Which one is a capital receipt?

License and court fees received by the government in year 2014-15.

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Financial help from Microsoft for the victims of flood affected areas.

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Sale of 40% shares of public sector undertaking to a private enterprise.

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Profit of LIC, a public enterprise.

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Solution

The correct option is C Sale of 40% shares of public sector undertaking to a private enterprise.
Capital expenditure refers to the estimated expenditure in a fiscal year which creates assets for the government and causes reduction in liabilities for the government. For example: expenditure on lands and building, purchase of shares, expenditure on machinery and equipment. Thus, sale of 40% shares of public sector undertaking to a private enterprise is a capital receipt.

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Similar questions

Q. Identify the following as revenue receipts and capital receipts. Give reasons.
(i) Loans recovered from Public sector enterprises.
(ii) License and court fees received by the Government in the year 2014-15.
(iii) Loan taken from USA for the infrastructural developments.
(iv) Sale of shares held by Government in a PSU.
(v) Financial help from Microsoft for the victims of flood affected areas.
(vi) Amount borrowed from Japan for construction of Metro.
(vii) Dividend received by Government from a company.
(viii) Funds raised from public in the form of National Saving Certificates.
(ix) Sale of 40% shares of a public sector undertaking to a private enterprise.
(x) Profits of LIC, a public enterprise.

Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer.

(i) Receipt from sale of shares of a public sector undertaking.

(ii) Borrowing from public.

(iii) Profit of public sector undertakings.

(iv) Income tax received by government.

Q. Sale of public enterprises to private sector is called __________.

Identify the form of public sector enterprise in the following cases:

(a) This is the oldest and traditional form of public enterprise.

(b) Special act of the parliament brings this public enterprise into existence.

Act of selling a part or the whole of shares of selected public sector undertakings (PSU) held by the government to generate capital receipts is called _______.

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