taxes types, methods & budgeting process section 2 MCQ Questions & Answers Detailed Explanation
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The following question based on Taxes Types, Methods & Budgeting Process topic of indian economy mcq
- Expenditure on acquisition of assets like roads, buildings, machinery, etc.
- Loans received from foreign governments
- Loans and advances granted to the States and Union Territories
(a) (ii) & (iii) only
(b) (i) & (iii) only
(c) (i) only
(d) All of the above
The correct answers to the above question in:
Answer: (d)
Those receipts/expenditures of the government which changes the liability or the assets (physical or financial) of the Govt. comes under capital budget.
Expenditure on the acquisition of assets like roads or buildings come under capital expenditure.
Loans received increases the liability and loans given by govt. increases the assets of govt., hence the capital budget.
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Question : 1
Which of the following statement is true regarding “Tax Base”?
a) It is the number of people and business units under tax net
b) It is the income of people which can be taxed by the government
c) It is the number of people falling under tax net
d) It is the aggregate value of financial streams on which tax can be imposed by the government
Answer »Answer: (d)
The tax base is defined as the total value of the financial streams or assets on which tax can be imposed by the government.
For example, in the case of income tax, the tax base is the minimum amount of annual income that can be taxed by the government (taxable income). If this minimum amount (tax threshold) is lowered, this will automatically increase (widen) the tax base; if it is raised, the tax base will be narrowed.
In the case of GST, the tax base is the value of goods and services on which GST is imposed.
In the case of property tax, the tax base is the value of the property on which property tax is imposed. Because the size of the tax base influences the taxable revenues that are available to a government, the size and growth of the tax base is crucial to the planning efforts of any government.
Question : 2
Consider the following statements regarding the Goods and Services Tax Network (GSTN):
- It is a non-government, private limited company
- It is a not for profit company
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Goods and Services Tax Network (GSTN) is a Section 8 (under new companies Act, not for profit companies are governed under section 8), non-Government company.
(But cabinet has approved a decision to make it a wholly-owned govt. company).
It was incorporated on March 28, 2013. The Company has been set up primarily to provide IT infrastructure and services to the Central and State Governments, taxpayers and other stakeholders for implementation of the Goods and Services Tax (GST).
Question : 3
Consider the following statements regarding the import of goods and services in India:
- They are treated as inter-state supplies
- Customs duty and IGST both are applicable
- Only IGST is applicable
- Imports are zero-rated
a) (i) & (iii) only
b) (iii) only
c) (i) & (ii) only
d) (i) & (iv) only
Answer »Answer: (c)
Exports, imports and movement of goods from one state to another state is treated as an interstate supply for the purpose of GST.
On imports, first customs duty is imposed and then Integrated GST (IGST) is also imposed.
Question : 4
Which of the following are Non-debt capital receipts of Govt. of India?
- Disinvestment
- Recovery of loans
- Public Account receipts
- Treasury Bills
a) (i) & (ii) only
b) (iii) & (iv) only
c) (i) only
d) (i), (ii) & (iii) only
Answer »Answer: (a)
There are certain capital receipts of the Central Government which do not create debt/liability on it. For example, when the government is selling its shares in PSUs it is capital receipts but is not creating debt on Govt. rather it is decreasing its assets. In the same way recovery of loans is capital receipt but does not create debt.
But, if the Govt. issues securities (treasury bills) then it will be debt creating capital receipts. And money received in Public Account are liabilities for Govt. of India and are considered as debt creating capital receipts.
Question : 5
Consider the following in relation with Corporate tax.
- Total turnover of the company
- Profit after distribution of dividend
- Profit before distribution of dividend
- Capital employed in the company
a) 2 alone
b) 3 alone
c) 1 alone
d) 4 alone
Answer »Answer: (b)
Question : 6
Consider the following statements regarding the "National Small Savings Funds (NSSF)":
- The proceeds of the small savings scheme of the Central government goes to NSSF
- NSSF is a part of the Public Account of India
- NSSF is a part of the Consolidated Fund of India (CFI)
a) (i) & (ii) only
b) (i) & (iii) only
c) (i) only
d) (iii) only
Answer »Answer: (a)
Post Office Savings Account, National Savings Certificate, Public Provident Fund, Kisan Vikas Patra, Sukanya Samriddhi Account are all Small Savings Schemes and the funds accruing in through these schemes goes into National Small Savings Funds (NSSF) maintained in Public Account of India. These all receipts create debt on the Government of India and are capital receipts.
National Small Savings Fund (NSSF) was set up on 1st April 1999 under the Public Account of India. The objective of NSSF was to account for all the monetary transactions under small savings schemes of the Central Government under one umbrella. The net collection in NSSF is invested in Central and State Government Securities.
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