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 civics introduction to gst fundamentals of gst tax journal

Under GST, credit availed of all the taxes paid is termed as __________.

  1. Round off

  2. Net off

  3. Set off

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

GST is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set off. 

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is proposed to be levied at all stages right from _____________ up to the final consumption.

  1. business

  2. trading

  3. manufacturing

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

GST is a consumption based tax which is levied on the basis of “Destination principle.” 

The concept relates to taxing the supply of goods or services at the point of consumption. It is a comprehensive tax regime covering both goods and services, and is collected on value-added at each stage of the supply chain. 
The essence of GST is in removing the cascading effects i.e., tax on tax of both Central and State taxes by allowing setting-off of taxes throughout the value chain, right from the original producer and service provider’s point, up to the consumer level.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Under GST, burden of tax is to be borne by the final consumer.

  1. True

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

GST is proposed to be levied at all stages right from manufacture up to final consumption, with the credit of taxes paid at previous stages available as set off. In a nutshell, only value addition will be taxed and the burden of tax is to be borne by the final consumer.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Under the destination based Goods and Services Tax, tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

  1. True

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

GST is a destination-based tax, meaning the tax revenue goes to the state where the goods or services are consumed, rather than where they are produced.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Revenue collected under IGST is divided between Central and State Governments as per the rates quoted by the party collecting taxes.

  1. True

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

Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.

Note: 

Under IGST,

  • Exports would be zero-rated.
  • Tax will go to the Central government.
Hence, the above statement is false.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST will replace a major part of __________ taxes.

  1. direct

  2. indirect

  3. foreign

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

GST will replace a major part of indirect taxes. This law has replaced many indirect taxes like VAT, Service tax etc. in country. GST is one indirect tax for the entire country.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Taxes collected under CGST are the revenues of the State Government.

  1. True

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

Taxes collected under CGST are the revenues of the Central Government and not State Government.

Hence, the above statement is false.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is levied as per dual aspect with __________ and ___________ simultaneously. 

  1. Centre

  2. Union

  3. States

  4. both (A) and (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

GST is levied as per dual aspect with Centre and States simultaneously as CGST and SGST.

Hence, D is the correct option.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is implemented to accomplish the objective of one nation ________ tax.

  1. one

  2. many

  3. diverse

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

GST is implemented to accomplish the objective of "one nation one tax". This is the idea behind implementing the GST which was taken into action.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST enhances the cascading effect on taxation.

  1. True

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

The implementation of GST will help create a common market in India and reduce cascading effects of the tax on the cost of goods and services. Not only the tax, but also the cost of goods and services may be affected in some sectors, and there will be a boost in revenue.

Hence, the above statement is false.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is a _____________ based tax and levied at a single point at the time of ___________ of goods and services.

  1. money, sale

  2. consumption, trading

  3. destination, consumption

  4. destination, sale
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

GST is a destination-based tax, which is levied on the consumption of goods and services.

Multiple choice civics introduction to gst fundamentals of gst tax journal

The prime objective of GST implementation is to ________ the multiple levy of tax on goods and services. 

  1. abolish

  2. promote

  3. motivate

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

The primary objective of GST is to eliminate the cascading effect of taxes, which is caused by the multiple levies of taxes at different stages of production and distribution.

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST is levied under the 3 categories which includes?

  1. CGST

  2. SGST

  3. IGST

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

GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intra-State or Inter-State.

Multiple choice civics introduction to gst fundamentals of gst tax journal

__________ is levied when the parties to the transactions are located in different states.

  1. CGST

  2. SGST

  3. IGST

  4. Both (A) & (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. 

Also, in cases of export or import of goods or services or when the supply of goods or services is made to or by a SEZ unit, the transaction is assumed to be Inter-State. 
In an Inter-State transaction, a seller has to collect IGST from the buyer.
Hence, C is the correct option.