Question

Answer the following question.
How are capital receipts different from revenue receipts? Discuss briefly.

Answer 1

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