What is the Difference Between Capital Budget and Revenue Budget?

The main difference between a capital budget and a revenue budget lies in the nature of the expenses and their impact on the government's or company's assets and liabilities.

Revenue Budget:

• Comprises revenue receipts and revenue expenditure.
• Revenue receipts are money earned by the government or a company through taxes, dividends, and profits.
• Revenue expenditure includes administrative expenses, salaries, pensions, etc..
• These expenses do not impact the government's or company's assets and liabilities.
• Examples of revenue budget components include excise duty, income tax, dividend income, salaries, and administrative costs.

Capital Budget:

• Comprises capital receipts and capital expenditure.
• Capital receipts cause a decrease in the assets of the government or an increase in its liabilities.
• Capital expenditure creates or reduces liabilities and impacts the government's or company's assets and liabilities.
• Examples of capital budget components include disinvestments, long-term investments, infrastructure development, and government assets.

In summary, the revenue budget focuses on short-term expenses and receipts, while the capital budget is concerned with long-term investments and expenditures that affect the government's or company's assets and liabilities.

Comparative Table: Capital Budget vs Revenue Budget

The key differences between Capital Budget and Revenue Budget are as follows:

Here is a table summarizing the differences between the two budgets:

In summary, the Revenue Budget deals with the government's sources of revenue and its day-to-day operational expenses, while the Capital Budget focuses on long-term investments and how they affect the government's assets and liabilities.