Government receipt is the money received by the government from various sources for its expenditures.
These receipts neither create any liability nor cause any reduction in the number of assets of government. They are regular and recurring receipts and further divided into two parts:-
1. Tax revenue receipts – These types of receipts are received by the government through various taxes imposed on individuals, companies, properties, goods and services, etc. It is further divided into two parts:-
1.1 Direct taxes – These are taxes which are imposed on incomes or profits of individuals or corporate. The burden of this tax is non-transferrable and can only be paid by the one, on whom it is imposed. For e.g. income tax and corporate tax are types of direct taxes paid by individuals and companies respectively.
1.2 Indirect taxes – These are taxes which are imposed on goods and services. The burden of this tax is transferrable, for example, excise duty is a type of indirect tax where tax paid by manufacturers is ultimately transferred to retailers or wholesalers.
2. Non-tax revenue receipts – This type of revenue is received by the government from sources other than taxes, for example, interest collected by the government on loans and funds granted to states and UTs and payable services provided by the government to people.
These types of receipts will either create liability or cause a reduction in the number of assets of government. These receipts are irregular and non-recurring in nature. There are two types of capital receipts:-
1. Debt receipts – These types of receipts increases the liability of the government, for example borrowing from the market, the central bank, foreign sources are all debt creating receipts as they all create liability for the government.
2. Non-debt receipts – These receipts leads to a reduction in the number of government assets. For example, receipts from disinvestments from public sector companies by the sale of government’s share leads to a reduction in government assets.