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The Budget of the Central Government is divided in two parts, namely Revenue Account and Capital Account. Which are the two sources of revenue receipts to the Central Government? a. External Loan          b. Tax Revenue c. Small Savings        d. Non-tax Revenue

The Budget of the Central Government is divided in two parts, namely Revenue Account and Capital Account. Which are the two sources of revenue receipts to the Central Government? a. External Loan          b. Tax Revenue c. Small Savings        d. Non-tax Revenue Correct Answer b and d

The correct answer is b and d.

Key Points

  • Revenue Receipts
    • The money received by a business through normal business operations is known as revenue receipts.
    • The revenue receipts are recurring and affect the profit and loss of business on the income statement.
    • They are the government receipts that neither create an asset nor reduce any liability and are considered as the current income receipts for the government from all sources.
    • A receipt is considered as a revenue receipt if it fulfills the following two criteria:
      • It should not create any liability for the government. For example, the taxes that are levied by the government are regarded as revenue receipts but any amount that is borrowed by the government is not a revenue receipt.
      • It should not be any decrease in the assets.
    • These revenue receipts are non-redeemable and can be classified into two categories namely: tax revenue and non-tax revenue.
    • Tax Revenue – Direct Tax and Indirect Tax
      • Tax is a compulsory payment that is made to the government by the people or the companies without having any direct benefit in return.
      • The sum of all receipts from the taxes and all other duties under the government are referred to as tax revenue.
      • They are either from direct taxes or indirect taxes.
      • It is the main source of regular receipts of the government and is categorized into Direct Taxes and Indirect Taxes.

Additional Information

  •  Direct Taxes
    • The taxes that are imposed on the property and income of an individual and a company are known as direct taxes.
    • Direct taxes are paid directly to the government by the companies and the individuals.
    • The income level, as well as the purchasing power of the people, are affected by direct taxes.
    • It also helps in changing the level of aggregate demand of the economy.
    • Direct Tax Systems can be progressive, regressive, or proportional.
  • Indirect Taxes
    • The taxes that affect the income and property of an individual and a company through their consumption expenditure are called indirect taxes.
    • Indirect taxes are imposed on goods and services and are known to be compulsory payments.

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Direction : Two statements I and II are given. These statement may be either independent causes or may be effects of independent causes or a common cause. One of these statements may be the effect of the other statements. Read both the statements and decide which of the following answer choice correctly depicts the relationship between these two statements. Mark answer :

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