What are Revenue Receipts of Government Budget?

Revenue Receipts of Government

Those Receipts of Govt which are Non Redeemable (which cannot be reclaimed from govt)

are called Revenue Receipts

They are recurring (repeating) in nature.

It is of different types

• Tax Revenue
• Non Tax Revenue

Lets learn about it one by one

Tax Revenue

They are proceeds of different taxes which are levied by Central Govt like GST, Income Tax

These taxes can be Direct Tax or indirect Tax

Direct Tax

Income Tax is charged on Individuals (Called Personal Income Tax) as well as on Companies (called Corporate Tax)

Higher the Income, Higher the tax Rate

Indirect Tax

Earlier different taxes were imposed like Service Tax (on services), Central Sales Tax (on sale of goods) and Excise (on Manufacturing)

Now, all these are replaced by GST from 1 July 2017

Exception: On certain goods, still Vat and Excise is applicable and not GST like Petrol, Diesel

Also on import, export of goods; Custom Duty is charged by Govt which also is part of tax Revenue

Non Tax Revenue

It contains following:

Cash Grants

Govt receives cash grants (aid) from different countries and organizations like UNO

Dividends and Profit

Central Govt owns shares of many PSU (Public sector Undertaking) like SBI,ONGC,BHEL

Profits of these PSU are given to Central Govt in form of Dividends

Interest Received

Central Govt gives loans to State govt etc on which it earns interest

Fees and other Receipts

Govt charges fees for Different Services like Fees for Company Registration etc

It also charges late fees and penalties for late deposit of taxes etc

SUMMARY

NCERT Questions

No questions in this part

Other Books

Question 1

In the following questions, select the correct answers:

Interest Income is a part of:

1. Non-tax revenue
2. Revenue Receipts
3. Both A and B
4. Neither A nor B

Question 2

Fees of a government college is a revenue receipt because:

1. It creates liability of the government
2. It neither creates liability nor reduces any assets of the government
3. It creates liability or increases asset of the government
4. It reduces assets of the government

Question 3

Identify the indirect tax from the following options.

1. Corporate Tax
2. Goods and Services Tax (GST)
3. Income Tax
4. Capital Gains Tax

Question 4

Direct tax is called direct because it is collected directly from:

1. The producers on goods produced
2. The sellers on goods produced
3. The buyers of goods
4. The income earners

Question 5

Identify the tax whose burden can be shifted:

1. Income tax
2. Goods and Service Tax (GST)
3. Corporate Tax
4. None of these

Oswaal Questions

Question 1

Which one of the following is a combination of direct taxes?

1. Excise duty and Wealth tax
2. Service tax and Income tax
3. Excise duty and Service tax
4. Wealth tax and Income tax

Question 2

The Non-tax revenue in the following is:

1. Export duty.
2. Import duty.
3. Dividends.
4. Excise.

Question 3

Direct tax is called direct because it is collected directly from:

1. The producers on goods produced.
2. The sellers on goods sold.
3. The buyers of goods.
4. The income earners.

Question 4

Read the following news report and answer the questions that follow:

MUMBAI: Investors were relieved as the finance minister Nirmala Sitharaman avoided an increase in the long-term capital gains tax on equity investments and securities transaction tax in the Union Budget for 2021-22 announced today.

Heading into the Budget, most investors were concerned that the government may look at increasing the long-term capital gains tax or the securities transaction tax in order to boost its revenues, especially as the stock market has witnessed a breakneck rally since the beginning of April.

In her Budget speech in July 2019, the finance minister had reintroduced the long-term capital gains tax after 15 years.

Currently, individuals who make capital gains of more than Rs1 lakh on their equity investment after a holding period of more than one year have to pay a tax of 10 per cent on the capital gains.

However, the capital gains tax for individuals in the highest bracket of earnings comes around 15 per cent inclusive of access.

Money managers had said that the government needed to bring out an equity friendly budget, implying no changes in taxations related to the stock market, in order to ensure that its divestment plans went smoothly in the next fiscal year.

"Budget 2021: Investors breathe a sigh of relief as FM skips LTCG, STT hike" - The Economic Times - February 1st, 2021

Question 1

What type of tax is the Capital Gains Tax?

1. Direct Tax
2. Indirect Tax
3. It is access
4. It is a fine

Question 2

What is the reason for the government to increase taxes?

1. To extract money from the people usable income of the rich and increase that of the poor.
2. To use the money for themselves
3. To achieve the objective of equality in income distribution
4. To get their salary.

Question 3

Why didn't the government say anything about the capitals gain tax?

1. To stabilize the economic growth
2. To help the economy for economic growth
3. To rectify the losses that happened due to Covid-19
4. All of the above

Question 4

The capital gains come in the highest bracket of earning comes around ________.

1. 10%
2. 15%
3. 20%
4. None of the above