Practicing Success
Which of the following adds to the "Capital receipts" in government budget? |
Increase in income tax slabs by 5% Interest received against the loans given to Malaysia Sale of shares of SBI to HDFC bank Dividends received from a PSU |
Sale of shares of SBI to HDFC bank |
The correct answer is Option 3: Sale of shares of SBI to HDFC bank Capital receipts refers to those receipts which either result in creation of liability or in reduction of assets. Thus, sale of shares of SBI to HDFC bank will result in the reduction of assets of the government. Increase in income tax slab, interest received from Malaysia and dividends received from a PSU are revenue receipts. Revenue receipts are those receipts that do not lead to a claim on the government. They neither create liability nor reduces the assets of the government. Here’s how the options fit into the concept of capital receipts:
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