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
- Corporation tax
- Tax on income
- Wealth tax
- Customs duty
- Excise duty
(a) 2 and 3
(b) 1, 2 and 3
(c) 1, 2, 4 and 5
(d) 1, 3, 4 and 5
The correct answers to the above question in:
Answer: (b)
Corporation Tax, Wealth Tax and Income Tax are in the category of direct tax.
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Read more taxes types methods budgeting process Based Indian Economy Questions and Answers
Question : 1
Fiscal Deficit of the Government of India is equal to which of the following:
a) Non-Debt capital receipts
b) Debt and non-debt capital receipts
c) Debt creating capital receipts
d) Capital receipts less of revenue receipts
Answer »Answer: (c)
Fiscal Deficit is equal to total borrowing and the borrowing is part of capital receipts which create debt. So fiscal deficit is equal to debt creating capital receipts.
Question : 2
The Minimum Alternative Tax (MAT) was introduced in the budget of the Government of India for the year?
a) 1995-96
b) 1991-92
c) 1992-93
d) 1996-97
Answer »Answer: (d)
The Minimum Alternative Tax (MAT) was introduced for the first time in the Budget for the year 1996-97.
Minimum alternate tax or MAT is a tax levied on firms/ companies or limited liability partnerships (LLPs) making abundant profits as well as distributing dividends to its shareholders who leveraging on the features of the Indian Taxation system do not contribute towards the government’s taxation kitty.
Thus, for such corporates, a minimal tax amounting to some fixed percentage of book profits i.e. profits according to accounting records is charged as minimal alternative tax (MAT).
Question : 3
Consider the following statements regarding Goods and Services Tax (GST):
- GST is a value-added tax
- GST is a multipoint destination-based tax
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
Question : 4
MODVAT is related to
a) Value Added Tax (VAT)
b) Wealth Tax
c) Excise Duty
d) Income Tax
Answer »Answer: (a)
Question : 5
Which of the following are Non-Tax Receipts of the Central Government?
- Issue of Passport and Visa
- Registration of Companies
- Royalty from on shore oilfields
- Royalty from offshore oilfields
a) (i), (ii) & (iii) only
b) (i), (ii) & (iv) only
c) (i) only
d) All of the above
Answer »Answer: (b)
Royalty from onshore (on land) oilfields goes to the State Governments as State governments are the owners of the minerals beneath the land in their territory.
From offshore (within sea) oilfields, royalty goes to Central Government as Central Govt. is the owner of the offshore fields. So, (iii) statement is not true.
Question : 6
Consider the following statements regarding the Fifteenth Finance Commission (FFC) recommendations:
- It has recommended 41% devolution from Central taxes to States in 2020-21
- It has recommended 1% devolution from Central taxes to the Union Territories of J&K and Ladakh 2020-21
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (c)
The Finance Commission recommends for devolution of taxes (from the divisible pool) from Centre to States only (called Vertical devolution) and is not meant for UTs, whether they have their own assembly/legislature or not.
The Fifteenth Finance Commission (FFC) recommendations will be applicable for six years period from 2020-21 to 2025-26. For the year 2020-21, the recommendations have been submitted and the final recommendations for the five-year period 2021-22 to 2025- 26 will be submitted by October 2020.
FFC quoted:
“The State of Jammu & Kashmir was reorganised into the Union Territories (UT) of Ladakh and Jammu & Kashmir through the Jammu & Kashmir Reorganisation Act, 2019. Article 280 of the Constitution, along with the Jammu and Kashmir Reorganisation Act puts the newly-created UTs of Ladakh and Jammu and Kashmir outside the purview of the Finance Commission's award.
Since UTs are the responsibilities of the Union, they are within the purview of the Union budget. We have notionally estimated that the share of the erstwhile State of Jammu & Kashmir would have come to around 0.85 per cent of the divisible pool. We believe that there is a strong case for enhancing this to 1 per cent of the divisible pool in order to meet the security and other special needs of the Union Territories of Jammu and Kashmir and Ladakh.
Since this enhancement has to be met from the Union' Government's resources (through Ministry of Home Affairs), we recommend that aggregate share of States may be reduced by 1 percentage point to 41 per cent of the divisible pool.”
So basically, FFC has not recommended the transfer of taxes to Jammu & Kashmir and Ladakh Union Territories for the period 2020-21.
GET Taxes Types, Methods & Budgeting Process PRACTICE TEST EXERCISES
taxes types, methods & budgeting process section 1
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