Which of the following is not an example of Revenue Receipts of the government?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Recovery of loans
When a loan comes back, the government’s financial assets fall. So recovery of loans is a capital receipt. Revenue receipts neither create a claim on the government nor reduce its assets. They are made up of tax and non-tax revenue.
Option (1) Income tax — Revenue receipt (Incorrect). This is a direct tax, so it is part of tax revenue.
Option (2) Goods and services tax — Revenue receipt (Incorrect). This is an indirect tax, so it is part of tax revenue.
Option (3) Recovery of loans — Capital receipt (Correct). The money received only replaces an asset that the government already held, the loan.
Option (4) Interest received on loans — Revenue receipt (Incorrect). Interest receipts are non-tax revenue.
NCERT (2026-27): “5.1.2 Classification of Receipts Revenue 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… …The India Tax system witnessed a dramatic change with the introduction of the GST (Goods and Services Tax) which encompasses both goods and services and was be implemented by the Centre, 28 states and 7 Union territories from 1 July, 2017. …Non-debt creating capital receipts are those receipts which are not borrowings and, therefore, do not give rise to debt. Examples are recovery of loans and the proceeds from the sale of PSUs.…” |