Class 12 Macro Economics Notes · CBSE

Budget Receipts and Expenditure

Learn the classification of government receipts and expenditure into revenue and capital categories, with interactive quizzes and 2024-25 Union Budget pie chart breakdown.

Last updated: 1 Sep 2026

Notes

Where the Rupee Comes From

The 2024-25 Union Budget breaks down where every rupee of government revenue comes from and where it is spent.

Rupee Comes From

Borrowing27%

Income Tax19%

GST & Other Taxes18%

Corporation Tax17%

Non-Tax Receipts9%

Excise Duties5%

Customs4%

Non-Debt Capital1%

Rupee Goes To

States' Share21%

Interest Payments19%

Central Schemes16%

Other Expenditure9%

Finance Commission9%

Budget Receipts

Revenue Receipts

Receipts that neither create liability nor reduce assets. Regular and recurring. (Tax Revenue + Non-Tax Revenue)

Capital Receipts

Receipts that either create a liability or reduce assets. Non-recurring. (Borrowings, Recovery of Loans, Disinvestment)

Aspect	Revenue Receipts	Capital Receipts
Liability	Does NOT create	Creates liability
Assets	Does NOT reduce	Reduces assets
Nature	Regular & recurring	Irregular & non-recurring
Examples	Income Tax, GST, Interest, Fees	Borrowings, Disinvestment, Loan recovery

Rule: Revenue receipt = no liability AND no asset reduction. Capital receipt = either creates liability OR reduces assets.

Classify: Revenue or Capital Receipt?

Corporation Tax

Loan from World Bank

GST collections

Income Tax

Grants received from World Bank

Sale of PSU / Disinvestment

Profits of PSUs (Railways, LIC)

Borrowings from public

Dividend from Maharatna company

Capital Gains Tax

Fees of Government College

Recovery of loans / Debt cleared by Sri Lanka

Interest received on loans to states

Small savings (Post Office, NSC)

Foreign aid for earthquake victims

Budget Expenditure

Revenue Expenditure

Expenditure that neither creates an asset nor reduces a liability. Recurring — day-to-day running costs.

Capital Expenditure

Expenditure that either creates an asset or reduces a liability. Non-recurring.

Aspect	Revenue Expenditure	Capital Expenditure
Asset	Does NOT create	Creates asset
Liability	Does NOT reduce	Reduces liability
Nature	Recurring	Non-recurring
Examples	Salary, pension, interest, subsidies	Roads, machinery, loan repayment

Union Grants to states are treated as revenue expenditure even if used by states for asset creation.

Classify: Revenue or Capital Expenditure?

Subsidies to farmers

Defence capital equipments from Germany

Grants given to State Governments

Construction of school buildings

Administrative and defence services

Repayment of loans

Building a bridge

Salaries to hospital staff

Purchase of 20 cranes for flyovers

Amount borrowed from USA repaid

Expenditure on tax collection

Purchasing computers for govt offices

Scholarships to students

Construction of Metro rail

Payment of pensions