Question

Which of the following is an item of Revenue Receipt ?

• A. Dividends on Investments made by the Government
• B. Recovery of Loans
• C. Borrowings
• D. Disinvestment

Answer 1

Answer:

A. Dividends on Investments made by the Government

Dividends on Investments made by the Government.

• In the Government Budget, Revenue Receipts are those that neither create a liability for the government nor cause a reduction in its assets.

• Dividends are "regular" income earned from the government's shares in public sector enterprises (like BHEL or SBI) and do not involve selling off any property or taking on debt.

To identify a Revenue Receipt, ask two questions:

1. Does the government have to pay this back later? (Liability)

2. Did the government sell something to get this? (Asset Reduction)

If the answer to both is No, it is a Revenue Receipt.

Revenue Receipts: Tax vs. Non-Tax

Revenue receipts are further divided into two categories :

1. Tax Revenue: Money collected through Direct Taxes (Income Tax, Corporate Tax) and Indirect Taxes (GST, Customs Duty).

2. Non-Tax Revenue: Money earned from other sources like :

   • Dividends and Profits from PSUs.

   • Interest received on loans given to states.

   • Fees and Fines (Passport fees, court fees, traffic fines).

   • External Grants from foreign governments or international bodies.