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 social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

The following is an example of commercial non-tax revenue ______. 

  1. Gifts and grants

  2. Fees

  3. Fines

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

Among the following options, the commercial non-tax revenue is the surpluses. For instance, the central government runs railways. Surplus from railway earnings can be normally contributed to the revenue budget of the central budget.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Which one of the following is a source of non-tax revenue for governments?

  1. Import duty on cars

  2. Octroi at check points on roads

  3. Entrance fee to museums

  4. Excise duty on beverages
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Non-tax revenue is collected by the government from other sources, except through taxation, The sources of non-tax revenue(NTR) are:
(i) Fees and charges for various facilities like museums, license offices, etc
(ii) Dividend/profits from public sector units (PSUs)
(iii) Income from radio/TV broadcasting, etc

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

The incidence of taxes refers to ___________.

  1. the level and rate of taxation

  2. who ultimately bears the money burden of the tax.

  3. the growth of taxation

  4. the way in which a tax is collected.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Tax incidence refers to the economic burden of a tax, specifically who ultimately pays it, regardless of who is legally responsible for remitting it.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Personal income tax is levied on income of ___________.

  1. individual only

  2. individual & hindu undivided families (HUF) only.

  3. individual, HUF, registered firms as AOP (Association of Person)

  4. individual, HUF, unregistered firm & other Association of Person (AOP)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Personal income tax in India applies to individuals, HUFs, and various associations of persons (AOPs) or bodies of individuals (BOIs).

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Which of the following statement is correct with regards to tax system in India?
(i) VAT is a system of indirect taxation.
(ii) Custom duties have been cut down -since 1991
(iii) Excise duty is levied on production
(iv) Agriculture tax is a main source of direct tax.
Select the correct answer:

  1. (i) (ii) & (iii)

  2. (i), (ii), (iii) & (iv)

  3. (i) & (ii) only

  4. (i) & (iii) only
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

VAT is indirect, custom duties have been reduced since 1991, and excise duty is on production. Agriculture tax is generally a state subject and not a main source of direct tax for the central government.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

Income earned by government from the sources other than taxes is called ______.

  1. private funds

  2. non-tax revenue

  3. public funds

  4. none
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Non Tax Revenue receipts are those revenue receipts which are not generated by taxing the public. Example of a non-tax revenue includes revenue from power distribution, irrigation, banking services, insurance, and community services etc. which make the part of the Government business.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

Which of the following is a non-tax revenue?

  1. loans or other borrowing from monetary funds

  2. aid from abroad

  3. revenue from state-owned enterprises

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

Non Tax Revenue Receipts are those revenue receipts that are not generated by taxing the public. Example of non-tax revenue includes revenue from power distribution, irrigation, banking services, insurance, and community services, etc. which make them part of the Government business. Other examples include loans or other borrowings from monetary funds or other governments that are included under, aid from abroad, revenue from state-owned enterprises, etc.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

Which of the following public revenue is a major contributor to the total central revenue?

  1. Tax revenue

  2. Non-tax revenue

  3. Both A and B have equal contribution

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

Public revenue which is a major contributor to the total central revenue is tax revenue. Revenue earned by government by taxing people is called tax-revenue. It is of two types:

  • Direct tax: tax payed to the government directly. Examples include income tax, gift tax, wealth tax, property tax etc.
  • Indirect tax: this tax is collected by an intermediary person from the person who ultimately bears the burden. Examples are sales tax, value added tax (VAT), goods and services tax (GST) etc.