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

GST is basically designed to:
1. Enhance manufacturing system
2. Reduce the tax base
3. Expand the distribution system
4. Increase the revenue from taxes
Of the above ___________.

  1. 1 & 2 are correct

  2. only 4 is correct

  3. 1, 3 & 4 are correct

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

GST is designed to enhance the manufacturing system (by removing cascading taxes), expand the distribution system (by creating a unified market), and increase tax revenue (by broadening the tax base).

Multiple choice civics introduction to gst fundamentals of gst tax journal

GST widens the _______ base which accordingly increases the _______ for government.

  1. revenue, cost

  2. sale, tax

  3. cost, tax

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

By bringing more businesses into the formal economy and simplifying compliance, GST widens the tax base, which in turn leads to higher tax revenue for the government.

Multiple choice civics introduction to gst fundamentals of gst tax journal

For the purpose of accounting, GST is broadly categorised as _________ and __________.

  1. GST paid, GST collected

  2. CGST collected, CGST paid

  3. GST charged, GST paid

  4. GST paid, GST set off
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In accounting, GST paid on purchases is recorded as an asset (Input GST), while GST collected on sales is recorded as a liability (Output GST). These represent the two primary categories for tracking tax credits and tax obligations.

Multiple choice civics introduction to gst fundamentals of gst tax journal

For accounting purposes, GST paid is termed as _________.

  1. input GST

  2. output GST

  3. charge GST

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

GST paid by a business on its purchases is referred to as Input GST, which represents a credit that can be used to offset tax liabilities.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input CGST cannot be set-off against output __________.

  1. CGST

  2. SGST

  3. IGST

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

Under the GST law, Input CGST is specifically meant to be set off against Output CGST and Output IGST. It cannot be used to pay off Output SGST.

Multiple choice civics introduction to gst fundamentals of gst tax journal

For accounting purposes when GST is collected, it is termed as ___________.

  1. input GST

  2. output GST

  3. collected GST

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

GST collected from customers on sales is termed Output GST, representing a liability for the business to pay to the government.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input _________ can be set-off against any type of GST.

  1. CGST

  2. SGST

  3. IGST

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

Wef 1.2.2019, the Government has changed the order in which ITC of IGST, CGST & SGST/UTGST can be adjusted from the liability payable of IGST, CGST & SGST/UTGST. Now IGST has to be fully exhausted before other taxes can be utilised. 

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input IGST is the only type of GST which can be used in setting off all types of output GST i.e., CGST, SGST and IGST.

  1. True

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

True , IGST can be used in setting off all types of output GST.

Wef 1.2.2019, the Government has changed the order in which ITC of IGST, CGST & SGST/UTGST can be adjusted from the liability payable of IGST, CGST & SGST/UTGST. Now IGST has to be fully exhausted before other taxes can be utilised. 

Multiple choice civics introduction to gst fundamentals of gst tax journal

More MCQs on Foreign Exchange Management 1. The subsumption of which taxes will make the GST-a pucca Destination based Consumption Tax _________________.

  1. CST and Central Excise

  2. VAT and Luxury Tax

  3. Service Tax and Purchase Tax

  4. Taxes on Lotteries and Entertainment Tax
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GST is a destination-based tax that replaced various indirect taxes, most notably the Central Sales Tax (CST) and Central Excise Duty, to create a unified market.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Which of the following is true in respect of events after the applicability of GST? Transitional Provisions 271 Indirect Taxes Committee _____________.

  1. Proceedings under earlier law will be disposed of under the earlier law

  2. Any default due to proceedings in the earlier law will be recovered in the earlier law

  3. Proceedings under the earlier law will be disposed of under the new law

  4. Any refund due to the proceedings will be admissible as input tax credit
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Transitional provisions ensure that legal proceedings initiated under the previous tax regime continue to be governed by that regime until their conclusion.

Multiple choice civics introduction to gst fundamentals of gst tax journal

What are the non-appealable orders or decisions in GST?
(i) File Transfer from authority to another
(ii) Order related to seizure or retention of books of accounts and other documents
(iii) Prosecution sanctioning order
(iv) Installment Order Codes.

  1. i only

  2. i & iv only

  3. ii, iii & iv only

  4. i, ii, iii & iv
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Goods and Services Tax is an indirect tax used in India on the provider of goods and services. It is an inclusive, multistage, reason-based tax inclusive because it has subsumed approximately all the indirect taxes apart from a few state taxes. 

Multi-staged as it is, the GST is compulsory at each step in the manufacturing process, but is supposed to be refund to all party in a variety of stage of manufacture other than the final customer and as a purpose base tax, it is together from point of utilization and not point of origin like preceding taxes. 

Goods and services are separated into five dissimilar tax slabs for collected works of tax - 0%, 5%, 12%, 18% and 28%.

Thus, the correct option is D.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Where supply has been made before the date of implementation of GST, no tax shall be Payable ________________.

  1. If tax/duty has been paid under the earlier law

  2. If goods were exempted under the earlier law

  3. If the goods were non-taxable under the earlier law

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

No tax shall be payable on the supply of goods and /or services made before the introduction of GST where a part of consideration for the said supply is received on or after the introduction of GST, but the full duty or tax payable on such supply has already been paid under the earlier law.

Multiple choice civics introduction to gst fundamentals of gst tax journal

Input tax credit on capital goods and Inputs can be availed in _____________.

  1. In thirty six installments

  2. In twelve installments

  3. In one installment

  4. In six installments
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under the GST Act, the input tax credit for both inputs and capital goods can be claimed in one installment, provided the conditions for eligibility are met.