Revenue Income Vs Capital Receipt

Revenue receipts are the regular sources of revenue of the government but the capital receipts are irregular sources of revenue.

Revenue income vs capital receipt. Thus capital receipts belonging to non recurring nature where is revenue receipts are of a recurring nature. The capital receipt is received in exchange for the source of income. Capital receipts are non reoccurring in nature however revenue receipts are reoccurring in nature. Their effect is carried only to the balance sheet of company revenue receipts are inflow of economic resources to the company and are recurring in nature.

Thus the capital receipts are received in the form of capital loan or sale processed of assets whereas revenue receipts are received in the form of income. Revenue income vs capital receipt. The primary difference between capital receipts vs revenue receipts is that capital receipts are the receipts of non recurring nature which either creates the liability of the company or reduces the company s assets whereas revenue receipts are the receipts of recurring nature and are reported in the statement of income of the company. The validity of the basis for taxing receipts from mining operators in the hands of landowners.

The former would be a capital receipt whereas the latter would be a revenue receipt. Prior to the introduction of capital gains tax in south africa capital gains attracted no tax liability at all and the disparity was even wider 1 the result of capital receipts enjoying a more favourable treatment than a receipt on revenue account has led to many taxpayers seeking the. They are vital to keep the company running. Any amount received as compensation on surrendering a right is capital receipt whereas any amount received for loss of future income is a revenue receipt.

Revenue income depriving the tax authority of tax revenue. Capital receipts are inflow of economic resources to the company and are non recurring in nature. He held that the income from such was different from the income earned by the periodical cutting of live bamboos. Unlike revenue received which is a substitution of income.

It is capital receipt but if he receives it as advance royalty for 5 years it is revenue receipt. Capital receipt either decreases the value of an asset or increases the value of liability but revenue receipt neither increases nor decreases the value of asset or liability.