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THE REVENUE CONCEPT
by
Dr. Chintamani Prasad Patnaik
MBA Dept. AITAM
INTRODUCTION *** ARTICLE 112 OF THE CONSTITUTION OF INDIA STATES THAT “AN ANNUAL FINANCIAL STATEMENT WILL BE PLACED BEFORE
LOKSABHA AND RAJYA SABHA . THIS IS CALLED BUDJET OF THE GOVERNMENT”. SIMILIARLY, EACH STATES GOVERNMENT IS REQUIRED AN ANNUAL FINANCIAL STATEMENT.
THE MAIN COMPONENTS OF A BUDGET IS REVENUE RECEIPTS OF THE
GOVERNMENT FROM VARIOUS SOURCES. FOR MEETING THE REVENUE EXPENDITURE OF THE GOVERNMENT.
THE OBJECTIVE , MEANING AND COMPONENTS OF REVENUE RECEIPTS
ARE AS FOLLOWS.
OBJECTIVES
1) REDISTRIBUTION OF INCOME AND WEALTH :-
GOVERNMENT THROUGH FISCAL TOOLS OF TAXATION ,SUBSIDIES AND TRANSFER PAYMENTS BRING ABOUT ‘FAIR’ DISTRIBUTION OF INCOME AND WEALTH IS A WAY TO BRING SOCIAL JUSTICE .
2) RE-ALLOCATION OF RESOURCES :-
THE GOVERNMENT,THROUGH ITS BUDGETARY POLICY RE-ALLOCATION RESOURCES SO THAT SOCIAL AND ECONOMIC OBJECTIVES ARE MET. PRIVITE FIRM DO NOT FIND IT PROFITABLE TO PRODUCE PUBLIC GOODS LIKE PARK, BRIDGES,NATIONAL DEFENCE ETC…..
3) ECONOMIC STABILITY :-
THE GOVERNMENT TRIES TO PREVENT BUSINESS FLUCTUATION AND MAINTAIN PRICE AND EMPLOYMENT STABILITY.
ECONOMIC STABILITY STABILITY . ECONOMIC STABILITY STIMULATES THE INDUCEMENTS TO INVEST AND INCREASE THE RATE OF GROWTH AND DEVELOPMENT.
MEANING GOVERNMENT NEEDS FUNDS TO FINANCE ITS ACTIVITIES. SUCH
FUNDS ARE RAISED FROM VARIOUS SOURCES. THE SOURCES CAN BE TAXES, PRICE OF GOODS AND SERVICES SUPPLIED BY PUBLIC ENTERPRISE,FEES,FINES,GIFTS, GRANTS, ETC… THUS, BUDGET RECEIPTS ARE ESTIMATED AS MONEY RECEIPTS OF THE GOVERNMENT FROM ALL SOURCES DURING THE FISCAL YEAR.
ESTIMATED BUDGET RECEIPTS ARE ESTIMATED MONEY RECEIPTS
OF THE GOVERNMENT FROM ALL SOURCES DURING THE FISCAL YEAR.
“ THE REVENUE RECEIPTS ARE THOSE RECEIPTS THAT NEIGHTER CREATE ANY LIABILITY NOR REDUCE ANY ASSET.”
COMPONENTS
• THE MAIN COMPONENTS OF GOVERNMENTS PUBLIC REVENUE ARE DIVIDED INTO TWO MAIN CATAGORIES : –
• REVENUE RECEIPTS AND CAPITAL RECEIPTS. • OUR CONSTITUTION UNDER, ARTICLE 112, MAKES IT
COMPOLSORY TO DIVIDE OUR DUDGET UNDER REVENUE AND CAPITAL RECEIPTS.
IT INCLUDES ------------ >
1. RECEIPTS FROM TAX REVENUE :-
A TAX IS A LEGALLY COMPULSORY PAYMENT IMPOSED BY THE GOVERNMENT . GOVERNMENT IMPOSES TAX ON INCOME , MANUFACTURING , SALES ,TRANSPORTATION , WEALTH , GIFTS , PROPERTIES , EXPORTS , IMPORTS ETC…… THERE ARE TWO TYPES OF TAXES
(A) DIRECT TAX :-
WHEN THE LIABILITY TO PAY A TAX AND THE BURDEN OF THAT TAX FALL ON THE SAME TAX IS A DIRECT TAX BECAUSE THE LIABILITY OF PAYING THIS TAX IS OF THE PERSON ON WHOSE INCOME IT IS LEVIED AND ITS BURDEN ALSO FALLS ON HIM. THE BURDEN PERSON , IT IS CALLED AS DIRECT TAX FOR EXAMPLE ; INCOME OF THIS TAX CANNOT BE SHIFTED ON TO OTHERS.
(B) INDIRECT TAX :-
WHEN THE LIABILITY TO PAY A TAX AND THE BURDEN OF THAT TAX FALL ON THE DIFFERENT PERSONS , IT IS CALLED AN INDIRECT TAX BECAUSE THE LIABILITY TO PAY THE SALES TAX IS THAT OF THE SHOP-KEEPER BUT HE SHIFTS THE BURDEN OF THIS TAX ON THE CUSTOMERS. ENTERTAINMENT TAX , TAX ON SERVICES, INDIRECT TAX etc...
2 . receipts from non-tax revenue :- non-tax revenue refers to the revenue receipts of the government from sources other than the tax .
Types of non-tax revenue
(i) commercial revenue :-
it is revenue received by the government by selling the goods and services produced by the government agencies .
example : payments for postage , toll , interest on funds borrowed from government credit corporations etc…..
It also includes interest and dividend on investment made by the government .
(ii) administrative revenue :- it is revenue that arises from administrative function of the government . Examples :- (1) fees – a payment to defray the cost of each recurring service undertaken by the government . It gives a special advantage to the fee payer . eg: college , fees , registration fees , etc… (2) fines and penalty - A payment for infringement of law . (3) forfeiture – a penalty imposed by the court for non – compliance with orders. (4) escheat – a claim of the government on the property of a person who dies with out having any legal heirs or with out leaving a will .
