government's expenditure and from where they will collect the taxes for the fiscal year.

This budget is further categorised into two groups namely Capital Budget and Revenue Budget.

Capital budget: This budget includes the government's capital receipts and payments. Capital receipts include loans from the public, foreign governments and RBI. While Capital expenditure is spending on the development of equipment, machinery, education, buildings, health facilities, etc.

Revenue budget: In this budget includes the government's revenue expenditure and receipts. Revenue expenditure is the government's spending on a day to day basis.

State Budget

In this, every state has to prepare its own budget every year. State Budget keeps the account of state government's expenditure for the development of state such as health facility, transport expenditure, land development, etc. As per the Constitution of India, it specifies that no expenditure can be collected from the Consolidated Fund of a State without the authority of Appreciation Act.

The receipt of the state budget is different from the Union budget. This budget consists of tax and non-tax revenues collected by the state, which is then shared with the share of central taxes.

Posted By: Niharika Sanjeeiv