Answer the following question.
How are capital receipts different from revenue receipts? Discuss briefly.
The difference between capital receipts and revenue receipts is given as follows:
|Basis||Capital Receipts||Revenue Receipts|
|Effect on government assets||Capital receipts refer to those receipts of the government, which cause a reduction in the government assets||Revenue receipts are those receipts of the government which does not cause any reduction in the assets of the government.|
|Effect on government liability||Capital receipts refer to those receipts of the government, which create a liability for the government||Revenue receipts those receipts of the government which does not create any liability for the government|
|Examples||These receipts comprise of recovery of loans, borrowings of governments and other liabilities of the government||These receipts comprise of tax and non-tax receipts, duties and fines, interest and dividends receipts on government investments and assets|
Concept: Classification of Receipts
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