Official capital includes RBI's holdings of foreign currency and special drawing rights (SDR) held by the Government.

Private Capital consists of Foreign Investments, long-term loans, and Foreign Currency Deposits.

According to International Monetary Fund "The balance of payments for given period is a systematic record of all economic transactions taken place during the period between resident of the reporting countries".
(or)
In the words of Dominick Salvatore "The Balance of payment is a summary statement in which principle of all the records of the resident of a nation with the resident of all other nations are recorded during a particular period of time, usually a calendar year."

Balance of payment refers to a systematic record of all economic transactions between the residents of one country and the residents of foreign countries during a particular period of time. For example: one year.

The current account balance includes two items
(i) Visible trade - Import and export of goods.
(ii) Invisible trade - Invisible service items like banking, shipping, insurance, travel and transportation.

The Capital Account consists of three components :
(i) Private Capital
(ii) Banking Capital
(iii) Official Capital

A balance of payment surplus indicates that country's exports are more than its imports and its government and residents are savers.

Balance of payment is the principal tool for analyzing the monetary position of international trade of a country just like Receipt and Payment account of enterprise revealing the net effect of cash movements during in an enterprise to a particular period.

1. Balance of trade is statement showing the net effect of export and import of a country
2. It records only transactions relating to merchandise, i.e. goods transactions
3. It does not record capital transactions
4. It is part of the current account of BOP
5. It may beat favorable or unfavorable or in an equilibrium state.
6. It is not true indicator of economic prosperity or economic relations of a country. Unfavorable balance of trade can be converted into favorable balance of payment.

 Sl.No   Basis   Direct Taxes   Indirect Taxes    1  Meaning  It is a systematic record of all Economic transactions happened between the resident of one country and resident of foreign countries during a particular period. Balance of Trade is a statement showing net effect of Export and Import of a Country.   2  Nature of Transactions recorded   It records both the transactions relating to goods and services.  It records only transactions relating to merchandise i.e. goods.   3  Capital Transaction It records Capital transactions It does not record Capital transactions   4  Structure It includes balance of Trade, balance of services, balance of unilateral transfers and balance of Capital transactions It is a part of Current Account of Balance of payments.   5  Net position It always remains balanced in the sense that receipt side is made equal to payment side. It may be at favourable or unfavourable or in equilibrium state   6  Indicator of Economic Status It is a true indicator of Economic performance of an Economy. It is not a true indicator of Economic prosperity or Economic relations of country.   7  Correcting unfavourableness  Unfavourable balance of payment leads to deficit in balance of payment situation. Unfavourable balance of trade can be converted into favourable balance of payment.