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) recommendations for tax reforms
(b) guidelines for the privatisation of public sector undertakings
(c) recommendations for reforms in the power sector
(d) guidelines for reducing vehicular pollution and the promotion of CNG use
The correct answers to the above question in:
Answer: (a)
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Question : 1
Which of the following statements are true for the Income Tax in India?
- It is a progressive tax
- It is a direct tax
- It is collected by the state Governments
- It is a proportional tax
a) Only 1 and 2 are correct
b) 1, 2 and 3 are correct
c) Only 1 is correct
d) 2, 3 and 4 are correct
Answer »Answer: (a)
Question : 2
The "Internal and Extra Budgetary Resources" of Central Public Sector Undertakings (CPSUs) include which of the following:
- Profit of the CPSUs
- Domestic and foreign loans raised by the CPSUs
a) (ii) only
b) Both (i) & (i)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
The investment by Central Public Sector Undertakings (CPSUs) is financed through the following two modes:
- Budgetary support provided by the Central Government
- IEBR was raised by CPSUs on their own.
Internal and Extra Budgetary Resources (IEBR) comprises internal resources and extra-budgetary resources.
Broadly, the internal resources comprise of retained profits – net of dividend to Government and carry forward of reserves and surpluses and extrabudgetary resources are the sum of domestic and foreign loans raised directly by the CPSUs but repaid by the government.
Question : 3
Which of the following Tax is levied by Union and collected and appropriated by States?
a) Estate Duty
b) Stamp Duties
c) Passenger and Goods Tax
d) Taxes on Newspapers
Answer »Answer: (b)
As mention in article 268 of Indian Constitution, Stamp Duties are mentioned in the Union List shall be levied by the Government of India but collected and appropriated by the States.
Question : 4
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 : 5
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 : 6
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.
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