Meaning:
The branch of economics that deals with income and expenditure of the government and its effect on socio-economic aspects are called Public Finance (Government Finance).

Source of Government Revenue:
Government revenue refers to the income of a government from various sources to meet regular and development expenditure. There are generally two sources of government revenue, they are:

1. Tax revenue:
Tax is the compulsory payment paid by the people to the government. The taxpayer does not get direct benefit while paying tax, but they may get indirect benefit from various services provided by the government. Tax revenue is two types:

a) Direct tax:
If direct tax is levied on someone then the burden can’t be shifted to others so, direct taxes are non-transferable. Generally, direct taxes are imposed on income and property of a person. The main sources or components of direct taxes are:

* Land revenue and registration tax: Government charges tax on the purchase of land and house.

* Property, profit & income tax: Government charges a certain amount of tax in income, property & profit or the general people.

b) Indirect tax:
If tax is levied on goods and services and the burden of tax can be shifted from one person to another then, it is called an indirect tax. The producer can shift the burden of tax to ultimate consumers by raising the price of commodities. The main sources of a component of indirect tax are:

* Custom duty: The government can collect revenue by imposing a tax on the import and export of goods and services.

* Tax on consumption & production of goods and services: Government can collect the revenue by imposing a tax on the consumption and production of goods and services such as excise tax, entertainment tax, value added tax, etc.

2. Non-tax revenue:
The income received by the government from various sources other than tax is known as non-tax revenue. There are various sources of non-tax revenue which are:

a) Dividend tax:
The revenue received from the profit of government investment in various sectors like a financial institution, industrial sector, service sectors, etc.

b) Receipts from the sale of government commodities & services:
It consists of income from drinking water, irrigation, electricity, education, etc.

c) Fines and penalties:
People pay a large amount of money to the government in the form of fines and penalties.

d) Principal and interest payment:
It consists of repayment of principal and interest of debt by the corporations to the government.

e) Royalty and sale of fixed assets:
It includes the income received from mine royalty and sells of mine and government fixed assets such as land, buildings, etc.

Foreign grants are also a major source of government revenue. Nepal can get grants from foreign government and institutions for development programs and security expenses.

Government Expenditure:
Government expenditure refers to the expenditure made by the government and its various agencies for the promotion of public welfare. The sources of government expenditure are classified under two headings which are as follows:

1. Regular or administrative expenditure:
Expenditure made on normal government services or administrative functions is called regular expenditure. It is related to expenditure on day to day activities like payment of salaries, pension, payment of interest and principal for external and internal debt, etc. the regular expenditure consists of the following headings:

a) Constitutional organs: It consists of the expenditure made by the government of constitutional organs like Supreme Court, Election commission, Auditor General's office, etc.
b) General Administration: It consists of the expenditure made by the government on the council of ministers, district administrations, police, jail, etc.
c) Defense: It consists of the expenditure made by the government on management and running of defense-related offices.
d) Social services: It consists of the expenditure made by the government on education health, drinking water, etc.
There are other headings of regular expenditure such as revenue administration, economic administration & planning, judicial administration, foreign services, economic services, loan and investment, loan repayment and interest and miscellaneous.

2. Development & capital expenditure: Expenditure made on the development activities is called development expenditure. It is related to long term expenditure on development programs. The development consists of the following headings:

a) Constitutional organ: It includes the expenditure made on infrastructural development of Supreme Court, election commission, Auditor General's office, etc.
b) General administration: it includes the expenditure made on administrative reform.
c) Social services: It includes the expenditure made on the development of education drinking water, health, etc.
d) Economic administration and planning: It includes the expenditure made on planning & statistics of a nation.

There are other headings of development expenditures such as economics services and miscellaneous.