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

Answer: (b)

The investment by Central Public Sector Undertakings (CPSUs) is financed through the following two modes:

1. Budgetary support provided by the Central Government
2. 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.

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.

Answer: (b)

Exports will become ZERO RATED under GST, so statements 2 and 3 would have been correct If the examiner had used moderate words “GST will help”. But he has used ‘extreme’ words.

GST is unlikely to ‘drastically’ reduce CAD Because of crude oil import and OPEC cartel that manipulates its prices.

Similarly, GST is unlikely to enormously increase the size of our economy (IMF projection ~1-1.5% addition in growth rate.) and we can’t overtake China in near future, because unlike China we are keeping our currency undervalued against the dollar.

Hence statements 2 and 3 are wrong. We are left with Answer B.

Answer: (a)

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.

Answer: (c)