Which of the following are part of the Revenue budget 1 Income Tax 2 Grants to states 3 Interest on ...........

Economic Affairs Tax System

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Which of the following are part of the Revenue budget?

1. Income Tax

2. Grants to states

3. Interest on Government Securities

Select the correct answer using the code given below.

1 and 2 only

3 only

2 and 3 only

1, 2 and 3

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Explanation:

Revenue account consist of Revenue receipts and revenue expenditure.

Revenue receipts are receipts of the government which are non-redeemable, that is, they cannot be reclaimed from the government.

Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government. It relates to those expenses incurred for the normal functioning of the government departments.

1: Income tax is a revenue receipt because it is non-redeemable i.e. Government doesn't have to pay it back#.

2:Grants to state is a revenue expenditure (even if some of it is used for asset creation)

3:Interest on government security or bond is a revenue expenditure. Here, money raised through loan is capital receipt but interest paid on it would be revenue expenditure.