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 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.

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

Which of the following is NOT true about indirect tax?

  1. Wealth tax is direct tax

  2. It is imposed by the central government but collected by the state government and handed over to central govt.

  3. In the budget of 2016-17, income tax collection was more than non tax revenue

  4. In the budget of 2016-17, income tax collection was 14% of total revenue of the central government
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice social science government and taxes types of tax types of taxes government budget and taxation

Which of the following are direct taxes?
I. Income tax
II. Goods & Service Tax
III. Gift Tax
IV. Custom Duty

 V. Wealth tax. 

  1. II, IV &V only

  2. I only

  3. I & III only

  4. I, III &V only
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Direct taxes are those where the incidence and impact fall on the same person. Income tax, Gift tax, and Wealth tax are direct taxes, while GST and Custom Duty are indirect taxes.

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

Excise Duty, Customs Duty, Service Tax, Sales Tax, Purchase Tax, Entry Tax, etc. are examples of ______________.

  1. direct taxes

  2. indirect taxes

  3. both (a) and (b)

  4. neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

All the listed taxes (Excise, Customs, Service, Sales, etc.) are indirect taxes because they are levied on goods and services and their burden is shifted to the final consumer.