Question

Short answer type questions:
State the basis of classification of government receipts into revenue receipts and capital receipts. Give an example of each.

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.