New Delhi: Finance Minister Nirmala Sitharaman will present Union Budget 2026-27 in Parliament on 1 February 2026. For the common man, budget often means
what becomes cheaper and costlier, or how much relief was given by the government in income tax slabs. But have you ever considered where the government gets the money to spend lakhs of crores of rupees from?
The budget is not just a list of expenditures, but it is also an account of the government’s earnings. Interestingly, the source of income of the government is not only your tax paid, but there are many other ways in which the government fills the treasury.
Direct & Indirect Taxes: The Backbone of Government Revenue
Tax is the main source of income of the government. It can be said to be the backbone of the country’s economy. It works in two ways: direct and indirect. When you pay income tax on your hard-earned money or a company pays corporate tax, it goes straight to the government exchequer.
Also, an income is one that you don’t see, but you repay it every step of the way. When you buy anything from the market, from needles to cars, the GST (GST) levied on it goes into the government’s pocket. At the same time, excise duty (excise duty) levied while filling petrol and diesel or on the purchase of liquor is also a large part of the government’s revenue. The government uses this money to not only run the administration, but also bring welfare schemes to reduce the gap between the rich and the poor.
Exploring India’s Non-Tax Revenue Streams for the Budget
If you think that the government relies only on tax collection, then you are wrong. The government also plays the role of a businessman. This is called ‘non-tax revenue’. Whenever you use any government service and pay fees, or invoice for breaking traffic rules, that money goes to the government.
Government Borrowings and Disinvestment
Not only this, the government gets dividend (dividend) of the profits that government companies like Railways, Government Banks, Department of Posts and ONGC (ONGC) earn. Apart from this, the government also has power over the country’s natural resources. Be it coal mines, minerals or spectrum auctions for mobile networks, the government earns thousands of crores of rupees by selling or leasing them.
Many times it happens that the total income of the government falls short of its expenses. When money starts falling short for development works and public welfare, the government takes the path of ‘borrowing’. This is a huge part of the budget. For this, the government issues bonds in the market, which are bought by banks, insurance companies and many times the general public.
Apart from this, the money we deposit in small savings schemes (like PPF or Post Office Savings) is also used by the government for its expenses. If necessary, the government also takes loans from foreign entities or other countries. Many times the government raises a large lump sum amount by selling stake in its own companies (called disinvestment or disinvestment).
