Economics · General Awareness

Indian Taxation System

2,325 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.

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Indian Taxation System Questions

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Whether the registered person will get immunity from interest & late fee leviable if assessment order passed u/s 62(1) is withdrawn?

  1. Taxable person will get immunity only from late fee u/s 47.

  2. No, taxable person will still be liable for interest u/s Section 50 and late fee u/s Section 47. Therefore, no immunity has been provided for the same.

  3. Taxable person will get immunity from late fee u/s 47 as well as interest u/s 50.

  4. Taxable person will get immunity only from interest u/s 50.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Taxable person will get immunity only from interest u/s 45. No, the taxable person will still be liable for interest under section Sec 45 and late fee under section Sec 42. Therefore, no immunity has been provided for the same. 

Where the taxable person is incapable to conclude the value of goods or services or both or establish the rate of tax applicable thereto, he may request the proper officer in writing giving reasons for payment of tax on a temporary basis and the proper officer shall pass an order, within a period not later than ninety days from the date of receiving of such request, allow the expense of tax on temporary basis at such rate or on such value as may be particular by him.

 Thus, the correct option is D.

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Recently, India shifted to a new method for measuring its national income. The new method classifies taxes into 'product' and 'production'. Select the statements given below which are correct about these taxes. using the code—
1. Both of the taxes arc imposed on the producers.
2. While product taxes are variable, the production taxes are fixed.
3. Land revenue. profession tax, stamps and registration fees are some of the examples of production taxes in India.
4. Sales tax, excise duty, service tax, export and import taxes are the examples of product taxes in India.

  1. 1 and 2

  2. 1,2 and 3

  3. 2,3 and 4

  4. 1,2,3 and 4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
While the product taxes are imposed on the producers they are ultimately paid by the consumers of the goods and sen icesthese taxes are linked to the production volumes of the producers (so they are variable). Production taxes are paid by producers are not linked to the volume of their productions that is why they are 'fixed cost- of production.

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Revenue of the state governments is raised from the following sources, except ____________.

  1. entertainment tax

  2. expenditure tax

  3. agricultural income tax

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

In India, agriculture is not considered as commercial activity, it is considered as activity of subsistence from hundreds of years. Other areas such as entertainment, expenditure, and land revenue can be seen as business activities for purpose of profit making. This is the main reason for being exclusion of agricultural revenue out side taxation.

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Excise duty tax is levied on the _______.

  1. import of goods

  2. export of goods

  3. production of goods

  4. sale of goods
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

  • Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol and narcotic substances is collected by the State Government and is called State Excise duty. The Excise duty on rest of goods is called Central Excise duty.
  • Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Among the tax revenues of the Central government, the leading source is _____.

  1. income tax

  2. corporation tax

  3. union excise tax

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

  • The Union excise duties are the leading source of revenue for the Central Government and are levied on commo­dities produced within the country (exclu­ding those commodities on which State excise is levied e.g. liquors and narcotic drugs).
  • The most important commodities from the revenue point of view are sugar, cotton, mill cloth, tobacco, motor spirit, matches and cement.

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Which types of tax helps in reducing disparities of income?

  1. Proportionate tax

  2. Progressive tax

  3. Regressive tax

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

A progressive tax is a tax in which the tax rate increases 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 social science government and taxes types of tax types of taxes government budget and taxation

Which of the following holds true for an indirect tax _____.

  1. the tax is levied on wealth

  2. the tax is levied on all kinds of income

  3. point of impact and incidence are different

  4. the tax is levied on property
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Indirect tax is a type that is paid to government indirectly  i.e tax on goods and services rather than on income and profits. Examples of indirect tax include VAT, excise duty, service tax, customs duty etc. Point of impact and incidence is different for example we buy a commodity from shopkeeper(point of impact) and tax levied goes to government ( point of incidence).

Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Consider the following statements and identify the right one:
I- Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
II- The constitution also provides for transferring certain tax revenues from union list to states.

  1. Only I

  2. Only II

  3. Both

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

Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.