Receipts of the government that either create a liability or reduce its financial assets are called:

In the Union Budget, all the money received by the government is divided into two types: revenue receipts and capital receipts. The difference depends on whether the receipt changes the government's assets and liabilities.

Capital receipts are receipts that either create a liability for the government or reduce its financial assets. The main capital receipts are:

Borrowings, such as market loans, treasury bills and loans from foreign governments and institutions. These create a liability, because the money must be repaid.

Recovery of loans given earlier by the government to states, public sector units and others. This reduces the government's financial assets.

Disinvestment, that is, sale of the government's shares in public sector enterprises. This also reduces its assets.

Small savings, such as Post Office deposits and provident funds, which create a liability.

Revenue receipts, on the other hand, neither create a liability nor reduce assets. They include tax revenue (such as income tax, corporation tax and GST) and non-tax revenue (such as interest receipts, dividends from public sector units, fees, fines and grants).

In the same way, expenditure is divided into revenue expenditure, which does not create assets (salaries, interest payments, subsidies), and capital expenditure, which creates assets or reduces liabilities (building roads, buying machinery, repaying loans).

These categories are used to calculate deficits. Revenue deficit = revenue expenditure minus revenue receipts. Fiscal deficit = total expenditure minus total receipts other than borrowings, so it shows how much the government needs to borrow.

Why not the other options?

• ✗Revenue receipts neither create liabilities nor reduce assets.
• ✗Tax receipts are a part of revenue receipts.
• ✗Non-tax revenue, such as dividends and fees, is also a part of revenue receipts.