What is a vote on account?
In what case vote-on-account is presented
In the usual case, annual budget is presented each year on the February 28 other than a case if it happens to be a non-working day. And towards May the presented budget for the given financial year is passed.
But when general elections are about to happen and a new government is likely to come in power, annual budget is not passed. Moreover, in respect of the current case when the general election are likely to be held in April or May, the passage of annual budget is not possible so a vote on account is presented.
Note: For each of the annual budget there is a vote-on-account as the final proposed annual budget for a year is passed by mid-May. The government announces the vote on account for the parliament to approve the expenses and thereby providing the capital for running the government during the interim period for 2 or 3 months as the annual budget is proposed until March 31st each and sanction by the parliament expires on this date.
Fund allocation & other provisions under vote on account
Allocation of funds for different accounts is done on a pro-rata basis in correspondence with the amount allocated for the given account in the last budget or even an higher amount if the government proposes. In a case if the vote on account is presented for a three months time, amount of allocation for the interim term shall be computed based on the allocated amount in a year. Also, for a particular head, no new schemes can be introduced. The amount to be spent until the time the new budget for the fiscal year is passed needs to necessarily accounted in the full year's budget meaning in a case when some account with annual budget of Rs. 10,000 crore incurs 40% of the amount in the interim term, only 60% can be spent in the remaining fiscal year.
No changes in respect of tax can be introduced such as cut in tax rates as well as new taxes can't be effected.
Few of the expectations that industry folks have from the Finance Minister's vote on account on February 17 for FY15
Finance Ministry by announcing the vote on account or interim budget will seek parliamentary approval for expenses that it projects to incur in the first quarter of FY15. Expectations are on the front of gold import duty, service tax rationalization and subsidy grants for fertilizer and fuel among others.
GoodReturns.in