Test: Government Budget And Economy - 1

A government budget is a document prepared by the government and/or other political entity presenting its anticipated tax revenues (Inheritance tax, income tax, corporation tax, import taxes) and proposed spending / expenditure (Health care, Education, Defence, Roads, State Benefit) for the coming financial year.

Government budget shows estimated receipt and expenditure. With this budget government do all that work that have been declared for the year. Actually all the budget for any firm or even a home, money limit is decided for the expected works during the year. Budget is common concept for all.

Government redistributes income and wealth with the help of government budget. it imposes high tax on rich to absorb extra purchasing power from the economy and give it to the poor in the form of subsidies. This reduces the gap between the rich and the poor and inequality is decreased and redistribution of income and wealth is achieved with the help of government budget.

The budget is divided into two parts:

(i) Revenue Budget and

(ii) Capital Budget.

The budget is divided into two parts:

(i) Revenue Budget and

(ii) Capital Budget.

Revenue budget consists of the revenue receipts of the government (tax revenues and other revenues) and the expenditure met from these revenues.

Revenue receipts are divided into tax and non-tax revenue.

► Tax revenue is the income that is gained by governments through taxation. Taxes such as income tax, corporate tax, custom duties, excise and other duties levied by the government.

Other revenues are receipts of the government mainly consisting of interest and dividend on investments made by the government, and fees and receipts for other services rendered by the government.

Revenue Budget consists of the revenue receipts of the government (tax revenues and other revenues) and the expenditure met from these revenues.

Revenue receipts are divided into tax and non-tax revenue.

► Tax revenue is the income that is gained by governments through taxation. Taxes such as income tax, corporate tax, custom duties, excise and other duties levied by the government.

Other revenues are receipts of the government mainly consisting of interest and dividend on investments made by the government, and fees and receipts for other services rendered by the government.

Capital Budget: consists of capital receipts (like disinvestment, borrowing, loans from public or foreign governments, Reserve Bank of India, etc).

Capital expenditure (like expenditure on development of machinery, health facilities, etc). 

Capital budgeting comprises two words — 'capital' and 'budget'.

Capital Budget
It consists of capital receipts (like disinvestment, borrowing, loans from public or foreign governments, Reserve Bank of India, etc).

Capital expenditure (like expenditure on development of machinery, health facilities, etc). 

Capital budgeting comprises two words — 'capital' and 'budget'.

The Revenue Budget comprises revenue receipts and expenditure met from these revenues. The revenue receipts include both tax revenue (like income tax, excise duty) and non-tax revenue (like interest receipts, profits).