Question

Distinguish between revenue receipts and capital receipts in a government budget. Give example in each case.

Distinguish between revenue receipts and capital receipts of the government, with suitable examples. 

Distinguish between revenue receipts and capital receipts in a government’s budget.

Answer 1

Sr. No.	Basis of Difference	Capital Receipts	Revenue Receipts
1.	Meaning	These refer to those government receipts that cause a reduction in government assets and also create liability for the government.	These refer to those government receipts that neither create any liability nor create any reduction in the government assets.
2.	Reduction in Assets	They cause a reduction in the assets of the government.	They do not cause any reduction in the assets of the government.
3.	Creation of Liability	They create liability for the government.	They do not create any liability for the government.
4.	Example	Recovery of loans is a capital receipt.	Tax receipts are revenue receipts.