Which one of the following is not a component of Revenue Receipts of the Union Government?
- A.Corporate tax receipts
- B.Dividends and profits
- C.Disinvestment receipts
- D.Interest receipts
Correct answer
Explanation
The correct answer is C, Disinvestment receipts. Money from selling the government's stake in public sector enterprises reduces its assets, so it is a capital receipt, not a revenue receipt.
In the Union Budget, revenue receipts are those that neither create a liability nor reduce an asset of the government. They are of two kinds: tax revenue, such as corporation tax, income tax and GST, and non-tax revenue, such as interest on loans given by the Centre, dividends and profits from public sector units and the RBI, fees and fines. Capital receipts either create a liability, like market borrowings and small savings, or reduce assets, like recovery of loans and disinvestment.
Option A is wrong to pick because corporation tax is the largest single item of tax revenue. Option B is wrong to pick because dividends and profits from PSUs and the RBI are non-tax revenue. Option D is wrong to pick because interest the Centre earns on its loans is also non-tax revenue.
Exam tip: revenue receipt = no liability, no asset loss; borrowings, loan recovery and disinvestment are capital receipts.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
Show answer
GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
Read the full explanation →