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) Estate Duty
(b) Stamp Duties
(c) Passenger and Goods Tax
(d) Taxes on Newspapers
The correct answers to the above question in:
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.
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Question : 1
What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’?
- It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
- It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.
- It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
a) 1 and 3 only
b) 1 only
c) 2 and 3 only
d) 1, 2 and 3
Answer »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.
Question : 2
Consider the following statements:
- States and UTs combined expenditure is more than Central government expenditure
- States and UTs combined borrowing is more than Central government borrowing
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (c)
For the year 2019-20, States and UTs (government) combined expenditure was Rs. 37.7 lakh crore and Central government expenditure were around Rs. 27 lakh crores.
So, States and UT combined expenditure is around 1.4 times of Centre and States and UTs combined borrowing for 2019-20 is around Rs. 5.52 lakh crore (2.6% of GDP), while Centres borrowing for 2019-20 is around Rs. 7.7 lakh crore (3.8% of GDP).
Question : 3
Consider the following statements regarding Goods and Services Tax?
- It will lead to the harmonization of taxes
- Supplies to exports are zero-rated
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
GST has led to a reduction in the number of taxes and now the same tax rate is applicable across all the countries on all goods and services. This is called the harmonization of taxes.
On exports, Govt credits back the GST paid to suppliers and hence effectively there is no GST on exports which is also called zero-rated.
Question : 4
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 : 5
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 : 6
The Kelkar proposals which were
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
Answer »Answer: (a)
GET Taxes Types, Methods & Budgeting Process PRACTICE TEST EXERCISES
taxes types, methods & budgeting process section 1
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taxes types, methods & budgeting process section 3
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taxes types, methods & budgeting process section 5
taxes types, methods & budgeting process section 6
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