What Is Difference Between Revenue Receipt And Capital Receipt?

What is revenue receipt example?

Common examples of revenue receipts Income received as interest on a saving account.

Dividend income received from shares of various companies.

Rental income received by a company.

Cash discount received from vendors..

Which of the following is revenue receipt?

Notes: Only 1 & 2 are revenue receipts. Rest two are capital receipts.

Is revenue receipt taxable?

Also, certain revenue receipts have been exempted from taxation under Income-tax Act while certain receipts have been taken as income chargeable to income-tax. For example under section 28 certain receipts have been made chargeable to income-tax under the head “profits and gains of business or profession“.

Is entrance fee a capital receipt?

v. CIT [1961] 41 ITR 495, the entrance fees received from the members are not capital receipts but revenue receipts and are taxable as income of the assessee-club.

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 a capital receipt?

Capital receipts are receipts that create liabilities or reduce financial assets. They also refer to incoming cash flows. Capital receipts can be both non-debt and debt receipts.

Is subscription a revenue receipt?

Subscription is revenue receipt.

What is capital and revenue expenditure and receipts?

Capital expenditure is money spent on the purchase of fixed assets or on improvements to fixed assets. Revenue expenditure is the day-to-day running costs of a business. The main difference between these two types of expenditure is the length of time the expenditure is of benefit to the business.

Is capital a revenue or expense?

Capital expenditures are for fixed assets, which are expected to be productive assets for a long period of time. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense.

Is recovery of loan a revenue receipt?

Recovery of loans is treated as a capital receipt because it reduces assets of the government .

What is revenue receipt?

Revenue receipts can be defined as those receipts which neither create any liability nor cause any reduction in the assets of the government. … For example, taxes received by the government, unlike borrowings, do not create any liabilities for it.

What is capital expenditure and examples?

What are Capital Expenditures? Capital expenditures refer to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets. … Long-term assets are usually physical, fixed and non-consumable assets. Examples include property, plant, and equipment.

What is not a revenue receipt?

Recovery of loans is not an example of revenue receipts because revenue receipts refer to those money receipts which does not create a liability for the government or cause reduction in assets of the government.

Is escheat a revenue receipt?

Escheats is an example of revenue receipts because revenue receipts refer to those money receipts which does not create a liability for the government or cause reduction in assets of the government.

Is revenue a profit?

Revenue is the total amount of income generated by the sale of goods or services related to the company’s primary operations. … Profit is the amount of income that remains after accounting for all expenses, debts, additional income streams, and operating costs.

What are the sources of capital receipt?

3 Main Sources of Capital Receipts The sale of shares in the business, including both common and preferred stock. (Learn more about issuing shares for your business.) The issuing of debt instruments to your business, such as a bank loan. (Read up on good debt vs bad debt.)

Is salary a capital expenditure?

Key Takeaways. Capital expenditures (CAPEX) are a company’s major, long-term expenses, while operating expenses (OPEX) are a company’s day-to-day expenses. … Examples of OPEX include employee salaries, rent, utilities, property taxes, and cost of goods sold (COGS).

Is a capital receipt taxable?

According to the Income Tax Act, the receipts of capital nature are not liable to be taxed. Accordingly any receipt in relation to sale of a factory or of a manufacturing concern or of a building of a banking concern or of any other profit making appartus owned by the recipient, are regarded as capital receipt.