taxes types, methods & budgeting process section 5 MCQ Questions & Answers Detailed Explanation

Answer: (b)

In the budget 2019-20 government had proposed an electronic or e-assessment scheme which was notified in September 2019 and to implement this scheme government launched the "National e-assessment Centre" (based in Delhi) on 7th October 2019.

There are around 7.5 crore direct taxpayers. They pay taxes and file returns (tax documents). Taxpayers use various ways to avoid paying taxes and showing their income way below the actual income. So, the government has set certain parameters to pick for the assessment/review of these cases.

For example, those taxpayers whose income is quite high (say 30 lakhs) but tax payment is very less supposing only 2 lakhs OR suppose in any particular savings account more than Rs. 10 lakhs got deposited in a financial year etc.

Now suppose there are 5 lakh such cases. Now out of these 5 lakh cases, the government may pick randomly 50,000 cases for review/assessment (as all cannot be reviewed because of resource constraints).

So, the government will send notice and you will have to give clarifications. And govt may scrutinise such cases in quite a detail and if some wrongdoings were found, you may be penalized.

Earlier (before the e-assessment scheme was launched), these cases were selected by tax officials and there used to be face to face meetings between tax officials and taxpayers and where taxpayers were used to be harassed. But now all such cases will be randomly picked by computer and no face to face grilling would happen but only through electronic mode of communication.

So, this will improve transparency and efficiency, and governance and thus improves the quality of assessment and monitoring.

Income Tax Act 1961 was amended to introduce this scheme which implies it is for direct taxes. Budget 2020-21 has proposed to amend the Income Tax Act so as to enable Faceless Appeal on the lines of Faceless assessment.

Answer: (a)

Answer: (a)

A progressive tax receives a larger percentage from the income of higher earners than it acts from low income person.

Answer: (c)

Answer: (c)

The Public Finance (Central) Division, under Department of Expenditure, Ministry of Finance is responsible for preparation of outcome budgets in consultation with the NITI Aayog.

This output-outcome framework (outcome budget) is prepared for all Centrally Sponsored Schemes (CSSs) and Central Sector Schemes (CSs) dealing with identified measurable outcomes in the relevant medium-term framework and physical and financial outputs are targeted on a year to year basis.

For example, suppose if government is budgeting Rs. 30,000 crores for the LPG subsidy for FY 2020-21 then under the outcome budget it may set a target that it is planning to distribute LPG cylinders to 10 crore households.

Answer: (d)

Suppose GST on the car of Rs. 5 lacs is Rs. 1 lakh.

Now if I purchase one car then I will pay Rs. 1 lakh tax and if my income is Rs. 10 lacs then tax as a percentage of income will be:

1 lakh x 100% =10% 10 lakhs

Suppose the same car a rich person purchases whose income is Rs 10 crores then tax as a percentage of his income will be:

1 lakh x 100% = 0.1% 10 crores

So, a rich person pays less tax as a percentage of his income, hence GST is regressive.

In a similar way, all indirect taxes are regressive in nature. Income tax is progressive, as poor people need to pay less tax rate as compared to rich people.