Question: Why Is Tax Not A Capital Receipt?

What are the two types of revenue receipt?

For the government, there are two sources of revenue receipts — tax revenues and non-tax revenues..

Which of the following is capital receipt in government budget?

The main items of capital receipts are loans raised by Government from public which are called Market Loans, borrowings by Government from Reserve Bank and other parties through sale of Treasury Bills, loans received from foreign Governments and bodies and recoveries of loans granted by Central Government to State and …

Why are borrowing a capital receipt?

Capital receipts refer to those money receipts which creates a liability for the government or cause reduction in assets of the government. Therefore, borrowing is acapital receipt as it creates a liability for the government.

Is disinvestment a non tax revenue receipt?

The government has been very successful in generating resources from disinvestment in 2017-18. Disinvestments are not considered a part of the deficit although there is a case that they should be considered so. Disinvestments are considered as a capital receipt, or more correctly a non-debt creating capital receipt.

Is revenue receipt taxable?

Also, certain revenue receipts have been exempted from taxation under Income-tax Act while certain receipts have been taken as income chargeable to income-tax. For example under section 28 certain receipts have been made chargeable to income-tax under the head “profits and gains of business or profession“.

What is revenue receipt with example?

Common examples of revenue receipts Income received as interest on a saving account. Dividend income received from shares of various companies. Rental income received by a company. Cash discount received from vendors.

How is recovery of loans a capital receipt?

Recovery of loan is a capital receipt because it causes a reduction in the assests of the government. Capital receipts are defined as those receipts which either create a liability or cause a reduction in the assets. Recovery of loans satisfies the definition, hence it is a capital receipt.

Which is not capital receipts?

Note that non debt capital receipts (NDCR) of the union government include: Recoveries of loans and advances given to state governments, Union territories and foreign governments. Disinvestment proceeds. Money accrued to the Union government from listing of central government companies and issue of bonus shares.

What is capital receipt in income tax?

Any sum received in compensation for the termination of source of income is capital receipt, e.g., compensation received by an employee from its employer on termination of his services is capital receipt. … It was held that damages received are the compensation for the profits which were to be earned.

Which is the source of capital receipt?

Your capital receipts will come from these three sources: The sale of fixed assets, which are tangible or intangible property owned or controlled by your company. Fixed assets are not as readily liquidated (converted to cash) as other assets (such as a company bank account).

Is entrance fee a capital receipt?

v. CIT [1961] 41 ITR 495, the entrance fees received from the members are not capital receipts but revenue receipts and are taxable as income of the assessee-club.

What is difference between revenue receipt and capital receipt?

The primary difference between Capital Receipts vs Revenue Receipts is that Capital receipts are the receipts of non-recurring nature which either creates the liability of the company or reduces the company’s assets whereas revenue receipts are the receipts of recurring nature and are reported in the statement of …

Why is interest received on loan a revenue receipt?

Because it is an income and it neither creates a liability nor reduces any asset. …

Is disinvestment a capital receipt?

Government receipts which either (i) create liabilities (e.g. borrowing) or (ii) reduce assets (e.g. disinvestment) are called capital receipts. Thus when govt. Funds raised from disinvestment reduce government assets (ii) Recovery of loan is also capital receipt as It reduces government assets. …

What are examples of capital receipts?

Examples of debt capital receipts: Market loans, issuance of special securities to public-sector banks, issue of securities, short-term borrowings, treasury bills, securities against small savings, state provident funds, relief bonds, saving bonds, gold bonds, external debt, etc, are all example of debt capital …