Capital Receipt

Capital receipts refer to those receipts which either create liability or cause a reduction in the assets of the government. They are non-recurring and non-routine in nature.

A receipt is a capital receipt if it satisfies any one of the two conditions:

• The receipts must create a liability for the government For example, Borrowings are capital receipts as they lead to an increase in the liability of the government However, tax received is not a capital receipt as it does not result in the creation of any liability
• The receipts must cause a decrease in the assets For example, receipts from the sale of shares of public enterprise is a capital receipt as it leads to a reduction in assets of the government

Source: Ramesh Singh