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    Assignment of Tax Law: Gitarattan International Business School DELHI-110085

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    Abhishek
    The document discusses the differences between capital receipts and revenue receipts. Capital receipts are non-recurring income that affects a company's balance sheet rather than profit/loss, such as from issuing shares or taking loans. Revenue receipts are recurring income from core business operations that affect profit/loss, like sales, services, or interest received. While capital receipts provide long-term benefits and reduce assets/increase liabilities, revenue receipts only provide short-term benefits in the current accounting year without affecting assets/liabilities.

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    Assignment of Tax Law: Gitarattan International Business School DELHI-110085

    Uploaded by

    Abhishek
    34 views5 pages
    The document discusses the differences between capital receipts and revenue receipts. Capital receipts are non-recurring income that affects a company's balance sheet rather than profit/loss, such as from issuing shares or taking loans. Revenue receipts are recurring income from core business operations that affect profit/loss, like sales, services, or interest received. While capital receipts provide long-term benefits and reduce assets/increase liabilities, revenue receipts only provide short-term benefits in the current accounting year without affecting assets/liabilities.

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    The document discusses the differences between capital receipts and revenue receipts. Capital receipts are non-recurring income that affects a company's balance sheet rather than profit/loss, such as from issuing shares or taking loans. Revenue receipts are recurring income from core business operations that affect profit/loss, like sales, services, or interest received. While capital receipts provide long-term benefits and reduce assets/increase liabilities, revenue receipts only provide short-term benefits in the current accounting year without affecting assets/liabilities.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    34 views5 pages

    Assignment of Tax Law: Gitarattan International Business School DELHI-110085

    Uploaded by

    Abhishek
    The document discusses the differences between capital receipts and revenue receipts. Capital receipts are non-recurring income that affects a company's balance sheet rather than profit/loss, such as from issuing shares or taking loans. Revenue receipts are recurring income from core business operations that affect profit/loss, like sales, services, or interest received. While capital receipts provide long-term benefits and reduce assets/increase liabilities, revenue receipts only provide short-term benefits in the current accounting year without affecting assets/liabilities.

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    GITARATTAN INTERNATIONAL BUSINESS SCHOOL

    DELHI-110085

    Batch (2016-2021)

    ASSIGNMENT OF TAX LAW

    Submitted by: DHRUV SHARMA


    Roll No: 01319103516
    Submitted to: LOVINA ROPIA
    CAPITAL RECEIPT V/S REVENUE RECEIPT

    WHAT ARE RECEIPTS?

    Receipts are just the opposites of expenses. But without receipts, there may be no existence of

    the business. Not all receipts directly increase the profits or decrease the loss. But some affect

    the profit or loss directly.

    In this article, we will be talking about capital receipts and revenue receipts. In simple terms,

    capital receipts don’t affect the profit or loss of the business, as for example, we can say that

    sale of long-term assets is one sort of capital receipts.

    But revenue receipts affect the profit or loss of a company. As an example, we can say that sale

    of products, the commission received etc. are revenue receipts.

    A receipt is a written acknowledgment that something of value has been transferred from one

    party to another. In addition to the receipts consumers typically receive from vendors and

    service providers, receipts are also issued in business-to-business dealings as well as stock

    market transactions. For example, the holder of a futures contract is generally given a delivery

    instrument which acts as a receipt in that it can be exchanged for the underlying asset when the

    futures contract expires. 1

    CAPITAL RECEIPT

    Capital receipts are the income received by the company which is non-recurring in nature. They

    are part of the financing and investing activities rather than operating activities. The capital

    1
    https://www.wallstreetmojo.com/capital-receipts-vs-revenue-receipts/
    receipts either reduces an asset or increases a liability. The receipts can be generated from the

    following sources:

     Issue of Shares

     The issue of debt instruments such as debentures.

     Loan taken from a bank or financial institution.

     Government grants.

     Insurance Claim.

     Additional capital introduced by the proprietor.

    REVENUE RECEIPT

    Revenue Receipts are the receipts which arise through the core business activities. These

    receipts are a part of normal business operations that is why they occur again and again however

    its benefit can be enjoyed only in the current accounting year as its effect is short term. The

    income received from the day to day activities of business includes all the operations that bring

    cash into the business like: 2

     Revenue generated from the sale of inventory

     Services Rendered

     Discount Received from the creditors or suppliers

     Sale of waste material/scrap.

     Interest Received

     Receipt in the form of dividend

     Rent Received

    2
    https://keydifferences.com/difference-between-capital-receipt-and-revenue-receipt.html
    DIFFERNCE BETWEEN CAPITAL REVENUE & REVENUE RECEIPT

    1. Receipts generated from investing and financing activities are capital receipts, on the other

    hand, receipts from operating activities are revenue receipt.

    2. Capital Receipts do not frequently occur, as it is non-recurring and irregular. But, revenue

    receipts do not occur again and again they are recurring and regular.

    3. The benefit of capital receipt can be enjoyed in more than one year, but the benefit of

    revenue receipt can be enjoyed only in the current year.

    4. Capital Receipts appears on the liabilities side of the Balance Sheet whereas Revenue

    Receipts appears on the credit side of the Profit and Loss Account as income for the

    financial year.

    5. The capital receipt is received in exchange for the source of income. Unlike revenue

    received which is a substitution of income.

    6. 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.

    SIMILARITIES

    1. Both receipts are a part of business activities.

    2. Both are necessary for the survival and growth of the company.

    3. The source of business income. 3

    3
    http://incometaxmanagement.com/Pages/Taxation-System/Capital-&-Revenue.html

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