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

_______ is a compulsory contribution from a person to the expenses incurred by the State in common interest of all without reference to specific benefits conferred on any individual. 

  1. Tax

  2. Fees

  3. Rates

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

A tax is defined as a compulsory financial charge or levy imposed by a government on an individual or entity to fund public expenditures, without a direct quid pro quo or specific benefit provided to the payer.

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

The most important source of public revenue is ____________.

  1. taxes

  2. interest

  3. dividend & profit

  4. license fees
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Public revenue is all the revenue receipts of the government. These revenue receipts consists of taxes, interest on loans etc. Majority of the revenue collected by the government is in the forms of taxes i.e. both direct taxes (income tax, wealth tax, property tax) and indirect taxes (GST, service tax). These taxes give revenue in huge quantity and hence it becomes the most important source of public revenue.

Multiple choice civics public expenditure and public revenue black money and tax evasion meaning of tax direct taxes

Excise duty is a:

  1. Direct tax

  2. Indirect tax

  3. Cooperation tax

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

An indirect tax is a tax which is imposed on one person and is paid partly or wholly by another party. This means that the effect or incidence of an indirect tax is not upon the party who pays the tax but on someone else. examples of indirect taxes are value added tax, excise duty, service tax. An excise duty is a type of indirect tax that is levied on the sales of particular goods. This tax is not paid directly by the customer but is passed on to the consumer by a merchant or producer of goods as a part of the price of the product.

Multiple choice organization of commerce and management ownership structures - cooperative society features, merits and demerits, formation and management of a cooperative society meaning and features of cooperative society cooperative organisation

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

  1. Not taxable

  2. Taxable

  3. Totally exempt

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

As per Income Tax Act, 1961 the income earned by any type of co-operative society is taxable with certain mentioned rates differ from organisation to organisation. 

Multiple choice geography food security in india components of food security government measures for food security important index numbers

Select the correct ones about India's wholesale price index and the producer price index of the developed countries:
1. Both are exclusive of the indirect taxes.
2. While the producer price index contains services. wholesale price index doesn't.

  1. Only 4

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

India's wholesale price index though has become similar to the PPI of the developed countries from the point of the exclusion of the indirect taxes (since May2017May2017) it does not include the services.

Multiple choice economics consumption and investment functions keynesian law of consumption and propensity to consume ex ante and ex post concept of consumption function, saving function and investment function

When is the disposable income equal to the total income?

  1. When taxes are equal to zero.

  2. When taxes are equal to the income.

  3. When taxes are equal to the fines payable.

  4. When taxes and fines payable are equal to zero.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Disposable income and total income will be the same if tax payment and fines payable are non existing or zero.

Disposable income is that part of total income which is available for consumption and saving. To elaborate it further, note that when a person receives income in return of factor services rendered by him/her, he/she may not spend all the income on consumption only. There are certain compulsory payments he/she has to make out of the income received, such as tax to the government, fines, if any etc. As a result the income available for consumption needs is reduced. Disposable income is defined as the income remained after payment of tax and fines. If tax payment is high, disposable income will be lower and vice versa. Accordingly, the level of consumption will be affected.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

Treatment of ITC in respect of a taxable person paying tax under section 7 opts to pay tax under composition scheme?

  1. No liability

  2. Liable to pay an amount equipment to the input tax credit in respect inputs held in state in any form

  3. ITC for input in stock allowed

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

Under GST composition scheme, when a taxpayer switches to regular scheme, they must pay input tax credit equivalent on inputs held in stock. This prevents abuse of the composition scheme provision.

Multiple choice organisation of commerce and management recent trends of business e-commerce and mobile commerce introduction to internet and e-commerce emerging modes of services

__________ can be one of the approach used to tax online transactions.

  1. Permanent establishment

  2. Residence-based

  3. Income-based classification

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

One of the approach used to tax online transactions.

1) Permanent establishment:-

A permanent establishment (PE) is a fixed place of business which generally gives rise to income or value-added tax liability in a particular jurisdiction.

2) Residence-based:-

Income or profits which result from international activities such as cross-border investment may be taxed where the income is earned (the source country), or where the person who receives it is normally based (the country of residence).

3) Income-based classification.


Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

Every registered taxable person shall be entitled to take credit of input tax in his return and such input tax credit shall be credited to _______________.

  1. Personal Ledger Account

  2. Refund account

  3. Electronic Cash Ledger

  4. Electronic Credit Ledger
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under GST law, input tax credit claimed by a registered person is credited to their Electronic Credit Ledger.

Multiple choice elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

Sole traders do not have to file a business tax return on the company's profits and losses.

  1. True

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

Sole trader do not have to file a business tax return on a company's profits and losses- this is a true statement. Sole trader starts his/her business with an objective of earning independent livelihood using his/her skills. Sole traders operate mostly on a small-scale basis and their number is large. Sole trader can be referred as the single individual who takes all initiatives and run the business.