Question

Classify the following as Revenue receipts or Capital receipts. Give valid arguments in support of your answer:
(i) Interest received on loan.
(ii) Disinvestment receipts from the sale of a government company.
(iii) Financial assistance by the Government of USA for promoting girl education in India.

Hint:

Capital receipts generally involve changes in assets or liabilities, while revenue receipts do not.

Answer 1

- Interest received on loan: Revenue Receipt. Revenue receipts are non-repayable and generated from regular government activities. Interest on loans constitutes recurring income.
- Disinvestment receipts from the sale of a government company: Capital Receipt. Disinvestment proceeds are irregular and decrease the government's asset holdings. 
- Financial assistance by the Government of USA: Revenue Receipt. Grants and aid are non-repayable and categorized as revenue receipts because they do not incur liabilities or diminish assets.