Tax revenue

Revenue Deficit

fiscal deficit, growth, revenue, tax, economy

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fiscal deficit

Economy

Sangita Reddy

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	There can be different forms of deficit in a Budget depending on the type of receipt and expenditure taken into account. Revenue deficit is that which occurs when the government&#39;s total revenue expenditure exceeds its total revenue receipts. This includes those transactions that have a direct impact on the government&#39;s current income and expenditure and happens when the actual amount of revenue and/or the actual amount of spending do not correspond with the budgeted revenue and expenditure.</div>
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	<strong>What is the difference between revenue deficit and fiscal deficit?</strong></div>
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	A revenue deficit should not be confused with the fiscal deficit. If the government has a revenue deficit, it means that its income cannot cover its expenditure. A country&rsquo;s fiscal deficit, on the other hand, is the total money spent by the government in excess of its income, with the income figure including only taxes and other revenues and excluding money borrowed to make up the shortfall.</div>
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	<strong>How is revenue deficit calculated?</strong></div>
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	Revenue deficit can be calculated by subtracting total revenue expenditure from total revenue receipts. It is important to note that revenue receipts neither create liability nor lead to a reduction in assets. The opposite of revenue deficit is revenue surplus, which arises when the actual amount of net income exceeds the projected amount of expenditure. Supposing the level of fiscal deficit remains the same, a higher revenue deficit would be considered worse because that would imply a higher repayment burden in the future not matched by benefits from investment.</div>
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	Revenue deficit can be divided into two categories &mdash; receipt from tax (direct tax, indirect tax), and receipt from non-tax revenue.</div>
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	<strong>How is revenue deficit met?</strong></div>
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	To remedy a revenue deficit, the government can choose to increase taxes or cut expenses. If not remedied, a revenue deficit can adversely affect the government&rsquo;s credit rating. Running a revenue deficit may place the government&rsquo;s planned expenditures in jeopardy, as there aren&#39;t enough funds to cover the cost. The government should try to reduce its expenditure and avoid unnecessary expenditure. By identifying and employing cost-cutting measures, the government can avoid revenue deficit.</div>
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	Revenue deficit indicates dissaving on the government account because the government has to make up the uncovered gap by drawing upon capital receipts, either through borrowing or through the sale of its assets.</div>

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What is Revenue deficit, Budget News, Revenue deficit Definition

What is Revenue Deficit?

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	Those expenditures of the government that do not lead to the creation of fixed assets are called revenue expenditures. The government spends money under various accounting heads, such as paying interest on loans, salaries and pensions, subsidies, spends on different ministries and departments, etc. Grants made to state governments and other parties are also treated as revenue expenditures, even though these might be used for the creation of fixed assets.</div>
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	Budget Estimates (BE) for 2018-19 pegged the Indian government&rsquo;s revenue expenditure to have grown 10.2 per cent over the Revised Estimates (RE) for 2017-18. That was a big drop from over 15 per cent growth in the preceding year.&nbsp;</div>
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	The Union government had cut its total expenditure by about Rs 1.45 trillion over its revised estimates for 2018-19. Of this, Rs 13,000 crore was cut on account of capital expenditure and Rs 1.32 trillion under revenue expenditure.</div>
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	The bulk of the expenditure compression was achieved through off-Budget borrowing. The burden of such borrowing fell on many public sector undertakings (PSU), such as Food Corporation of India (FCI), Housing and Urban Development Corporation, National Housing Bank and Rural Elec&shy;trification Corporation.</div>
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	Even though there is no official confirmation of such borrowing, the figures put out by the Controller General of Accounts (CGA) revealed it all. For instance, the CGA&rsquo;s 2018-19 figures showed how the food subsidy bill came down by a whopping 40 per cent over Rs 1.71 trillion mentioned in the revised estimates.&nbsp;</div>
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What is Revenue expenditure of government, Revenue expenditure of government Meaning, Budget News

