Match the LIST-I with LIST-II
| LIST-I | LIST-II | ||
| A. | Tax revenue | I. | Interest receipts |
| B. | Non-tax revenue | II. | Sale of shares in Public Sector Units |
| C. | Capital receipts | III. | Loans from another country |
| D. | Debt creating receipts | IV. | Corporation tax |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A-IV, B-I, C-II, D-III
Some of the money the government receives, such as taxes, never has to be returned; these are revenue receipts, divided into tax and non-tax revenue. Other receipts either create a liability, like a loan, or reduce the government’s assets, like the sale of shares; these are capital receipts, either debt creating or non-debt creating.
A. Tax revenue — this matches (IV) Corporation tax. Corporation tax is a direct tax on the profits of firms. Taxes, direct and indirect, are the most important part of the revenue receipts, and paying them creates no claim of the taxpayer on the government.
B. Non-tax revenue — this matches (I) Interest receipts. The non-tax revenue of the central government mainly consists of interest received on the loans it has given, dividends and profits on its investments, and fees for the services it provides.
C. Capital receipts — this matches (II) Sale of shares in Public Sector Units. Selling shares of public sector undertakings, called PSU disinvestment, reduces the financial assets of the government, so the money received is a capital receipt. No loan is involved, so it is a non-debt creating capital receipt.
D. Debt creating receipts — this matches (III) Loans from another country. A loan has to be returned, with interest, to the agency that gave it, so it creates a liability for the government. Borrowing, at home or from abroad, is therefore the debt creating part of the capital receipts.
Note: One item of LIST-I can be matched with more than one entry of LIST-II:
(C) Capital receipts → both (II) Sale of shares in Public Sector Units and (III) Loans from another country. The sale of shares reduces the financial assets of the government, and a loan creates a liability; both are capital receipts, the first non-debt creating and the second debt creating.
NCERT (2025-26): “5.1.2 Classification of Receipts … Revenue receipts are those receipts that do not lead to a claim on the government. They are therefore termed non-redeemable. They are divided into tax and non-tax revenues. Tax revenues, an important component of revenue receipts, have for long been divided into direct taxes (personal income tax) and firms (corporation tax), and indirect taxes like excise taxes (duties levied on goods produced within the country), customs duties (taxes imposed on goods imported into and exported out of India) and service tax… …Non-tax revenue of the central government mainly consists of interest receipts on account of loans by the central government, dividends and profits on investments made by the government, fees and other receipts for services rendered by the government.… …Capital Receipts: The government also receives money by way of loans or from the sale of its assets. Loans will have to be returned to the agencies from which they have been borrowed. Thus they create liability. Sale of government assets, like sale of shares in Public Sector Undertakings (PSUs) which is referred to as PSU disinvestment, reduce the total amount of financial assets of the government. All those receipts of the government which create liability or reduce financial assets are termed as capital receipts. When government takes fresh loans it will mean that in future these loans will have to be returned and interest will have to be paid on these loans. Similarly, when government sells an asset, then it means that in future its earnings from that asset, will disappear. Thus, these receipts can be debt creating or non-debt creating.…” |