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it means all receipts of Govt which create liability or Reduce Financial Assets

What are Capital Receipts - Teachoo.JPG

Example of Capital Receipts which Increase Liability

Borrowings from Public

(Loan raised from Public by issuing govt bonds)

 

Borrowings from RBI, Financial Institutions and Banks

(This is done through sale of treasury bonds)

 

Borrowings from Foreign Govt and International Institutions

(Example -Loan taken from Japan to make bullet Train)

 

Saving Schemes

(Sale of National Savings certificate, Post office savings schemes)

Different Capital Receipts which Create Liability - Teachoo.JPG

Example of Capital Receipts which Reduce Financial Assets

 

Recovery of Loan Granted by Central Govt

Suppose loan granted by Central govt to State govt

It is Asset in books of Central Govt

Suppose State govt repays this loan

It is Reduction Of Financial Assets of Central govt

So it is a capital receipt

 

Disinvestment

Disinvestment means Sales of shares of public sector undertakings (PSU)

Govt owns shares of various companies like SBI, ONGC, BHEL

So these are asset to Central Govt

Suppose govt sells these shares, it is reduction of financial asset

Hence it is a capital receipt

Capital Receipts which Reduce Financial Assets - Teachoo.JPG

NCERT Questions

No questions in this part

Other Books

question 1

In the following questions, select the correct answers:

Capital Receipts include:

  1. Tax Revenue
  2. Non-tax revenue
  3. Recovery of loans
  4. Borrowings
View Answer

Question 2

Which one is a Capital Receipt?

  1. Funds raised through National Savings Certificate
  2. Financial help received from Microsoft for flood victims
  3. Sale of 40% shares of PSU to a private enterprise
  4. Profit of LIC, a public enterprise
View Answer

Question 3

Which one of the followings statements is incorrect?

  1. Revenue receipts are recurring in nature.
  2. Revenue receipts are non-redeemable in nature.
  3. Capital receipts create an asset or reduce liabilities of the government
  4. Borrowings are treated as capital receipt as they lead to decrease in liability.
View Answer

Question 4

Disinvestment by government means:

  1. Selling of its fixed capital assets
  2. Selling of shares of PSU held by it
  3. Selling of its buildings
  4. All of the above
View Answer

Oswaal Questions

Question 1

Which of the following sources of receipts in government budget increases its liabilities?

  1. Direct taxes
  2. Recovery of loans
  3. Borrowings
  4. Dividend from public sector undertakings
View Answer

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Transcript

What are Capital Receipts Receipts of Govt which Increase Liability or Reduce Financial Assets Hence, Capital Receipts are of 2 types Receipts which Create Liability Example- Loan taken from public Receipts which Reduce Asset Example- Recovery of Loan Given Different Capital Receipts which Create Liability Borrowings from Public by Govt Public Money against Govt Bonds Govt Borrowings from RBI Money against Treasury Bonds RBI Govt Borrowings from Foreign Govt/Foreign Institution World Bank Loan Govt Saving Schemes (Post Office Savings Scheme, NSC) Public Savings Govt Capital Receipts which Reduce Financial Assets Example 1 –Repayment of Loan Repayment of loan State Govt Central Govt Example 2 –Disinvestment When Govt invest money in PSU, It is Financial Asset for Govt. When Govt Sells its share in PSU (does disinvestment), It is called Reduction of Financial Asset PSU Sale of shares Govt

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.