Article 112 of Constitution requires the Government to present Annual Financial Statement (AFS) before the Parliament every financial year. The AFS should distinguish the expenditure on the revenue account from other expenditures.
Revenue Budget include Current Receipts and expenditure that can be met from these receipts. On the other hand, Capital Budget includes Assets and Liabilities.
|Criteria||Revenue Budget||Capital Budget|
|Receipts||Non-redeemable receipts||Receipts which create liability or reduce financial assets.|
|Examples of Receipts||Tax Revenue (Direct and Indirect Taxes): GST, Income Tax, Corporate Tax, Excise Duty, Customs duty (In Declining Order)Non-Tax Revenue: Interest Receipts, Dividends and Profits of PSUs, User Charges, External Grants etc.||Debt Receipts: Market Borrowings.Non-Debt Receipts: Disinvestment, Recovery of Loans|
|Expenditure||Recurring: Incurred for purposes other than creation of Assets||Non-Recurring: Incurred for Asset creation|
|Examples of Expenditure||Interest Payments, Subsidies, Salaries and Pensions, Defence, Grants to the States for creation of Assets etc.||Creation of Roads, railways etc. and loans to States.|
The budget is not merely a statement of receipts and expenditures, but also a tool to promote economic development. For example, in the last 2-3 years, there has been much focus on capital Budget to revive the Indian economy.