Question

Short answer type questions:
Distinguish between: (a) Revenue receipts and capital receipts; (b) Direct tax and Indirect tax.

Answer 1

Revenue receipts are those money receipts which do not create any corresponding liabilities or cause any reduction in the assets of the government. Example: tax.

Capital receipts refers to those money receipts which either create a liability for the government or cause reduction in assets of the government.Thus, borrowings and other liabilities are included in capital receipts.

A direct tax is the one the final burden of which is borne by the person on whom it is imposed. Example: income tax.

An indirect tax is the one the final burden of which can be shifted to other persons. Example: sales tax.