Receipts and expenditure

Budget receipts:

• Revenue receipts create no claim on the government (they need not be paid back). Tax revenue: direct taxes (income tax, corporation tax) and indirect taxes (GST, customs duty). Non-tax revenue: interest and dividends (for example, from public sector undertakings), fees, and grants.
• Capital receipts either create a liability or reduce the government's assets. Debt-creating: borrowing. Non-debt creating: disinvestment (selling shares in PSUs) and recovery of loans.

Some taxes, like wealth tax, gift tax and estate duty, brought in so little that they were called 'paper taxes'.

Budget expenditure:

• Revenue expenditure creates no assets: salaries, interest payments, subsidies, pensions, and grants to states.
• Capital expenditure creates assets or reduces liabilities: buying land, buildings, machinery; giving loans to state governments and PSUs; repaying loans.

The test for any item: does it create a claim or an asset? If so, it is capital; if not, revenue.