India Markets closed

BQExplains: How India Earns Its Revenue

The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp

The Indian government, like most others, gets most of its revenue by taxing citizens, corporations, goods and services. As part of its budget presentation, the government presents a receipt budget, which lays down its source of earnings.

Gross tax revenue estimates are laid out each year, and a revised estimate is provided at the end of each year. In fiscal 2018-19 for instance, the government hopes to earn Rs 22.7 lakh crore in gross tax revenue.

The gross tax revenue is made up of the corporation tax, which forms the largest chunk, followed by taxes on individuals and the Goods and Services Tax.

Apart from tax revenue, the government also earns revenue from a few other sources. Prominent among these are receipts in the form of dividends from public sector enterprises. State-owned banks and financial institutions and even the Reserve Bank of India also pay dividends. In tough times, you will often hear of the government seeking higher dividends from these entities.

And then there are proceeds from divestment in public sector enterprises. The government hopes to collect Rs 80,000 crore by selling stake in state-run firms in 2018-19.

Also Read: What Is Fiscal Deficit?

. Read more on Budget 2019 by BloombergQuint.