taxes types, methods & budgeting process section 3 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

The investment by Central Public Sector Undertakings (CPSUs) is financed through the following two modes:

1. Budgetary support provided by the Central Government
2. 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.

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.

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.

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).

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.