LearnPick Navigation

Government Budget

Published in: Accountancy
  • Kartik K

    • Guwahati
    • 6 Years of Experience
    • Qualification: B.Com (hons) in Accountancy, Finance Professional
    • Teaches: Mathematics, English, All Subjects, Physics, Chemi...
  • Contact this tutor

Important Concept

  • 1
    GOVT BUDGET • Budget is a financial statement showing the expected receipt and expenditure of Govt. for the coming fiscal or financial year. • Main objectives of budget are : (i) Reallocation of resources.(ii) Redistribution of income and wealth (iii) Economic Stability (iv) Management of public enterprises. (v) Economic Growth • There are two components of budget : (a) Revenue budget (b) Capital budget • Revenue Budget consists of revenue receipts of Govt. and expenditure met from such revenue. • Capital budget consists of capital receipts and capital expenditure. BUDGET RECEIPTS Revenue Receipts • • • Capital Receipts Borrowing & other liabilities Recovery of Loans Other receipts (Dis-investments) Tax Direct Tax • Income Tax • Corporate Tax • Wealth & Property Tax Indirect Tax • Sale Tax • Service Tax • Excise duty • Custom Duty Non-Tax Commercial Revenue Interest Divident, Profits External Grants Administrative Revenues Fee • Licence Fee Fines, Penalties • Direct Tax : When Government imposes a tax on a person and paid by the same person is called direct tax. Its burden cannot be shifted to others. • Indirect Tax : When Government imposes a tax on a person but partially or wholly paid by other person is called indirect tax. Its burden can be shifted to others. • Revenue Receipts : (i) Neither creates liabilities for Govt. (ii) Nor causes any reduction in assets. • Capital Receipts : (i) It creates liabilities or (ii) It reduces assets.
  • 2
    BUDGET EXPENDITURE Revenue Expenditure e.g., Interest Payment, subsidies etc. • Revenue Expenditure : Capita/ Expenditure emg., Construction of school building Repayment of loans etc- (i) Neither creates assets (ii) Nor reduces liabilities • Capital Expenditure : (i) It creates assets (ii) It reduces liabilities. • Revenue Deficit : Total revenue expenditure > Total revenue receipts • Revenue deficit when total revenue expenditure excess total revenue receipts. • Implications of Revenue Deficit are : (i) It leads to repayment burden in future without investment. (ii) It shows wasteful expenditures of Govt. on administration. (iii) It increase the burden of taxes. • Fiscal Deficit : Total expenditures > Total Receipts excluding borrowing. • Fiscal Deficit : When total expenditure exceeds total receipts excluding borrowing. • Implications of Fiscal Deficits are : (i) It leads to inflationary pressure. (ii) A country has to face debt trap. (iii) It reduces future growth + development. • Primary Deficit : Fiscal deficit — Interest payments. • Primary Deficit : By deducting Interest payment from fiscal deficit we get primary deficit. • Budgetary Deficit : Total Expenditure > Total Receipts.


Copyright Infringement: All the contents displayed here are being uploaded by our members. If an user uploaded your copyrighted material to LearnPick without your permission, please submit a Takedown Request for removal.

Need a Tutor or Coaching Class?

Post an enquiry and get instant responses from qualified and experienced tutors.

Post Requirement

Related Notes

Query submitted.

Thank you!

Drop Us a Query:

Drop Us a Query