Categories the following govt. receipts into revenue and capital receipts .
Give reasons for your answers.
a) Receipts from sale of shares of a public sector undertakings. b) Borrowings from public. c) Profits of public sector undertakings. d) Income tax received by Govt.
Hey Umer,
a. Receipts from sale of shares of a public sector undertaking is a form of disinvestment by the government.As disinvestment results in the reduction of government assets, consequently, is treated as capital receipts.
b. Borrowings of funds from the Public creates liability for the government. Therefore, the receipts from the borrowing activities of the government are treated as capital receipts.
c. Profits of Public sector Undertakings forms an important source of revenue for the government and these receipts neither creates any liability nor it creates any reduction in the assets of the government. Therefore they come under revenue receipts.
d. Income Tax received by the Government will come under the revenue receipts as this forms the major portion of revenue for the government and these receipts neither creates any liability nor it creates any reduction in the assets of the government.
a. Receipts from sale of shares of a public sector undertaking is a form of disinvestment by the government.As disinvestment results in the reduction of government assets, consequently, is treated as capital receipts.
b. Borrowings of funds from the Public creates liability for the government. Therefore, the receipts from the borrowing activities of the government are treated as capital receipts.
c. Profits of Public sector Undertakings forms an important source of revenue for the government and these receipts neither creates any liability nor it creates any reduction in the assets of the government. Therefore they come under revenue receipts.
d. Income Tax received by the Government will come under the revenue receipts as this forms the major portion of revenue for the government and these receipts neither creates any liability nor it creates any reduction in the assets of the government.