Revenue Receipts

Introduction

• Revenue receipts are the receipts of the government which neither creates liabilities nor cause any reduction in the government or public assets.  
• Revenue receipts are regular and recurring in nature which the government receives in its normal course of business.

Classification of Revenue Receipts

Tax Revenue

• Tax revenue is the core source of government revenue. It includes both the direct and indirect taxes.
• The direct tax includes income tax, corporate tax, estate tax, capital gain tax, etc. while indirect tax includes Goods and Services Tax (GST), Cess, Custom duty, etc.

Non-Tax Revenue

Non-Tax revenue is the revenue which is not derived through taxation. They are collected from various other sources. Non-tax Revenue includes receipts from the government’s disinvestment proceeds from the stake sale in various public sector undertakings. They also include, 

• Interest:  The government earns interest on loans it makes, whether they are internal (to state governments, union territories, and so on) or external (to other countries) (outside the country). Interest income from these loans is a significant source of non-tax revenue.

• Profits and dividends:  Profits from the selling of public-sector items are used by the government. The government also reaps the benefits of its investments in other businesses in the form of dividends. 
• Fees: It refers to fees levied by the government to cover the expense of recurring government services. Such services include both fiscal services (cost incurred on printing of currency etc.) and general services (community service etc.).
• Fines and penalties:   They refer to payments that are imposed on people for breaking the law. For example, a fee for failing to obey a traffic signal or a penalty for failing to pay taxes such as income tax or customs charges.
• Grants:   Grants from foreign governments and international organizations are received by the government. Such grants are not a consistent source of income and are typically given in response to a disaster such as a war or a flood.

Revenue Receipts in-terms of Private Entities 

• Revenue receipts of a firm/company/corporations are the funds received as a result of its core business activities or operating activities, which leads to an overall increase in the gross revenue of the company.
• Revenue receipts of a firm are shown inside a profit and loss account and not in the balance sheet. 
• Revenue receipts have no effect on liabilities or assets of a company. 
• Revenue receipts are used to create a reserve fund of a company. 
• Receipts of this kind affect the overall profit and loss of an organization and are booked on accrual basis which means as soon as the right of receipt is established.
• Examples of Revenue Receipts of a company: Receipts from sale of goods and services, discount received from creditors or suppliers, interests earned, dividends received, rent received, commission received, bad-debts recovered, income from other sources, etc.