Which of the following is not a source of tax revenue for the Government of India and is instead classified as non tax revenue?

Introduction / Context:
Public finance in India distinguishes between tax revenue and non tax revenue. Tax revenue comes from compulsory levies like customs, excise, and income tax. Non tax revenue arises from fees, fines, interest receipts, and profits or dividends from public sector enterprises. This question assesses whether you can correctly identify which item in the list does not belong to the tax revenue category.

Given Data / Assumptions:

- Custom duty is a tax on imports and sometimes exports.

- Excise duty is a tax on the manufacture or production of goods within the country, though it has been largely subsumed by Goods and Services Tax for many items.

- Income tax is a direct tax levied on income of individuals and certain entities.

- Dividends and profits received from public enterprises represent returns on government investment, not taxes.

Concept / Approach:
The approach is to separate clearly what is a tax from what is not. A tax is a compulsory payment to the state without a direct quid pro quo, imposed under legal authority. Customs, excise, and income tax all fit this definition and are therefore tax revenues. Dividends and profits from public enterprises arise because the government holds shares or ownership in such entities and receives returns as any shareholder or owner would. Those receipts are classified as non tax revenue in the government budget.

Step-by-Step Solution:
Step 1: Recognise customs duty as a tax on goods moving across the national border, collected by customs authorities. Step 2: Recognise excise duty as a tax on domestic production, historically collected from manufacturers. Step 3: Recognise income tax as a direct tax on the income of individuals and certain organisations. Step 4: Note that dividends and profits are payments made by public enterprises to the government because it owns equity or has invested capital. Step 5: Apply the definition of tax: dividends and profits are not compulsory levies; they are returns on investment, so they are non tax revenue. Step 6: Select dividends and profits from public enterprises as the option that is not a source of tax revenue.

Verification / Alternative check:
Budget documents of the Government of India clearly separate tax revenue from non tax revenue. In these statements, customs duty, excise duty, and income tax appear under the tax revenue heading. Dividends and surplus of public sector enterprises, as well as surplus from the Reserve Bank of India, are recorded under non tax revenue. Reviewing even one such budget summary confirms this classification and verifies that dividends and profits do not form part of tax revenue.

Why Other Options Are Wrong:
Custom duty is a classic example of an indirect tax, contributed mainly by importers. Excise duty, though restructured with the introduction of Goods and Services Tax, is also a tax where applicable. Income tax is a cornerstone of direct taxation and a major component of tax revenue. Since all three clearly meet the definition of tax revenue, they cannot be the correct answer to this question.

Common Pitfalls:
Candidates sometimes become confused because dividends and profits ultimately add to government income, just like taxes. However, the classification question is not about what earns money, but about whether the collection is a tax. Another mistake is to think that only direct taxes count as tax revenue and to misclassify customs or excise. The safe method is to remember that any levy called duty or tax is part of tax revenue, while dividends and profits are returns on investment and so are non tax revenue.

Final Answer:
The item that is not a source of tax revenue for the Government of India is dividends and profits from public enterprises.