Question

Write short notes on:
1. Capital expenditure
2. Revenue receipts

Answer 1

1. Capital expenditure refers to that government expenditure which causes a reduction in the government liabilities as well as creates assets for the government. For example - expenditure on purchasing land or buildings, expenditure on purchasing bonds etc.

2. Revenue receipts are those receipts of the government which neither creates any liability nor any reduction in the assets of the government. These comprise of tax and non-tax receipts, duties and fines, interest and dividends receipts on government investments and assets. These receipts can be classified into the following two categories:
a. Tax revenue
b. Non-tax revenue