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 economics tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

The reasons for high tax incidence in India are____________.

  1. increase in expenditure on development planning

  2. rise in expenditure on defence and other non-developmental activities

  3. high cost of collection

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

High tax incidence in India is driven by the need to fund development projects, rising defense expenditures, and the administrative costs associated with collecting taxes from a large and diverse population.

Multiple choice economics tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

Tax reform committee (TRC) was constituted for comprehensive reform of _________.

  1. direct tax laws

  2. indirect tax laws

  3. both direct and indirect tax laws

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

The Tax Reform Committee, often associated with the Chelliah Committee, was established to provide a comprehensive framework for reforming both direct and indirect tax structures in India.

Multiple choice social science tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

Which of the following is a progressive tax?

  1. Income tax

  2. Sales tax

  3. Custom duty

  4. Excise duty
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Income tax is a classic example of a progressive tax because the tax rate increases as the taxpayer's income increases. Sales tax, custom duty, and excise duty are generally regressive or proportional.

Multiple choice social science tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

An income tax system is said to be progressive ________________.

  1. if the rate of increase of the tax liability for a tax paying unit is less than the rate of increase of its income

  2. if the rate of increase of the tax liability for the tax paying unit is greater than the rate of increase of its income

  3. if the rate of increase of the tax liability for tax paying unit is equal to the rate of increase of its income

  4. if the rate of increase of the tax bears a multiplicative relation with rate of increase in income of tax paying unit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A progressive tax system is defined by the tax rate increasing as the tax base (income) increases. This means the tax liability grows at a faster percentage rate than the income itself.

Multiple choice business organisation mercantile agents and account sales course of business transaction in home trade documents and procedure used in home trade home trade: agents and procedures

_______ is chargeable from companies engaged in production of goods at applicable tariffs.

  1. Custom duty

  2. Excise duty

  3. Value Added Tax

  4. Goods & Service Tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Goods and Services Tax is an indirect tax levied in India on the supply of goods and services. GST is levied at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

Mixed income refers to the income of: ______.

  1. small enterprises

  2. traders

  3. self employed persons

  4. all the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Mixed income refers to the combined income of self-employed individuals, which includes elements of wages, rent, interest, and profit that are difficult to separate in small-scale operations.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

______ is the personal income minus personal income tax and miscellaneous payments to government.

  1. Surplus income

  2. Disposable income

  3. Expendable income

  4. Residual income
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Disposable income refers to the income which is freely available to the disposal of the individual. The gap between the personal income of an individual and disposal income is due the taxes and other payments made to the government on the personal income earned. 
Symbolically: ${\text{Disposable Income = Personal Income - Taxes and other payments made to the government on the personal income}}$ 

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

The major difference between personal income and disposal income is _______.

  1. indirect tax

  2. direct taxes

  3. savings

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

Personal income is the total income received by individuals, while disposable income is the amount left for spending after direct taxes are deducted.

Multiple choice business mathematics and statistics applications of calculus marginal income and marginal cost to find the maximum profit if marginal revenue and marginal cost function are given: integral calculus – ii

If the amount of taxes paid $(T)$ depends on income $(x)$, how would you use calculus notation to describe the marginal tax rate? If taxes and income are both measured in dollars per year, what are the units of the marginal tax rate?

  1. Same as units of $T$
  2. Same as units of $x$

  3. Unit - less

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

If taxes and income are both measured in dollars per year, then the units of the marginal tax rate will be unit-less.

Multiple choice economics public expenditure public expenditure public finance and budget public finance, taxes and budget

Which one of the following is a direct tax?

  1. Excise duty

  2. Customs duty

  3. Service tax

  4. Income tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An income tax is a tax that governments impose on financial income generated by all entities within their jurisdiction. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

Multiple choice economics public expenditure public expenditure public finance and budget public finance, taxes and budget

Governments generally impose higher taxes on the rich, moderate taxes on the not-so-rich and exempt the poor from paying taxes. This principle of taxation is called ______.

  1. progressive taxation policy

  2. heavy taxation policy

  3. direct taxation policy

  4. protective taxation policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A progressive tax is a tax in which the tax rate increase as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate

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

A credit note is issued by ___________ and it is a document accepted for GST purposes.

  1. Recipient, for reducing the tax/ taxable value;

  2. Supplier, for reducing the tax/ taxable value;

  3. Supplier, for increasing the tax/ taxable value;

  4. Recipient, for increasing the tax/ taxable value.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under GST regulations, a credit note is a document issued by the supplier to the recipient. It is used to reduce the tax liability or the taxable value of the original supply.

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

Suppose tax exempted goods under earlier law dispatched within 6 months prior to the appointed day are returned back within 6 months from the appointed day. How, the tax element involved in the return supply will be treated under GST?

  1. Subject to tax at the appropriate rate of GST

  2. No GST

  3. At the half rate of the GST

  4. Only SGST is charged
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to transitional provisions in GST law, if goods that were tax-exempt under the earlier law are returned within the specified time frame, no GST is applicable on the return supply.

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

A person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer shall make a separate application for registration under GST.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Proviso to Rule 1 of the Final Registration Rules under GST mandates that a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer shall make a separate application for registration as a business vertical distinct from his other units located outside the Special Economic Zone.