taxes types, methods & budgeting process section 2 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Post Office Savings Account, National Savings Certificate, Public Provident Fund, Kisan Vikas Patra, Sukanya Samriddhi Account are all Small Savings Schemes and the funds accruing in through these schemes goes into National Small Savings Funds (NSSF) maintained in Public Account of India. These all receipts create debt on the Government of India and are capital receipts.

National Small Savings Fund (NSSF) was set up on 1st April 1999 under the Public Account of India. The objective of NSSF was to account for all the monetary transactions under small savings schemes of the Central Government under one umbrella. The net collection in NSSF is invested in Central and State Government Securities.

Answer: (b)

Answer: (a)

There are certain capital receipts of the Central Government which do not create debt/liability on it. For example, when the government is selling its shares in PSUs it is capital receipts but is not creating debt on Govt. rather it is decreasing its assets. In the same way recovery of loans is capital receipt but does not create debt.

But, if the Govt. issues securities (treasury bills) then it will be debt creating capital receipts. And money received in Public Account are liabilities for Govt. of India and are considered as debt creating capital receipts.

Answer: (d)

Those receipts/expenditures of the government which changes the liability or the assets (physical or financial) of the Govt. comes under capital budget.

Expenditure on the acquisition of assets like roads or buildings come under capital expenditure.

Loans received increases the liability and loans given by govt. increases the assets of govt., hence the capital budget.

Answer: (d)

The tax base is defined as the total value of the financial streams or assets on which tax can be imposed by the government.

For example, in the case of income tax, the tax base is the minimum amount of annual income that can be taxed by the government (taxable income). If this minimum amount (tax threshold) is lowered, this will automatically increase (widen) the tax base; if it is raised, the tax base will be narrowed.

In the case of GST, the tax base is the value of goods and services on which GST is imposed.

In the case of property tax, the tax base is the value of the property on which property tax is imposed. Because the size of the tax base influences the taxable revenues that are available to a government, the size and growth of the tax base is crucial to the planning efforts of any government.