Revenue expenditure of the government

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	The revenue budget consists of revenue receipts of the Government of India and the expenditure met using that revenue. The revenue budget details the sources from where the revenue is coming to the government. The government&#39;s sources for revenue are tax collected from people and corporations. The government also makes investments through various instruments and receives interest and dividends on those. Its non-tax revenue includes the disinvestments that the government does in the companies where it holds stakes. This also accounts for the revenue for the government.&nbsp;</div>
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	According to the Budget Estimates of 2019-20, the revenue receipts of the government are likely to come around Rs 19,62,761 crore. Of this, Rs 16,49,582 crore is expected to come in the form of tax revenue and the remainder as non-tax revenue. According to the BE of 2019-20, the corporation tax should generate a revenue of Rs 7,66,000 crore for the government. Income tax, on the other hand, may come close to Rs 5,69,000 crore. The government can have Rs 1,55,904 crore via customs duty in its coffers. The revenue through GST collection for Budget estimate 2019-2020 may come around Rs 6,63,343 crore.&nbsp;</div>
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	In the non-tax segment, the total for interest receipts, dividends and profits is expected at Rs 1,77,239 crore. Fiscal services, general services, social and community services, and economic services may amount to Rs 1,32,783 crore.<br />
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		<strong>Source of Tax Revenue</strong></div>
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		The government generates its revenue from taxes and several other non-tax revenue sources. Tax is one of the major sources of revenue for the government to carry out its work. Tax revenue can be classified into a few major categories &mdash; corporation tax, tax on income, Customs, Union excise duties, service tax, and several others.</div>
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		Corporation tax is the biggest source of revenue for the government. Public and private companies registered under the Companies Act, 1956, are liable to pay corporation tax. Corporation tax is levied on the net income of the company. The collection, surcharge, cess and other receipts make up the huge chunk of the revenue.</div>
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		Tax on income is the other source of income for the government. Tax is levied on salaried persons and they are categorised in several tax brackets with different tax rates. The tax on income includes collections, surcharges, Securities Transaction Tax (STT), and other such kinds of charges.</div>
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		Wealth tax includes tax on real estate, tax on other kinds of wealth, and gift tax. The revenue generated by custom duties include import duties, basic duties, and duties levied on specific items. Cess on export and export duties also contribute to the same. The union excise duties levied on several items also contribute to the tax revenue.</div>
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The revenue budget consists of revenue receipts of the government and its expenditure. Learn more about revenue budget, revenue receipt, revenue expenditure and more revenue budget-related news here at Business Standard.

What is Revenue Budget | Revenue Receipt | Sources of Tax Revenue

Revenue Budget

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	Revenue receipts can be defined as those receipts which neither create any liability nor cause any reduction in the assets of the government. They are regular and recurring in nature and the government receives them in the normal course of activities.</div>
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	Revenue receipts include the proceeds from taxes and other duties levied by the Centre; the interest and dividend it receives on its investments; and the fees and charges the government receives for its services.</div>
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	Simply put, <strong>revenue receipts must satisfy two basic conditions:</strong></div>
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	<strong>No liability:</strong> Revenue receipts do not create any liability for the government. For example, taxes received by the government, unlike borrowings, do not create any liabilities for it.</div>
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	<strong>No asset reduction: </strong>Revenue receipts do not lead to any reduction in the government&rsquo;s assets. So, the government cannot show its earnings from sale of stake in a public-sector undertaking as revenue receipts because the stake sale resulted in reduction of its assets.</div>
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	For the government, there are two sources of revenue receipts &mdash; tax revenues and non-tax revenues.</div>

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What are Revenue Receipts, News, Budget 2020 News, Revenue Receipts Definition

Revenue Receipts

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	Other than taxation being a primary source of income, the government also earns a recurring income, which is called non-tax revenue. While sources of tax revenue are few, the sources of non-tax revenue are many, with the number of collections per source. Although there are many sources of non-tax revenue, the amount per source is much less than that for tax revenue.</div>
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	For example, when citizens use services offered by the government, they pay bills, which are categorised as non-tax revenue, as the government provides infrastructure support to implement the services. Non-tax revenue also includes the interest collected by the government on the loans or funds offered to states.</div>
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	The difference between tax revenue and non-tax revenue is that the former is charged on income earned by an entity, which is a direct tax and on the value of transaction of goods and services, which falls under indirect tax.</div>
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	On the other hand, non-tax revenue is charged against services provided by the government. It is mandatory to pay a part of the income generated and the amount of goods and services consumed as tax. However, non-tax revenue becomes payable only when services offered by the government are availed of.</div>
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	There are various services provided by the government that become sources of non-tax revenue, such as police services, electricity, municipal services, etc. These sources become a medium of non-tax revenue for the state government concerned.</div>

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What is Non-Tax Revenue, Non-Tax Revenue News, Budget News, Non-Tax Revenue Receipts

Non-Tax Revenue

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	Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types &mdash; non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.</div>
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	Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.</div>
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	Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country&#39;s output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy&#39;s resources.</div>
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	Taxes collected from both direct tax and indirect tax are the government&rsquo;s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.</div>
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	Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax and property tax are some examples of direct tax. Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government&rsquo;s tax revenue.</div>
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What is Tax revenue, Tax revenue Definition, Tax revenue News

Tax Revenue

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	Government revenue refers to all the income of the government from taxes and non-tax sources. These funds are used for government expenditure. Government revenues and spending are an important part of fiscal policy of the government.</div>
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	Revenue refers to all the receipts of the government from taxes, custom duties, revenue from state-owned enterprises, capital revenues and foreign aid.</div>
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	<strong>Revenue is generated from mainly two types of sources:</strong></div>
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	<strong>Tax revenue</strong>: Taxes on incomes of individuals and corporations and also on the goods and services produced.</div>
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	<strong>Non-tax revenue:</strong> Dividends from state-run companies, central bank revenue and capital receipts in the form of external loans and debts from international financial institutions.</div>
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	India&rsquo;s total revenue in the April-November quarter of FY20 increased 12.9 per cent to Rs 10.12 trillion. It was 8.97 trillion in the same period in FY19.</div>
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	Government revenues averaged Rs 3.09 trillion from 1997 until 2019, touching an all-time high of Rs 16.66 trillion in March 2019.</div>
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Revenue Deficit

What is Revenue Deficit?

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