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 meaning and importance of taxes government and taxes tax civics economics

MODVAT is:

  1. Modern Value Added Tax

  2. Modified Value Added Tax

  3. Monopoly Value Added Tax

  4. Method of Deduction of VAT
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

MODVAT (modified value added tax) was introduced in India in 1986. MODVAT was re-named as CENVAT. The system was termed as MODVAT, as it was restricted upto manufacturing stage and credit of only excise duty paid on manufacturing products (and corresponding CVD paid on imported goods) was available.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

If final good attracts an excise duty of Rs. 8000 and Rs. 1000 has already been paid on inputs then the firm will pay the Rs. 7,000 towards excise duty. It is paying tax according to________.

  1. VAT

  2. CENVAT

  3. MODVAT

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under CENVAT scheme the credit of the excise duty/additional duty of customs paid on inputs and capital goods and service tax paid on input services allowed to be utilized for the payment of the excise duty on the final products or service tax on output services in order to avoid cascading effect of the duty/tax. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Taxes levied on personal income, profits of the corporate, wealth and property is termed as ________ tax.

  1. indirect

  2. service tax

  3. direct

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Direct tax are the tax where the final burden of the tax is borne by the person on whom it is imposed. These taxes are directly paid by the person on whom it is imposed to the government. For example- income tax, corporate tax etc. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which among the following is a source of non-tax revenue for the government?

  1. Gifts and grants

  2. Fees, fines and penalties

  3. Interest and dividend on investments

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Non-tax receipts of the government are all those revenue receipts of the government that is not a part of tax receipts of the government be it a direct tax or indirect tax. For example - fees, fines, escheats, gifts and grants, interest and dividends on investment, etc. 

Multiple choice function, distinction and objectives of chambers of commerce role of chambers of commerce & industry and trade associations internal trade commerce business studies

What is the meaning of Octroi?

  1. Tax collected on the goods and from the people entering the state or municipal limits.

  2. Tax collected from the customers present in the market.

  3. Tax levied on the goods in the market.

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Octroi, tax levied by a local political unit, normally the commune or municipal authority, on certain categories of goods as they enter the area.

Multiple choice function, distinction and objectives of chambers of commerce role of chambers of commerce & industry and trade associations internal trade commerce business studies

What is the chief source of the Government revenue levied across states by the Central government?

  1. Central excise

  2. Sales tax

  3. Value added tax

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Central Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods are manufactured. Central Excise duty is an indirect tax levied on goods manufactured in India. Excisable goods have been defined as those, which have been specified in the Central Excise Tariff Act as being subjected to the duty of excise.

Multiple choice organization of commerce and management cooperative organisation features, organisation, advantages and disadvantages of cooperative organisation cooperative societies cooperative society introduction to huf joint hindu family business

The income of cooperative society is legally ____________ as per the Income tax Act, 1961.

  1. Not taxable

  2. Taxable

  3. Totally exempt

  4. Taxable if State Government pass order
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cooperative societies are considered legal entities and are subject to income tax under the Income Tax Act, 1961, though they may enjoy certain deductions or exemptions.

Multiple choice social science index number value and price important index numbers price rise/inflation

Only element which is the cause of income for company is ______.

  1. Price

  2. Tax

  3. Discount

  4. Value added tax
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The are many reasons behind the income of a company. But before any other reason, the company must design its product or service and set a reasonable price to it. Any certain change to the price can affect the set of customers to that company. So, price is the deriving element towards the cause of income for company.

Multiple choice civics state factors of a state introduction to philosophical state the state government (part-ii)

Which one of the following is not a state subject?

  1. Police

  2. Agriculture

  3. Income tax

  4. Irrigation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Income tax, Corporation Tax, Service tax are levied and collected by Centre but are appropriated by both states and Center as per distribution formula recommended by Finance Commission. This formula is not binding upon the parliament.

Multiple choice commerce goods and services tax goods and service tax study of gst goods and services tax (gst)

GST is ______________.

  1. a value added tax

  2. tax on goods and services

  3. tax on consumer goods and services

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India. GST is one indirect tax for the entire country.

Multiple choice commerce goods and services tax goods and service tax study of gst goods and services tax (gst)

The advantages of GST to the Citizens are listed as:

  1. Reduction in prices of goods and services due to elimination of cascading.

  2. Uniform prices throughout the country.

  3. Transparency in taxation system.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  1. GST is a simplified transparent tax and has abolished a number of indirect taxes which was levied by the Centre and State Governments, including Central Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Luxury Tax, etc.
  2. It focuses on removing the Cascading Effect, i.e. tax on tax.
  3. It has led to falling prices of many consumer goods as manufacturing cost of many good has reduced due to less burden of taxes.
  4. Items like a car, FMCG etc. are expected to become cheaper than before.
  5. As a simple rule of economics, with fall in prices of the items, there will be an increase in the demand or consumption of goods.
  6. This increase in demand will tend to increase the supply. Hence, will ultimately lead to the rise in production of goods.
  7. In the long run, it will be helpful for the common man, as increased production of goods will create more job opportunities.
  8. This will help in lowering the burden on the common man i.e. you will have to shed less money to buy the same products which were earlier costly.
Multiple choice commerce goods and services tax goods and service tax study of gst goods and services tax (gst)

GST has the disadvantage(s) as follows:

  1. Complete lack of adaptation mechanisms and trained staff.

  2. Unclear estimate of the exact impact of GST.

  3. No clear mechanisms to control tax evasion.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  • Some Economist say that GST in India would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent.
  • Some Experts says that CGST(Central GST), SGST(State GST) are nothing but new names for Central Excise/Service Tax, VAT and CST. Hence, there is no major reduction in the number of tax layers.
  • Some retail products currently have only four percent tax on them. After GST, garments and clothes could become more expensive.
  • The aviation industry would be affected. Service taxes on airfares currently range from six to nine percent. With GST, this rate will surpass fifteen percent and effectively double the tax rate.
  • Adoption and migration to the new GST system would involve teething troubles and learning for the entire ecosystem.