What is Capital Budget and Revenue Budget?

By Shubhra Anand Jain|Updated : November 7th, 2022

While the revenue budget includes items that do not impact the government's assets and liabilities, the capital budget includes items that do affect the government's assets and liabilities. The government creates an annual budget that includes capital and revenue budgets.

Capital Budget and Revenue Budget

The government's assets and liabilities are affected by capital revenues and expenditures. Capital receipts refer to borrowings, loans from a public or foreign government, or borrowings from the central bank made by the government of a country. Here are some factors about revenue budget and capital budget:

Type of Budget

Components

Examples

Revenue Budget

Revenue Receipts,

Revenue Expenditure

Excise Duty, Income Tax, Dividend Income, Salaries, Administrative Costs

Capital Budget

Capital Receipts,

Capital Expenditure

Disinvestments, Long-term Investments, etc.

Difference between Revenue Budget and Capital Budget

The key differences between Revenue Budget and Capital Budget are as follows:

Revenue BudgetCapital Budget
Revenue receipts are money earned by the government as taxes and non-taxes like dividend income, profits, etc.Capital receipts cause a decrease in the assets of the government or increase its liabilities.

Revenue expenditure includes administrative expenses, salaries, pensions, etc.

Capital expenditure creates or reduces liabilities.
Revenue and spending have no effect on the government's assets and liabilities.

 Assets like hospitals are a part of capital expenditure for the government.

Related Questions:

Comments

write a comment

FAQs on Capital Budget and Revenue Budget

  • The revenue budget causes no impact on the government’s assets and liabilities, while the capital budget does change the status of the total number of government assets and liabilities.

  • Some of the examples of revenue budget include income from taxes, dividends, investments, and profits. Capital budget examples include disinvestments that reduce the government’s share of total assets and increase liabilities.

Follow us for latest updates