taxes types, methods & budgeting process section 1 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 6

Consider the following statements:

1. Tax revenue as a per cent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a per cent of GDP of India has steadily increased in the last decade.

a) Both 1 and 2

b) 1 only

c) 2 only

d) Neither 1 nor 2

Question : 7

Which of the following best explains the cascading effect of taxation?

1. When tax imposition leads to a disproportionate increase in prices by an extent more than the rise in the tax.
2. When tax imposition leads to a disproportionate decrease in prices by an extent more than the rise in the tax.
3. When tax imposition leads to a disproportionate decrease in imports.
4. When tax imposition leads to a disproportionate decrease in exports.

a) 4 only

b) 1 only

c) 2 and 3 only

d) 3 and 1 only

Question : 8

Indicate the sequence of the following in terms of the implementation.

1. Income Tax
2. Expenditure Tax
3. Value Added Tax
4. Fringe Benefits Tax

a) 2, 3, 4, 1

b) 1, 3, 2, 4

c) 1, 2, 3, 4

d) 3, 4, 1, 2

Question : 9 [UPSC (Pre) 1999]

Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct?

a) The Union levies, collects and keeps all the proceeds of income tax to itself

b) The Union levies and collects the tax, but all the proceeds are distributed among the states

c) The Union levies, collects and distributes the proceeds of income tax between itself and the states

d) Only the surcharge levied on income tax is shared between the Union and the States

Question : 10

Which of the following is not a case of Centre’s Off Budget Borrowings?

a) Borrowing by HUDCO to fund the affordable housing programme

b) Borrowing by NABARD for govts’ irrigation projects

c) Borrowing by FCI to fund the food subsidy programme

d) Borrowing by NTPC for its power generation projects