CA Foundation · Business Economics · Public Finance
In the Indian government budget, which of the following is classified as a capital receipt?
Recovery of loans granted earlier is a capital receipt, because it reduces a financial asset of the government. Interest on loans, dividends from PSUs and corporation tax are revenue receipts since they do not create any liability or reduce any asset.
- AInterest received on loans given to state governments
- BProceeds from the recovery of loans granted earlierCorrect
- CDividends received from public sector undertakings
- DCorporation tax collections
Explanation
Capital receipts either create a liability or reduce an asset of the government. Recovery of loans reduces the government's financial assets, so it is a capital receipt. Interest, dividends and corporation tax are revenue receipts because they neither create a liability nor reduce an asset.
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