Carefully read the following two statements and pick the most appropriate option:
Assertion (A): The government’s revenue receipts don’t bring with them any burden of repayment or financial liability.
Reason (R): These earnings aren’t meant to be returned and generally come from either tax-related sources or other regular inflows.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Both A and R are true, and R is the correct explanation of A.
Revenue receipts are defined as government income that neither creates a liability nor causes a reduction in assets. Unlike capital receipts (such as loans), revenue receipts—which include tax revenues (GST, Income Tax) and non-tax revenues (interest, dividends)—are "non-redeemable." This means the government is not under any legal obligation to return this money to the payer. Therefore, since these inflows are permanent earnings from regular economic activities, they carry no future burden of repayment.