What is meant by non-tax revenue? Explain the different sources of non-tax revenue

Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Long Questions – Q.2 What is meant by non-tax revenue? Explain the different sources of non-tax revenue

Solution:-

Non-Tax revenue refers to those revenue receipts of the government which is not a part of its tax receipts. Various sources of non-tax revenue are: –

1. Interest: – Government receives interests on loan, it has advanced to various state governments, public, international organizations, foreign countries etc. This is a recurring revenue source for the government.
2. Profits from PSUs: – Profits of various PSUs like LIC, BHEL, Indian Railways goes into government treasury. These profits are an important source of non-tax revenue for the government.
3. Dividends: – Government receives dividends from the investments it makes in other companies. This also forms a part of governments revenue.
4. Fees: – Fees refers to the amount of money charged by Government for rendering some important services. It is only charged to those who avail these services. Example of such services are issuing birth certificate, death certificate, court fees etc.
5. Fines and Penalties: – These are imposed on those who break the law of the land. These act as important source of non-tax revenue for the government. Some examples are fine on jumping red light, fine on not wearing helmets etc.
6. Escheats: – Escheats refers to the legal claim of government on a person’s property who dies without leaving an heir or a will.
7. Gifts and Grants: – Government receives gifts, grants and monetary help from international organizations, foreign government, corporates and its citizens. Its an irregular source of income and is generally received during war time or national crisis.

Long Questions – Sandeep Garg Macroeconomics Class 12 Solutions Government budget and the Economy

• Define Government budget. Explain the various objectives of a government budget.
• What is meant by non-tax revenue? Explain the different sources of non-tax revenue
• What is meant by budget expenditure? Distinguish between revenue expenditure and capital expenditure.
• What is the meaning of revenue receipts? What are the two main sources of revenue receipts?
• Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.
• Distinguish between: (a) Direct Tax and Indirect tax (b) Primary deficit and Revenue deficit
• Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit