taxes types, methods & budgeting process section 3 MCQ Questions & Answers Detailed Explanation
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The following question based on Taxes Types, Methods & Budgeting Process topic of indian economy mcq
(a) Customs duty
(b) Income tax
(c) Corporation tax
(d) Service tax
The correct answers to the above question in:
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.
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Read more taxes types methods budgeting process Based Indian Economy Questions and Answers
Question : 1
What do you understand by ‘regressive taxation’?
a) Taxation where the tax rate increase with the increase of taxable income
b) Tax that takes a larger perentage from low-income people than from high income people.
c) Taxation where the tax rate increases irrespective of fall or rise in taxable incomes.
d) None of above
Answer »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.
Question : 2
The objective of SEZ is
a) Promotion of Regional Trade
b) Promotion of MSME’s
c) Promotion of Goods and Services
d) Promotion of Government Schemes
Answer »Answer: (c)
Question : 3
Which of the following statements are true regarding FRBM Act 2003?
- RBI can subscribe to the primary issues of Central government securities
- RBI can fund Central government fiscal deficit
- The central government can take advances from RBI in case there is a mismatch in cash disbursements and cash receipts
a) (i) & (iii) only
b) (ii) & (iii) only
c) (i) only
d) (iii) only
Answer »Answer: (d)
As per the Fiscal Responsibility and Budget Management (FRBM) Act 2003, RBI has been prohibited from subscribing to Central government securities in the primary market.
This has been done so that government should raise money from the market at market interest rate rather than from RBI at a cheaper rate.
The central government is not allowed to borrow from RBI to fund its fiscal deficit but if there is a temporary mismatch in the government’s cash disbursement and cash receipts then, the government can take advance (called ways and means advance) from RBI.
Question : 4
Consider the following statements. In India, taxes on transactions in Stock exchanges and Futures Markets are
- Levied by the union
- Collected by the States
a) Both 1 and 2
b) Neither 1 nor 2
c) Only 1
d) Only 2
Answer »Answer: (c)
Question : 5
‘Fiscal Drag’ expresses the impact of inflation on which of the following ?
a) Black money
b) Fiscal Deficit
c) Tax Revenue and GDP
d) Investment
Answer »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.
Question : 6
When a portion of public debt falls due, refinancing of public debt is done by:
a) Extending maturity of debt by raising the interest payable on rate maturing debt
b) Raising taxes to provide funds to repay the maturing bonds
c) Selling new bonds and using proceeds to pay off holders of maturity bonds
d) Print additional paper currency to meet maturing obligations
Answer »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.
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Taxes Types, Methods & Budgeting Process Shortcuts and Techniques with Examples
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