Can anyone explain to me the - definitions of revenue receipt and capi...
Revenue Receipt:
Revenue receipt refers to the income that a government receives from its regular activities and operations. It includes the inflow of funds from various sources such as taxes, fines, fees, interest on loans, dividends from public sector enterprises, etc. These receipts are not meant for creating any assets or reducing liabilities, but are used for meeting the day-to-day expenses of the government.
Capital Receipt:
Capital receipt, on the other hand, refers to the income that a government generates by selling its assets or by taking loans. It includes proceeds from the sale of government securities, borrowings from the Reserve Bank of India and other financial institutions, disinvestment proceeds, recoveries of loans given by the government, etc. These receipts are used for creating assets or reducing liabilities of the government.
Differences between Revenue Receipt and Capital Receipt:
There are several key differences between revenue receipt and capital receipt, which are outlined below:
1. Nature: Revenue receipt represents the regular income of the government from its day-to-day activities, while capital receipt represents the income generated from the sale of assets or borrowings.
2. Usage: Revenue receipts are used for meeting the routine expenses of the government, such as salaries, pensions, subsidies, etc. Capital receipts, on the other hand, are used for creating assets or reducing liabilities, such as infrastructure development, repayment of loans, etc.
3. Impact on Financial Position: Revenue receipts do not have a significant impact on the financial position of the government as they are used for recurring expenses. Capital receipts, on the other hand, have a long-term impact as they are used for creating assets or reducing liabilities.
4. Source: Revenue receipts are generated from regular sources such as taxes, fines, fees, etc. Capital receipts are generated from non-regular sources such as sale of assets, borrowings, etc.
5. Treatment: Revenue receipts are treated as revenue income in the government budget and are shown on the income side of the budget. Capital receipts are treated as capital income and are shown on the capital side of the budget.
Conclusion:
In summary, revenue receipts represent the regular income of the government from its day-to-day activities, while capital receipts represent the income generated from the sale of assets or borrowings. Revenue receipts are used for meeting routine expenses, while capital receipts are used for creating assets or reducing liabilities. The distinction between these two types of receipts is important in macroeconomics and government budgeting as it helps in understanding the financial position and expenditure priorities of the government.
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.