Consider the following statements about the receipts of the government:
(A) Money raised by selling the government’s shares in a public sector company (disinvestment) is a capital receipt.
(B) Recovery of loans given earlier by the government is a capital receipt.
(C) Interest received by the government on loans it has given is a capital receipt.
Which of the statements given above are correct?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) and (B) only
A capital receipt either creates a liability or reduces the government’s assets: borrowings, recovery of loans and disinvestment are capital receipts, so (A) and (B) are correct. Interest received on loans is a non-tax revenue receipt, so (C) is wrong.