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

Answer: (c)

Corporation tax in India is the major source of Gross Tax Revenue (GTR) for the Government of India. It provides higher tax collection in comparison to income tax, custom duty and service tax.

Answer: (b)

A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.

The regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption, or income.

Answer: (c)

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)

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: (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.