taxes types, methods & budgeting process section 5 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

As per the union budget 2016-17, the share of taxes is one rupee.

Answer: (a)

The fiscal Deficit is govt of India’s borrowing either from domestic sources or from abroad.

So, when Govt. of India issues bonds to borrow money, it can be purchased by FPI’s also. But FDI is into equity/shares and not in debt instruments.

Answer: (d)

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.

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.