taxes types, methods & budgeting process section 6 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 1 [UPPCS (Mains) 2004]

The recommendation of the Kelkar Task Force related to

a) Banking

b) Taxes

c) Trade

d) Foreign Investment

Answer: (b)

Question : 2 [UBI-PO 2016]

With a view to redress the grievances of tax payers speedily, Income Tax department has started a new electronic platform which is known as

a) e-bharat

b) e-grievances

c) e-IT

d) e-nivaran

Answer: (d)

The Income Tax department has launched a special electronic grievance redressal system called ‘e–nivaran’ in order to fast track taxpayer grievances and ensure early resolution of their complaints.

Question : 3 [UPPCS (Pre) 1995]

Which of the following taxes does not directly increase the price of a commodity to buyers?

a) Trade Tax

b) Import Duty

c) Income Tax

d) Excise Duty

Answer: (c)

Question : 4

GST will lead to formalization of the Indian economy because of the following reasons.

a) GST has input tax credit mechanism

b) All the businesses have to pay GST without any threshold limit

c) GST is consumption/ destinationbased tax

d) GST will be levied on goods and services both

Answer: (a)

Consider an example to understand GST in a better way (GST rate 18%):

Consumer 100 + 118 300 + 54 Tax = Rs.18 Tax

= Rs. 36 (Rs.54 - Rs.18) (CGST = 9, SGST = 9) (CGST = 18, SGST = 18) Govt. Govt.

In the above example, A is doing a value addition of Rs. 100 and selling the product to B in Rs. 118 and paying Rs. 18 GST to the government. B is doing a value addition of Rs. 200 and is paying Rs. 36 GST to the government. Since GST is a value-added tax, so every entity in the value chain shall pay the government tax only on their value addition.

Practically B shows the invoice of Rs. 354 to the government and pays a tax of Rs. 54 to the government but when it produces the tax receipt obtained from A to the government worth Rs. 18 then government credits/refunds Rs. 18 to B. This is called Input Tax Credit Mechanism as the taxes paid by B on the purchase of inputs from A i.e. Rs. 18 is credited by the government back to B.

Since there is only one tax i.e. GST and credits of input taxes paid at each stage is available in the subsequent stage of value addition across India (whereas in the case of VAT input credit was available only within the State), hence it will prevent the dreaded cascading effect of taxes. This is the basic feature and advantage of GST.

Important aspects regarding the implementation of GST:

If A belongs to one State (say UP) and B and the consumer belong to another State (say Bihar) then all the State GST i.e. Rs. 9 and Rs. 18 (=Rs. 27) will be passed on to the State where the product is being consumed by the consumer

i.e. Bihar and the State where A belongs i.e. UP will not get any SGST.

This is why GST is also called consumption-based and destination-based tax as all the SGST is passed on to the consuming State i.e. Bihar.

If A and B belong to different states then rather than GST, IGST will be levied by the Centre on the transaction between A and B which is again equal to the sum of CGST and SGST and ultimately distributed to the Centre and the consuming State equally. Practically everything remains the same, only the tax name changes to Integrated GST (IGST)

If B, rather than selling the product to the consumer in India, exports the products then IGST will be imposed as IGST is levied on inter-State supplies. The GST paid in the entire value chain and the IGST paid at the border is refunded/credited back to the suppliers. So effectively there is no tax on exports and hence we say that exports are "zero-rated" supplies. Supplies to SEZs are also zero-rated.

If a trader is importing a product into India then he will have to pay first customs duty and then IGST on the imported product as imports are also considered to be InterState supplies.

Question : 5 [UPPCS (Pre) 1995]

The largest sources of tax revenue to Central Government of India are

a) Custom duty and corporate tax

b) Union excise duty and custom duty

c) Union excise duties and corporate tax

d) Custom duty and income tax

Answer: (c)

IMPORTANT indian economy mcq EXERCISES

Taxes Types, Methods & Budgeting Process Shortcuts »

Click to Read...

taxes types, methods & budgeting process section 6 Online Quiz

Click to Start..
1292 taxes types methods budgeting process indian economy MCQ section 6 question answer pdf

Recently Added Subject & Categories For All Competitive Exams

Number System - Aptitude Problems For IBPS RRB PO Prelims

Free Important 100+ Aptitude Number System practice multiple choice questions and answers test & Quiz PDF for IBPS RRB PO (Officer Scale 1) Prelims 2024 Exam

29-Mar-2024 by Careericons

Continue Reading »

Classification MCQ Test: IBPS RRB PO 2024 Scale-1 Prelims

Free 150+ Classification Verbal Reasoning Multiple choice questions and answers practice test series PDF, Free Quiz For IBPS RRB PO Officer Scale 1 Level 2024

28-Mar-2024 by Careericons

Continue Reading »

100+ Analogy Verbal Questions Answers PDF For IBPS RRB PO

Most Important Analogy Verbal Reasoning Multiple choice questions and answers practice test series PDF & Free Quiz For IBPS RRB PO Officer Scale 1 Level 2024

27-Mar-2024 by Careericons

Continue Reading »

IBPS RRB Clerk 2024 Seating Arrangement Questions Answers

Seating Arrangement: Verbal Reasoning Practice multiple choice questions and answers test & Quiz PDF for IBPS RRB (Assistant Multipurpose) Clerk Prelims 2024

26-Mar-2024 by Careericons

Continue Reading »