Explanation:

Capital Receipts: Meaning, Conditions and Sources! Capital receipts refer to those receipts which either create a 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:

• (i) 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 creation of any liability.
• (ii) The receipts must cause a decrease in the assets. For example, receipts from sale of shares of public enterprise is a capital receipt as it leads to reduction in assets of the government.