taxes types, methods & budgeting process section 3 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Answer: (b)

Receipts under the Public Account account mainly flow from the sale of Savings Certificates, contributions into General Provident Fund, Public Provident Fund, Security Deposits and Earnest Money Deposits (a kind of security deposits) received by the government.

It also includes schemes like Kisan Vikas Patra, Sukanya Samridhi Scheme etc. In respect of such deposits, the government is acting as a Banker or Trustee and refunds the money after the completion of the contract/ event.

All government borrowings through Treasury bills and Dated securities go to the Consolidated Fund of India.

Answer: (d)

Motor Vehicle tax is not a source of tax revenue for the Central Government in India. It is type of revenue part of State tax.

Answer: (d)

When the government borrows more, then there may be a decrease in private investment due to a reduction in the amount of savings available to the private sector.

This is because if the government decides to borrow from the private citizens by issuing bonds to finance deficits, these bonds (which are risk-free) compete with corporate bonds and other financial instruments for the available supply of funds.

If people decide to buy government bonds, the funds remaining to be invested in the private sector will be less.

Thus, some private/corporate borrowers will get "crowded out" of the financial markets as the government claims an increasing share of the economy's total savings.

This also increases the interest rate for the private sector.

Answer: (b)

Answer: (c)

MODVAT e.g. modified value added tax is related to Value added tax e.g. VAT.