Tax revenue
Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Class 12, Ch 5 "Government Budget and the Economy"
Meaning
Tax revenue is the money the government collects through taxes. A tax is a compulsory payment, and the taxpayer gets nothing specific in return. It is a revenue receipt: it creates no claim on the government and never has to be paid back. It has two parts:
- Direct taxes are paid by the person or firm that bears them, such as personal income tax and corporation tax.
- Indirect taxes are taxes on goods and services, such as customs, excise and GST.
The Union Budget shows tax revenue net of states' share, which means after handing over the part that belongs to the states.
Example
Central tax revenue (net of states' share) was 7.9% of GDP in 2023-24. GST started on 1 July 2017 and replaced central excise, service tax and state VAT. From September 2025, its rates were cut down to 5% and 18%, plus a 40% rate on sin and luxury goods.
Don't confuse with
- Non-tax revenue: money the government gets without taxing, such as interest on its loans, PSU dividends, the RBI's surplus transfer and fees for services.
- Disinvestment receipts: money from selling PSU shares. This is a capital receipt, not tax revenue.
Related concepts
- Revenue budget
- Capital budget
- Revenue receipts
- Non-tax revenue
- Capital receipts
- Debt-creating capital receipts
- Non-debt creating capital receipts
- Asset monetisation