Sources of revenue

The income of the government from all its sources is called public revenue. According to Dalton has defined public revenue as public receipts in a broad sense and public revenue in a revenue sense.

Tax Revenue

Non-tax revenue

Commercial revenueAdministrative revenueGrants and giftsOther income

TAX REVEN

UE

NON-TAX

REVENUE

REVENUE

RECEIPT

Collected for 2011-12

2008-09

2009-10

2010-11

2011-12

2012-13

0100000200000300000400000500000600000700000800000900000

1000000

Revenue ReceiptsCapital Receipts

Collection of receipt during year 2008-2012

What do you mean by TAX ?

“The tax is the price which each citizen pays to the state to cover his share of the cost of the general public services which he consumes.” - De Marco

TAX REVENUE

DIRECT TAXES

INDIRECT TAXES

CORPORATION TAX

INCOME TAX

EXPENDITURE TAX

SERVICE TAX

CUSTOM DUTIES

EXCISE DUTIES

SALES TAX

Direct Taxes

In this type of taxes, the liability to pay the tax and it’s burden falls on the same person. This can be classified into :

Corporation Tax

Income Tax

Service Tax

Expenditure Tax

These taxes against profits earned by businesses during a given taxable period. The contribution made by corp. tax is : 359,990.00 crore.

A tax that governments impose on financial income generated by all entities within their jurisdiction. The contribution made by corp. tax is : 172,026.00 crore.It is a tax which is payable on service provided by the service provider. The contribution made by corp. tax is : 82,000.00 crore.

Expenditure tax is a taxation plan that replaces the income tax .This tax is based on the rate of spending. The contribution made by corp. tax is : 52,900.00 crore.

Corporation Tax

Income Tax Service Tax0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

350,000.00

400,000.00

Revised 2011-12Budget 2012-13

Budget of Direct Taxes

Indirect Taxes“In this type of taxes, the liability to pay the taxes and it’s

burden can be on different persons .” These can be classified into:

CUSTOM DUTIES

EXCIES DUTIES

SALES TAX

Customs Duty is a type of indirect tax levied on goods imported into a country as well as on goods exported from a country.

Excise duty is the indirect tax levied by the state on the manufacture or production of goods in India .

Sales Tax is a tax, levied on the sale or purchase of goods.

Wea

lth ta

x

Custom

s tax

Union E

xcise

Dut

ies

Taxe

s of U

nion T

errit

ories

0.00

40,000.00

80,000.00

120,000.00

160,000.00

200,000.00

Revised 2011-12Budget 2012-13

Budget of Indirect Taxes

Heads In Cr.

Corp Tax 359,990.00

Total Taxes on Income

172,026.00

Wealth Tax 635.00

Customs 151,700.00

Net Union Excise Duties

164,115.66

Total Service Tax 82,000.00

Total taxes on UT 1,973.22

Total Tax Revenue

932,439.88

Total tax revenue collected (2011-12)

CONSU mer

1,72,026.00 crores from Income Tax

Non-tax revenueGovernment revenue other than tax revenue is called tax

revenue.

Non-tax revenue

Commercial revenue

Administrative revenue

Grants and gifts

Other income

Administrative Revenue

Fees

Fines Escheat

It includes fees, licence fees, special assessment, fines and penalties, forfeitures, escheats and rates.

A fee is a payment to the government for

the services that is renders to the people.

It refers to that income of the state which arises out of the property left by the

people without a legal heir.

Fines are those payment which is made by law breakers to the government by

a economic punishment

Special Assessment Meaning:- If on account of government activities a value of any property increases and if government levies a tax on this enhanced value, it is known as special assessment .According to Taylor,“Special assessment are charges imposed upon property benefited by such improvements the amount of charge been determined by pro-rata or pro-rata benefits ” When government undertakes certain activities of public improvements like construction of roads etc. they may confer the 1.Common benefit to the community as a whole, and 2.Special benefit for those whose properties are taken.

