Giving reasons, state whether the following statements are true or false:
- Value added tax is a direct tax.
- Subsidies are treated as revenue expenditure.
- Borrowings from public are treated as revenue receipts.
- Revenue deficit is a part of fiscal deficit.
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- False.
As Value Added Tax is an indirect tax, in the case of which the liability to pay and burden is on different entities.
- True.
Subsidies are items of revenue expenditure, because expenditure on them does not lead to any creation of assets or reduction in liabilities.
- False.
Borrowings from public are capital receipts and not revenue receipts, because by borrowing government increases its liabilities.
- True.
As Revenue Deficit is equal to Total Revenue Expenditure Total Revenue Receipts and Fiscal deficit is a wider term, it includes both Revenue Expenditure and Capital Expenditure.
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