Question: Which Transaction Is A Capital Receipt?

What are examples of capital receipts?

Examples of debt capital receipts: Market loans, issuance of special securities to public-sector banks, issue of securities, short-term borrowings, treasury bills, securities against small savings, state provident funds, relief bonds, saving bonds, gold bonds, external debt, etc, are all example of debt capital ….

Is subscription a capital receipt?

A capital receipt tends to be of a non-continuing nature. Thus, the sale of a fixed asset or shares in a business arises on only an occasional basis. One exception is when shares are sold on an ongoing subscription basis. … Thus, they do not arise from the operating activities of a business.

Why tax is not a capital receipt?

Taxes received by government are not capital receipts because they neither create any liability nor cause a reduction in the assets of the government.

How is recovery of loans a capital receipt?

Recovery of loan is a capital receipt because it causes a reduction in the assests of the government. Capital receipts are defined as those receipts which either create a liability or cause a reduction in the assets. Recovery of loans satisfies the definition, hence it is a capital receipt.

Is a capital receipt taxable?

Receipts which are capital in nature are not income according to ordinary concepts. These receipts may be assessable under other provisions, such as the capital gains tax provisions. … The cases have established other tests in respect to the revenue or capital nature of expenses incurred.

What are the two types of revenue receipts?

On this basis, revenue receipts are of two types viz. Tax Revenue and Non-tax revenue….Non-Tax RevenueMoney which the Government earns as “Dividends and profits” from its profit making public enterprises (PSUs).Interest which the Government earns on the money lent by it to external or internal borrowers.More items…•

What are the sources of revenue receipts?

Non-tax revenue consists of all receipts from sources other than taxes as shown in that chart.Components or sources of revenue receipts are explained below: … It comprises the following items:(i) Interest: … (ii) Profits and Dividends: … (iii) Fees and Fines: … (iv) Special Assessment: … These are the following:

What are the main items of capital receipt?

Your capital receipts will come from these three sources:The sale of fixed assets, which are tangible or intangible property owned or controlled by your company. … The sale of shares in the business, including both common and preferred stock. … The issuing of debt instruments to your business, such as a bank loan.

Why are borrowings a capital receipt?

Capital receipts refer to those money receipts which creates a liability for the government or cause reduction in assets of the government. Therefore, borrowing is a capital receipt as it creates a liability for the government.

Which of the following is source of capital receipt?

Disinvestment, that is, sale of public properties to the private organization is an example of capital receipt because capital receipts refers to those money receipts which either create a liability for the government or cause reduction in assets of the government.

What is a capital transaction?

Transactions relating to share capital and reserves, long-term debt capital, or fixed assets of a company, as opposed to revenue transactions. For example, the purchase of a building is a capital transaction, while the maintenance of a building is a revenue transaction.

What are capital receipts and revenue receipts?

The primary difference between Capital Receipts vs Revenue Receipts is that Capital receipts are the receipts of non-recurring nature which either creates the liability of the company or reduces the company’s assets whereas revenue receipts are the receipts of recurring nature and are reported in the statement of …

What is not a capital receipt?

Capital receipts: This is the income flow from the sale of fixed assets, cash from the sale of shares in the business, cash from the issuance of a debt instrument which includes loans and bonds. The sale of goods and services is not a capital receipt.

What is the meaning of revenue receipt What are the two main sources of revenue receipts?

Revenue receipts can be defined as those receipts which neither create any liability nor cause any reduction in the assets of the government. … For the government, there are two sources of revenue receipts — tax revenues and non-tax revenues.