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
- 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)
The correct answers to the above question in:
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).
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Read more taxes types methods budgeting process Based Indian Economy Questions and Answers
Question : 1
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 : 2
Which one of the following is not related with income from corporate sector in India?
a) Minimum alternate tax
b) Capital Gain tax
c) Fringe Benefit tax
d) Tax on company profit
Answer »Answer: (a)
Question : 3
Corporation Tax is on
a) sale of goods
b) income of a company
c) production of a company
d) stock of goods
Answer »Answer: (b)
Question : 4
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 : 5
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 : 6
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.
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