taxes, prices of goods and services supplied by public enterprises, fees, fines, gifts, grants, etc. budget receipts are estimated money receipts of the government from all sources during the fiscal year like.
The main components of government revenue are divided into Revenue receipts and Capital receipts.
A. Revenue Receipts
This receipt does not either create a liability or lead to reduction in assets and can be divided into tax-revenue and non – tax revenue.
(a) Receipts from Tax Revenue
What is a Tax?
Tax is a legally compulsory payment imposed by government on income, manufacturing, transportation, wealth, gifts, properties, exports, imports, etc.
Types of Taxes: There are two types of taxes:
(i) Direct Tax. When the liability to pay a tax and the burden of that on the same person, it is called a direct tax. For example, income tax is a direct tax. The burden of this tax cannot be shifted on to others.
(ii) Indirect Tax. When the liability to pay a tax and the burden of that tax can be on different person, it is called an indirect tax. For example, sales tax is an indirect tax because the liability to pay sales tax is that shopkeeper but he shifts the burden of this tax on the customers.
(b) Receipts from Non – Tax Revenue
What is Non – Tax Revenue? Non – tax revenue refers to the revenue receipts of the government from sources other than the tax.
Types of Taxes: Type of Non – Tax Revenues:
(i) Commercial Revenue revenue received by the government by the goods and services produced by the government agencies. Payments for postage, toll, interest on funds borrowed from government credit corporations, etc.
(ii) Administrative Revenue that arises from administrative function of the government.
(i) Fees. e.g., college fees, registration fees, etc.
(ii) Fines and Penalties for infringement of Law.
(iii) Forefeitures. Penalty imposed by the court for non – compliance orders.
(iv) Escheat A claim of the government on the property of a person who dies without having any legal heirs or without leaving a will.
B. Capital Receipts
Capital receipts are receipts under capital account include market borrowings, external loans, recoveries of loans and advances the government and provident fund. For example, disinvestment of PSU the budget capital receipts are classified into three groups:
(i) Recoveries of Loans granted by the central government to state and union territory governments and parties.
(ii) Borrowings and other Liabilities. Government raises loans from the market, Reserve Bank of India foreign governments and other bodies.
(iii) Other Receipts. Include capital receipts other than recovery of loans and borrowing. Funds raised from ‘disinvestment’. Disinvestment means selling a part or whole of the public sector enterprises held by government. It is called capital receipt because it reduces the assets of the government.