Government Budget and the Economy Test - 4

Through its budgetary policies, the governemnt tries to reduce the inequalities in income and wealth. They can impose taxes on the rich and give subsidies to the poor so that income is redistributed among the poorer sections of the society.

Any receipt which creates liability for the govt is a capital receipt. For eg. loans/borrowings by the government are a liability as they have to be paid back.

It is a statement of the estimates of the government receipts and government expenditure during the period of a financial year.

The government frames its budgetary policy with a view to achieving a set of objectives.

Tax receipts is a major revenue for the government. Tax receipts can be income tax, Goods and services tax, gift tax, wealth tax etc. Tax is a compulsory payment to the government by the households, firms or other institutional units. 

Budgetary policy is an annual exercise relating to the revenue and expenditure policy of the government. The government frames its budgetary policy with a view to achieveing a set of objectives like balanced regional growth, redistribution of income and wealth etc.

Revenue and capital budget are the two main components of budget. Under revenue budget, we have revenue receipts and revenue expenditure of the government.

Government budget is an annual statement of the estimates of the governemnt receipts and government expenditure during the period of the financial year.

Income tax is a direct tax as it has to be paid by the person or firm on whom it is imposed . The burden of the tax cannot be shifted.

Revenue expenditure refers to estimated expenditure of the government in a fiscal year which does not create any assets or cause a reduction in the liabilities. The other component is capital expenditure 

Direct tax is a tax which is imposed on individuals, eg. income tax. and the person on whose income it is imposed has to pay the tax. He cannot shift the burden to any other person. Corporate tax is imposed on firm. They have to pay the tax imposed on them and cannot shift the burden to anyone else, whereas indirect taxes imposed on manufacturers can be shifted to the final buyers of the commodity.

Revenue budget has two components. Revenue receipts and reveneue expenditure. 
Revenue expenditure refers to the estimated expenditure of the government in a fiscal year which does not create assets or cause a reduction in liabilities. 

The distribution of income and wealth is higly unequal in countries like India. By imposing taxes on the rich and giving subsidies to the poor, the government redistributes income in favour of the poorer sections of the society.

Government revenue is classified as revenue receipts and capital receipts. Capital receipts are further classified as i) recovery of loans, ii) borrowings and other liabilities, iii) other receipts. Capital receipts either create a liability or cause a reduction in the assets of the government.

capital expenditure refers to the estimated expenditure of the government in a fiscal year which creates assets or causes a reduction in liabilities.

Capital expenditure is one of the components of the budget expenditure. It refers to the estimated expenditure of the government in a fiscal year which creates assets or causes a reduction in the liabilities.

A direct tax is a tax, the final burden of which is borne by the person on whom it is imposed. For eg. income tax is a direct tax.

An indirect tax is one, the final burdent of which can be shifted to other persons, For eg. GST .GST is imposed on the traders but they charge this tax from the buyers . The tax is added to the price of the goods and services being sold.

Any receipt which does not create any liability for the govt is a revenue receipt. Tax receipt is a revenue receipt because it does not involve any corresponding liability for the government.

Capital budget is a component of the government budget. It includes the capital receipts and capital expenditure of the governemnt.

Disinvestment is a capital receipt since it causes reduction in the assets of the govt. For eg. the money received by the govt by selling its shares (say of Maruti Udyog) causes reduction in the assets of the govt.

capital receipts refers to those money receipts of the government which either create a liability for the government or cause a reduction in the assets 

There are two components of government revenue. They are revenue receipts and capital receipts. Revenue receipts are classified as tax receipts and non tax receipts.

Revenue receipts of the government may be defined as those money receipts which neither creates a liabilty nor reduces the assets of the government.

The major source of revenue receipts fo the government is tax receipts.