Economics ยท 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
B
Correct answer
Explanation
Tamgha was a tax on trade and commerce that Babur exempted his Muslim subjects from after his victory at the Battle of Khanwa.
B
Correct answer
Explanation
Tax concessions, such as investment allowances or tax holidays, directly affect the net cash outflows and inflows of a project. They are critical components in calculating the post-tax cash flows.
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Income Tax
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Corporate Tax
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Wealth Tax Estate Duty
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Value Added Tax
D
Correct answer
Explanation
An indirect tax is collected by an intermediary from the person who bears the ultimate economic burden of the tax. Value Added Tax (VAT) is a classic example of an indirect tax, whereas income and corporate taxes are direct taxes.
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always equal to personal income
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always more than personal income
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equal to personal income minus indirect taxes
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equal to personal income minus direct taxes
D
Correct answer
Explanation
Personal disposable income is the amount of money that an individual has available for spending and saving after income taxes (direct taxes) have been deducted from their personal income.
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Major revenue
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Envoy
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Plebiscite
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Mandamus
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Octroi
E
Correct answer
Explanation
Octroi is a tax levied on goods entering a municipality for consumption, use, or sale within that area.
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a tax levied on tobacco products.
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a tax levied on foreign exchange transactions
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a tax levied on pharma products.
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a tax levied on agricultural products.
B
Correct answer
Explanation
A Tobin tax is a tax proposed on short-term currency conversions (foreign exchange transactions) to curb speculation.
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Fringe Benefit Tax
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Foreign Board of Tax
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Foreign Banking Tax
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Fringe Benefit Taxation
A
Correct answer
Explanation
FBT stands for Fringe Benefit Tax, which was a tax introduced in India on certain benefits provided by an employer to employees in addition to their salary.
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Custom duty
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Wealth tax
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Service tax
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Excise duty
B
Correct answer
Explanation
Wealth tax is a direct tax.
All others given above are examples of indirect tax.
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Income tax
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Service tax
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VAT
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CST
C
Correct answer
Explanation
Value added tax ensures the avoiding from cascading effect.
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P and L account
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capital account
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P and L appropriation account
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trading account
B
Correct answer
Explanation
It is an expense of personal account. So, it should be treated as drawings and debited to capital account. It is a charge against profits in case of companies.
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straight line method
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written down value method
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annuity method
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sinking fund method
B
Correct answer
Explanation
As per statutory requirements, written down value method is appropriate. However, the straight line method may be used in certain cases.
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Excise duty on liquor
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Capital gains tax
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Customs tax
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Corporation tax
A
Correct answer
Explanation
Under the Indian Constitution, excise duty on alcoholic liquors for human consumption is a subject under the State List, meaning state governments have the authority to levy this tax.
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stamp duties
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passenger and good tax
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estate duty
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taxes on newspapers
A
Correct answer
Explanation
Under Article 268 of the Indian Constitution, stamp duties are levied by the Union but are collected and appropriated by the States.
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income tax
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custom tax
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sales tax
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excise duty
A
Correct answer
Explanation
A progressive tax is one where the tax rate increases as the taxable amount increases. Income tax is the primary example of a progressive tax.
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Stamp Duty
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Excise Duty
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Income Tax
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Gift Tax
A
Correct answer
Explanation
Stamp duties are taxes levied by the Central Government under Article 268 of the Constitution, but they are collected and appropriated by the respective State Governments. Other options like Income Tax are both levied and collected by the Centre.