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
- 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
The correct answers to the above question in:
Answer: (b)
Customs duties-Export duty and import duty are levied by Central Government.
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Read more taxes types methods budgeting process Based Indian Economy Questions and Answers
Question : 1
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 : 2
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 : 3
Which department decides the outlay for Centrally Sponsored Scheme (CSS)
a) Public Finance Division under department of Expenditure
b) Economic Division under department of Economic Affairs
c) NITI Aayog
d) None of the above
Answer »Answer: (a)
Public Finance (Central) Division under Department of Expenditure, Ministry of Finance in consultation with the Budget Division, Department of Economic Affairs, Ministry of Finance decides the outlay for Centrally Sponsored Schemes (CSS) and Central Sector Schemes.
Question : 4
When was the Wealth tax first introduced in India?
a) 1976
b) 1957
c) 1991
d) 1948
Answer »Answer: (b)
Question : 5
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 : 6
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.
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taxes types, methods & budgeting process section 1
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