Explain the various components of the budget.

1.	Explain the various components of the budget.
Answer» Components of Budget: The budget has two broad components (1) Revenue budget (2) Capital budget. (1) Revenue budget includes revenue receipts and expenditure of the government. (a) Revenue Receipts: It refers to those receipts of the government which neither create a liability nor leads to a reduction in assets. Tax Revenue: It consists of the proceeds of taxes and other duties levied by the government. Non Tax Revenue: It includes receipts from sources other than tax. (b) Revenue Expenditure: • It refers to all those expenditures of the government which do not result in the creation of physical assets. • Capital Budget includes capital receipts and expenditure of the government. • Capital Receipts: It is defined as any receipts of the government which either create liability or reduce assets. • Capital Expenditure: An expenditure which either creates assets or reduce liabilities.

Answer»

Components of Budget:

The budget has two broad components

(1) Revenue budget

(2) Capital budget.

(1) Revenue budget includes revenue receipts and expenditure of the government.

(a) Revenue Receipts: It refers to those receipts of the government which neither create a liability nor leads to a reduction in assets.

Tax Revenue: It consists of the proceeds of taxes and other duties levied by the government.

Non Tax Revenue: It includes receipts from sources other than tax.

(b) Revenue Expenditure:

• It refers to all those expenditures of the government which do not result in the creation of physical assets.

• Capital Budget includes capital receipts and expenditure of the government.

• Capital Receipts: It is defined as any receipts of the government which either create liability or reduce assets.

• Capital Expenditure: An expenditure which either creates assets or reduce liabilities.

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