What is Non Tax Revenue?

Non Tax Revenue is a recurring income that the government earns from different sources, excluding taxes. These tax revenues don’t come from the general public taxes. The Indian government provides a few services that help them generate the state’s income. One of them is the revenue receipts. These receipts are the payments that do not lead to obligations or claims against the Indian government: non-tax revenue and tax revenue. Welcome to this comprehensive blog, where you will learn the ins and outs of non-tax revenue.

What is Non Tax Revenue?

What is non tax revenue? Simply put, it is the recurring income earned by the government, barring other taxes. There are different modes of tax revenues, and they comprise direct and indirect taxes. Other than that, non-tax revenue also offers some revenue to the government. 

What is non-tax revenue with example?

After learning the non tax revenue meaning, it’s time to get a practical understanding with some examples. The best example of non-tax revenue is when individuals avail of services offered by the Indian government. Take the example of broadband connection, telecommunication, electricity, and more. They need to pay their bills, including their share of non-tax revenue to the government. The Indian government collects interest as the non-tax revenue on the funds and loans advanced to the states.

Sources of Non Tax revenue of State Government

The best sources of non-tax revenue for state government include the following:
    • Jobs through the state public service boards
    • Security guards in houses
    • Civil services
    • Municipal services
    • Electricity
    • Administrative services
    • Newspapers 
    • Sale of stationery and more

Components of Non Tax Revenue

The following are the critical elements of non-tax revenue: 
    • Interest on loans offered to the states & union territories 
    • A petroleum license that includes the expenses of buying the right to conduct exploration in the area
    • Profits and dividends that cover transfers of RBI surplus and dividends & profits from the PSEs 
    • Communication service fees from telecom providers 
    • Power supply fees paid to the Central Electricity Authority 
    • Broadcasting expenses 
    • Fees for using roads and bridges 
    • Payments made in exchange for issuing passports, visas, auditing and more
    • Payments received by CSD for their services 
    • Fee for civil services
    • Examination charges paid by candidates and parents for exams held by SSC or Staff Selection Commission 
    • Gazettes, sale of stationery and other expenses for purchasing stationery, official publications, newspapers, and more

The government can improve the fiscal stability of the state with non-tax revenues. In addition, it can diversify income streams through non-tax methods. So, the government can provide financial support to public services and infrastructure without relying on citizen taxes. However, the revenue streams should be effectively managed to ensure economic development.

Importance of Non Tax Revenue

Tax revenue is a significant source of revenue that the government earns. However, the tax collection amount varies depending on several factors. They are consumption levels, employment situations, and more. So, the non-tax revenue is a source of earnings for the government. At the same time, it helps them recover the expenses associated with the services they offer to the state.

Difference between Tax Revenue and Non Tax Revenue

The charges on tax revenue happen on the basis of the income earned by the entity or individual. In addition, it also depends on the overall value of the services or goods. Besides, non-tax revenue is levied for services offered by the government. It includes the interest on loans for diverse purposes. It is mandatory to pay some parts of the earned income and the amount of services/goods as tax. However, non-tax revenue is only payment when citizens avail themselves of the services offered by the government.

Is GST a non-tax revenue?

GST is an indirect tax that is charged on the value of the transaction of services and goods by a company or individual. However, it is not a non-tax revenue. In the non-tax revenue, the tax is only charged against the services offered by the government. The tax is only charged once the citizen avails of the service. 

Conclusion

This post has given you an insightful analysis of what is non tax revenue. You have also learned the sources of non-tax revenue. This guide also explained the difference between tax and non-tax revenue. So, now you understand the ins and outs of non-tax revenue.