For revenue generation, the government continues to rely primarily on a mix of taxation and borrowings as 24 paise of every rupee comes from borrowings, while income tax contributes a substantial 22 paise of every rupee as revenue.
According to the Union Budget for 2025-26 presented by Finance Minister Nirmala Sitharaman on Saturday, Goods and Services Tax (GST) and other taxes bring in 18 per cent to the coffers and the Corporate tax makes up another 17 per cent of each rupee as revenue.
Other smaller but significant sources of revenue include non-tax receipts at 9 per cent, union excise duties at 5 per cent, and customs duties at 4 per cent. A marginal 1 per cent is sourced from non-debt capital receipts, rounding out the government’s revenue sources, according to Budget documents presented in the Parliament.
On the government’s expenditure priorities, a significant 22 paise of every rupee is earmarked for the states’ share of taxes and duties, followed by 20 paise as interest payments for various borrowings.
Another notable allocation is 16 percent for Central Sector Schemes (excluding capital outlay on defence and major subsidies). This is followed by 8 per cent each for defence, finance commission, other transfers, and centrally sponsored schemes. Major subsidies also claim a significant share, absorbing 6 per cent of the rupee, while 4 per cent is spent on pensions. UNI SKB SSP