Grants and Gifts

Gifts are voluntary contribution from private individuals to the government fund for specific purposes. In federal countries, the central government gives grants-in –aid to the state government and the state government gives grants to the local bodies for carrying functions successfully, or for undertaking specific activity. These grants may be unconditional as well as for specific purposes.

Grants are received from foreign countries in the form of foreign aid, which may be military economy and technical type.

Commercial revenue

All types of revenue which are derived by government from public enterprises by selling their goods and services are called commercial revenue.

Other Incomes Other Incomes of the government includes the

following –

• Income from Public Property - Government gets income every year from all the public property. Example- Agricultural income and income from forest and mines etc.

•Deficit Financing – It is also one of the sources of financing and government expenses. These excess amount may be used for public welfare .

•Duties – Duties are levied in intoxicate articles, so that the consumption of such articles may be minimized. Such duties are collected on liquor, opium, Bhaang etc.

•Voluntary Loans – Loans are taken for meeting out the expenses. It may be voluntary or compulsory.

•Rates – Whenever a tax is levied by local bodies and its boundaries, it is known as rates. The rates differ from place to place.

Total Non-Tax collected (2011-12)

Heads In Cr.

Interest Receipt 19,577.78

Total Dividends and Profits

42,623.68

Total Fiscal Services 127.82

General Services 11,494.36

Total Social Services 2,353.90

Economic Services 45,915.27

Total Grants in Aid 2,172.96Non Tax Revenue of UT 1,169.35

Total Non Tax Revenue

125,435.12

Market Loans

External Assistance

Recovery Of Loans and AdvancesDisinvestment

Open market borrowings through auctions and other instruments.

Loans from friendly foreign countries and international organizations.

Recoveries from different levels of government and PSU’s.

Transfer of shares from PSU’s to general public.

Capital ReceiptsIn India, capital receipts of the government budget are further classified as under:

Small Savings

P.F. and other deposits

These include Post Office deposits ,NSS , NSC ,KVP etc.

Deposit scheme for retiring government and PSU employees

Heads In CroresNet Recoveries of Loans and Advances 15,020.00

Misc. Capital Receipts 40,000.00

Net Short Term Borrowings 358,000.00

Securities against Small Savings 24,182.46

Net State Provident Funds 10,000.00

Net Other Receipts (Internal Debts) (13,865.89)

Net External Debt 14,500.00Draw Down of Cash Balance 20,000.00

Net Market Stabilization Scheme 20,000.00

Total capital receipt collected (2011-12)

QuIz TiMe

World bank

ONGC

PSU

14258 15493

521980

2011-12

Recoveries Of LoansOther ReceiptsBorrowings and Other Liabili-ties

11650 30000

513590

2012-13

*Note – Values in Crores

Consumer’s Tax Burden

Capital Receipts

Capital receipts of the government are those monetary receipt which satisfy the following two characteristics:

* These receipts create a liability for the government.

* These receipts cause a reduction in the assets of the government .

Government Receipts

SOURCES OF REVENUE

TAX RECEIPTS

NON-TAX RECEIPTS

CORPORATION TAX INCOME TAX

SERVICE TAX

CUSTOM DUTIES

EXCISE DUTIES

SALES TAX

FINES

ASSESSMENT

INCOME FROM THE SALE OF SPECTRUM

INCOME FROM PUBLIC ENTERPRISES FEES

ESCHEAT

GRANTS/DONATIONS

Income Tax

“The tax is the price which each citizen pay to the state to cover his share of the cost of the general public services which be will consume.” - De Marco

Why the government actually collects Taxes?????

Tax Collectors

Inco

me

Tax

Cor

pora

tion

Tax

Excise Duty

Service Tax

Custom

Duty

VAT W

ealth Tax

Service tax

Corporation tax

Sales tax

Revenue receipts

Those money receipts of the government are known as revenue receipts which satisfy the two following related characteristics :

* These receipts do not create any corresponding liability for the government. * These receipts do not cause any reduction in the assets of the government .