why intrest payment not come in capital recipt why come in revenue expenditure ??
To understand this, you should first know the meaning of capital receipt and revenue receipt.
Capital receipts refer to those receipts of the government, which cause a reduction in the government assets and also create a liability for the government.It is the amount received or receivable for selling assets. Examples are : Sale of machinery , Building , Furniture , etc .
On the other hand, revenue expenditure refers to the government expenditure which does not cause any reduction in government liabilities and also does not create assets for the government. For example- expenditure on salaries, pensions, subsidies, etc.
Now, a payment of interest dues does not reduce the liabilities of government as the amount of loan to be repaid remains the same even after the payment of interest on it. Also, it does not create any asset for the government. Hence, it is considered a revenue expenditure in government budget.
Capital receipts refer to those receipts of the government, which cause a reduction in the government assets and also create a liability for the government.It is the amount received or receivable for selling assets. Examples are : Sale of machinery , Building , Furniture , etc .
On the other hand, revenue expenditure refers to the government expenditure which does not cause any reduction in government liabilities and also does not create assets for the government. For example- expenditure on salaries, pensions, subsidies, etc.
Now, a payment of interest dues does not reduce the liabilities of government as the amount of loan to be repaid remains the same even after the payment of interest on it. Also, it does not create any asset for the government. Hence, it is considered a revenue expenditure in government budget.
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