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
- 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)
The correct answers to the above question in:
Answer: (b)
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Question : 1
Consider the following statements regarding the Fifteenth Finance Commission (FFC) recommendations:
- For horizontal devolution, the population of the 2011 Census will be considered
- There are six parameters for horizontal devolution out of which ‘Tax Effort’ is one
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
The parameters for the distribution of taxes among the states (horizontal distribution) for FFC are
- Income Distance (45%),
- Population (2011 Census) (15%),
- Demographic Performance (12.5%),
- State Area (15%),
- Forest Cover (10%),
- Tax effort (2.5%).
Question : 2
Consider the following statements about the Agriculture Income Tax
- Agriculture Income Tax is levied and collected by the Union Government.
- Agriculture Income Tax is levied throughout the country in India.
a) Both 1 and 2
b) 1 only
c) 2 only
d) Neither 1 nor 2
Answer »Answer: (d)
Agricultural income tax is levied on the income from Agriculture.
At present agriculture is subjected to – two direct taxes and they are Agricultural Income Tax and Land Tax.
They are levied by the state governments. Not all states levy agricultural income tax.
Question : 3
MODVAT is related to
a) Wealth Tax
b) Excise duty
c) Value added Tax (VAT)
d) Income Tax
Answer »Answer: (c)
MODVAT e.g. modified value added tax is related to Value added tax e.g. VAT.
Question : 4
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 : 5
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 : 6
Which of the following are included in the category of direct tax in India?
- 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
Answer »Answer: (b)
Corporation Tax, Wealth Tax and Income Tax are in the category of direct tax.
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