Economics · General Awareness

Indian Taxation System

2,347 Questions

The Indian taxation system comprises direct and indirect levies including income tax, goods and services tax, and property tax. Understanding these tax structures is crucial for general awareness sections in banking and government exams. The practice set covers central and state tax collections, exemptions, and capital gains rules.

Goods and Services TaxIncome tax rulesProperty tax assessmentsTax exemptionsCentral versus state taxes

Indian Taxation System Questions

Multiple choice

CENVAT is related to -

  1. Sales Tax

  2. Excise Duty

  3. Custom Duty

  4. Service Tax
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

CENVAT stands for Central Value Added Tax. It is a central excise duty levied on the manufacture of goods in India.

Multiple choice

CBDT stands for

  1. Central Board of Direct Taxes

  2. Central Board of Department of Telecom

  3. Central Board of Dual Taxes

  4. Central Board of Double Taxation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

CBDT is the Central Board of Direct Taxes, which is a statutory authority functioning under the Central Board of Revenue Act, 1963, in India.

Multiple choice

Consider the following statements:

  1. Estate duty also refer to as inheritance tax.
  2. Capital gains tax is a tax on the gains from the sale and purchase of an asset.
  3. The term Fiscal expenditure is also used to refer to the costs incurred by the government to collect taxes.
  4. Congestion charges refer to fees charged during the periods of peak, usage of certain facilities such as roads and parks to reduce congestion. Of the above, the correct statements are

  1. 1, 2

  2. 1, 2, 3

  3. 2, 3

  4. 1, 2, 3, 4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All four statements are correct. Estate duty is inheritance tax; capital gains tax applies to asset sales; fiscal expenditure includes administrative costs of tax collection; and congestion charges are fees for peak-time infrastructure usage.

Multiple choice

LIC Policy holders do not get any Income Tax benefit under which of the following Sections of the Income Tax Act ?

  1. Section 80 C

  2. Section 68 A, B and C

  3. Section 80 CCC

  4. Section 80 CD

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Section 80C and 80CCC are standard sections for tax deductions on life insurance premiums. Section 68A, B, and C are related to unexplained cash credits under the Income Tax Act and do not pertain to insurance benefits.

Multiple choice

Which of the following statement is not correct in relation to the Union Budget 2007-08?

  1. Tax on dividend distributed by companies hiked from 12.5% to 15%

  2. Banking cash transaction tax exemption limit increased from Rs. 25,000 to 50,000

  3. A sum of Rs. 25,000 crores allocated for Natioanal Scholarship Scheme for students of class IX to XII.

  4. Education cess on all taxes increased from 2% to 3%.

  5. Budget allocated special funds to boost the production of rubber, coffee and spices.
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice

Which of the following is not a responsibility of the businessman towards government?

  1. To pay taxes promptly and regularly

  2. To cooperate with the state in solving national problems

  3. To provide goods of standard quality

  4. To avoid monopolistic and restrictive trade practices

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is not the responsibilty towards government, but towards consumers. As the consumers purchase the products and pay the price for it, it is the responsiblity of business to provide the goods of good and standard quality at reasonable prices to its consumers.

Multiple choice

What best describes the structure of income tax in India?

  1. Indirect and progressive

  2. Direct and proportional

  3. Direct and progressive

  4. Indirect and proportional
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Income tax in India is a direct tax, meaning it is paid directly by the individual to the government. It is progressive because the tax rate increases as the taxpayer's income increases.

Multiple choice

Ad valorem is a tax on

  1. price

  2. value added

  3. commercial transactions

  4. industrial output
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Ad valorem is a Latin phrase meaning according to value. An ad valorem tax is based on the assessed value of an item, such as real estate or personal property, rather than its weight or quantity.

Multiple choice

CENVAT is associated with

  1. Rate of Indirect Tax

  2. Rate of Income Tax

  3. Rate of Direct Tax

  4. None of the above

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

CENVAT stands for Central Value Added Tax, which is an indirect tax levied on the manufacture or production of excisable goods in India.

Multiple choice

Which of the following is a direct tax?

  1. Sales tax

  2. Excise duty

  3. Custom duty

  4. None of these

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Sales tax, excise duty, and custom duty are all examples of indirect taxes. Since none of the listed options are direct taxes, 'None of these' is the correct choice.