Question

Explain public revenue in detail, giving examples.

Answer 1

Public revenue refers to the income received by the government from all its sources. It represents the total income or funds that the government uses to meet its public expenditure and finance various functions and services for the welfare of the people. Public revenue includes money collected mainly from taxes and non-tax sources. This revenue is essential for the government to meet its obligations without having to repay these sources, unlike public borrowing.

Public revenue can be broadly classified into two categories:

1. Tax revenue: Taxes are compulsory payments made by individuals and businesses to the government to fund public services and infrastructure. Taxes are characterized by being compulsory, personal obligations without direct quid pro quo to taxpayers, and primarily serve the general benefit of society. Examples of taxes include income tax, corporate tax, customs duties, excise duty and Service tax.
2. Non-tax revenue: These are revenues the government earns without imposing taxes. They include fees, fines, profits from government enterprises, and other sources that may often be linked to specific services. Examples include fees, licence fees, special assessments, price or commercial revenue, fines and penalties, escheats, forfeitures, gifts and grants, printing of paper money and borrowings.