taxes types, methods & budgeting process section 1 MCQ Questions & Answers Detailed Explanation
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The following question based on Taxes Types, Methods & Budgeting Process topic of indian economy mcq
(a) 1976
(b) 1957
(c) 1991
(d) 1948
The correct answers to the above question in:
Answer: (b)
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Question : 1
Which of the following taxes fall under the state list of Indian Constitution?
- Entertainment tax
- Luxury tax
- Stamp Duty
- Custom Duty
a) 2, 4 and 5
b) 1 and 2
c) 1, 3 and 4
d) 1, 2 and 4
Answer »Answer: (b)
Customs duties-Export duty and import duty are levied by Central Government.
Question : 2
Which of the following statements are true regarding “Deficit Financing”?
- It raises aggregate demand in the economy
- It may result in inflation in the economy
- It is used as a developmental tool by developing countries
- It is done by issuing government bonds
a) (i), (ii) & (iii) only
b) (iii) & (iv) only
c) (i) & (ii) only
d) All of the above
Answer »Answer: (d)
Deficit financing is the budgetary situation where expenditure is higher than the receipts.
The expenditure revenue gap is financed by either printing of currency or through borrowing. Nowadays most governments both in the developed and developing world are having deficit budgets and these deficits are often financed through borrowing.
Hence the fiscal deficit is the ideal indicator of deficit financing. Deficit financing is very useful in developing countries like India because of revenue scarcity and development expenditure needs.
Since government spends more than receipts, it leads to an increase in demand and may result in inflation also.
Question : 3
The Public Debt of the Government of India includes which of the following:
- Treasury Bills
- External Commercial Borrowing (ECB)
- NRI deposits
- Foreign Direct Investment in India (FDI)
a) (i) & (iii) only
b) (i), (ii) & (iii) only
c) (i) only
d) (ii) & (iv) only
Answer »Answer: (c)
Public Debt of Govt. of India is Central Government's internal and external debt.
Treasury Bill is Govt. of India's debt because these are bonds issued by GoI.
ECB and FDI relates to companies and PSUs. And NRI deposits are in banks and it is not a debt of Govt. of India.
So, only (i) statement is correct.
Question : 4
Which of the following figures are presented as part of the Budget presentation in Parliament?
- Budgeted receipts and expenses for the next Financial Year (FY)
- Budgeted receipts and expenses for the current FY
- Revised receipts and expenses for the current FY
- Actual receipts and expenses for the last FY
a) (i) & (ii) only
b) (i), (ii), & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (d)
Question : 5
Which of the following is not a case of Centre’s Off Budget Borrowings?
a) Borrowing by HUDCO to fund the affordable housing programme
b) Borrowing by NABARD for govts’ irrigation projects
c) Borrowing by FCI to fund the food subsidy programme
d) Borrowing by NTPC for its power generation projects
Answer »Answer: (d)
When the Centre does not have the budgetary resources to fund its various schemes/programmes then it asks its agencies to borrow and fund these programmes. For example, for the public distribution scheme, FCI borrows from National Small Savings Fund (NSSF).
Similarly, HUDCO and NHB borrow to fund the affordable scheme of the government, NABARD borrows for irrigation and rural housing. Rural Electrification Corporation (REC) borrows for rural electrification. Ideally, the Centre should borrow for these schemes but it asks its various agencies to take the loan in their name which is then not shown in the Centre’s budget.
These Off-Budget Borrowings (also called extra-budgetary resources) allows the Centre to reduce the immediate impact on the fiscal, as the repayments made by the government are calibrated over many years.
These however add to the overall public debt of Govt. of India. CAG has expressed concern over it and if these off-budget borrowings would have been included in the budget then the Centre’s fiscal deficit would have been more than 5% rather than 3.8% in 2019-20.
Question : 6
Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct?
a) The Union levies, collects and keeps all the proceeds of income tax to itself
b) The Union levies and collects the tax, but all the proceeds are distributed among the states
c) The Union levies, collects and distributes the proceeds of income tax between itself and the states
d) Only the surcharge levied on income tax is shared between the Union and the States
Answer »Answer: (c)
GET Taxes Types, Methods & Budgeting Process PRACTICE TEST EXERCISES
taxes types, methods & budgeting process section 1
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taxes types, methods & budgeting process section 6
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