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

Answer: (a)

Dividend paid by PSUs is revenue receipts of govt. of India. RBI is also a body corporate and owned by govt. of India and its dividend is also revenue receipts for govt. of India.

PSUs business earnings are not part of govt. of India receipts rather it belongs to the PSU. Sale of govt. the land will be a capital receipt for govt. because govt’s assets get reduced.

Answer: (c)

Refinancing means replacing an existing loan with a new loan that pays off the debt of the old loan. So, when a governments debt (public debt) is due, to refinance it, the govt can issue/sell new bonds to raise money.

Alternative definition of refinance: A refinance occurs when an individual or business revises the interest rate, payment schedule, and terms of a previous credit agreement. Debtors will often choose to refinance a loan agreement when the interest rate environment has substantially changed, causing potential savings on debt payments from a new agreement. A refinance involves the re-evaluation of a person or business's credit terms and credit status.

Answer: (c)

Fiscal drag is an economics term referring to a situation where a government’s net fiscal position (equal to its spending less any taxation) does not meet the net savings goals of the private economy. Fiscal drag is a concept where inflation and earnings growth may push more taxpayers into higher tax bracket.

Answer: (c)

Grants in aid by the Centre to the States will always be revenue expenditure for the Centre. Whether States spend it on capital expenditure or revenue expenditure, does not matter.

Answer: (d)

Answer: (c)

The Government of India earns maximum revenue from Union Excise Duty which is the indirect tax levied and collected on the goods manufactured in India and consumed within the country.

Custom Duty: It is a variation of Indirect tax and is applicable on all goods imported and a few Goods exported out of the country.

Corporation tax: It is a direct tax imposed by jurisdiction on the income or capital of Income.