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In the Indian Union Budget classification, which of the following is treated as a capital receipt of the Central Government?

Proceeds from disinvestment of shares in a public sector undertaking are a capital receipt, because the sale reduces the government's assets. Corporation tax, dividends and interest on loans are revenue receipts, as they are regular income that neither creates a liability nor reduces any asset.

  1. AProceeds from disinvestment of shares held in a public sector undertakingCorrect
  2. BCorporation tax collected from companies
  3. CDividend received from a public sector bank
  4. DInterest received on loans given to State Governments

Explanation

A capital receipt either creates a liability or reduces an asset of the government. Disinvestment reduces the government's financial assets, so it is capital. Corporation tax is tax revenue, while dividends and interest are non-tax revenue receipts because they do not alter assets or liabilities.

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