Though on the face of it, the difference lies in only two alphabets,
in principle the two terms have very different meanings. While a sum
assured defines the benefit, sum insured only reimburses the insured
loss.
Sum assured: It is a pre-defined benefit that the insurer pays to the
policyholder in case the insured event takes place. For instance, in a
life insurance policy, the insurer promises to pay the nominee a sum
assured-a pre-decided amount-in case of the policyholder’s death. For
this amount, the policyholder pays a premium to the insurer. If the
policyholder dies during the term of the policy, the insurer will pay
the nominee the sum assured and the policy terminates.
Sum insured: A policy that offers a sum insured works on the
principle of indemnity. By definition, indemnity means compensation for
any damage, loss or injury suffered. Non-life insurance policies such as
health, motor and householder’s work on the principle of indemnity.
There are two components of expenditure - plan and non-plan.
Of these, plan expenditures are estimated after discussions between
each of the ministries concerned and the Planning Commission.
Non-plan revenue expenditure is accounted for by interest payments,
subsidies (mainly on food and fertilisers), wage and salary payments to
government employees, grants to States and Union Territories
governments, pensions, police, economic services in various sectors,
other general services such as tax collection, social services, and
grants to foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public
enterprises, loans to States, Union Territories and foreign
governments.
Indirect taxes are those paid by consumers when they buy goods and services. These include excise and customs duties.
Customs duty is the charge levied when goods are imported into the country, and is paid by the importer or exporter.
Excise duty is a levy paid by the manufacturer on items manufactured
within the country. Usually, these charges are passed on to the
consumer.
These are the taxes that are levied on the income of individuals or
organisations. Income tax, corporate tax, inheritance tax are some
instances of direct taxation.
Income tax is the tax levied on individual income from various sources like salaries, investments, interest etc.
Corporate tax is the tax paid by companies or firms on the incomes they earn.
- The capital budget is different from the revenue budget as its
components are of a long-term nature. The capital budget consists of
capital receipts and payments.
Capital receipts are government loans raised from the public,
government borrowings from the Reserve Bank and treasury bills, loans
received from foreign bodies and governments, divestment of equity
holding in public sector enterprises, securities against small savings,
state provident funds, and special deposits.
Capital payments are capital expenditure on acquisition of assets
like land, buildings, machinery, and equipment. Investments in shares,
loans and advances granted by the central government to state and union
territory governments, government companies, corporations and other
parties.
The revenue budget consists of revenue receipts of the government (revenues from tax and other sources), and its expenditure.
Revenue receipts are divided into tax and non-tax revenue. Tax
revenues are made up of taxes such as income tax, corporate tax, excise,
customs and other duties that the government levies.
In non-tax revenue, the government’s sources are interest on loans
and dividend on investments like PSUs, fees, and other receipts for
services that it renders. Revenue expenditure is the payment incurred
for the normal day-to-day running of government departments and various
services that it offers to its citizens.
The government also has other expenditure like servicing interest on its borrowings, subsidies, etc.
Usually, expenditure that does not result in the creation of assets,
and grants given to state governments and other parties are revenue
expenditures. The difference between revenue receipts and revenue
expenditure is usually negative. This means that the government spends
more than it earns. This difference is called the revenue deficit.
The Union Budget is the annual report of India as a country.
It contains the government of India’s revenue and expenditure for the
end of a particular fiscal year, which runs from April 1 to March 31.
The Union Budget is the most extensive account of the government’s
finances, in which revenues from all sources and expenses of all
activities undertaken are aggregated. It comprises the revenue budget
and the capital budget. It also contains estimates for the next fiscal
year.
Assessee refers to the person whose income is being assessed. Every
person who files his or her return is known as the assessee, even though
if a person has no tax liability yet he gets his income assessed, he
shall be known as an assessee. Therefore, a person who is getting his
income assessed is known as an assessee.
Most insurers offer a wide range of funds to suit
one’s investment objectives, risk profile and time duration. Different
funds have different risk categories.
Different funds have different return potential.
Equity Funds, Fixed Interest and Bond Funds, Money Market Funds and
Balanced Funds are some of the most common fund types.
These are the invested parts of the premiums after
deduction of all the charges and premium for risk cover under all
policies in a particular fund as chosen by the policy holders.
