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.

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

___________ was introduced in 1957 and abolished in 2016.

  1. Income Tax

  2. Wealth Tax

  3. Gift Tax

  4. Estate Duty
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Wealth Tax Act was introduced in India in 1957 by John Mathai to reduce wealth inequality and was eventually abolished in 2016 by the Finance Act. Income tax, gift tax, and estate duty have different timelines of introduction and repeal.

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

In India, the majority of the contribution to Tax Revenue is by way of ____________.

  1. direct taxes

  2. indirect taxes

  3. no taxes

  4. nothing can be said
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In many developing economies, including India, a significant portion of tax revenue is generated through indirect taxes, which are levied on a broader base of consumption.

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

Which of the following statements is incorrect?

  1. Income Tax was abolished in India in 1991

  2. Gift Tax was abolished in India in 1998, but income tax on gifts (received without adequate consideration) was partially reintroduced in April 2005.

  3. No state has adopted VAT system of indirect taxation

  4. Estate duty was abolished in 1995.
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

Find the correct statement:

  1. share of indirect tax is more than direct tax in total tax revenue

  2. service tax is a direct tax

  3. income tax is indirect tax

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

In the Indian tax structure, indirect taxes historically contribute a larger share to total tax revenue compared to direct taxes. Service tax and income tax are correctly identified as indirect and direct taxes respectively in the distractors, making A the most accurate statement.

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

Taxes on production is usually ___________.

  1. direct taxes

  2. indirect taxes

  3. both (a) & (b)

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

Taxes on production, such as excise duty or sales tax, are collected from producers but passed on to consumers, making them indirect taxes. They are not levied directly on the income or wealth of the taxpayer.

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

Which of the following are indirect taxes?
(i)Custom duties
(ii)Excise duties
(iii)Sales-tax
(iv)Estate duties

  1. (i), (ii), (iii) & (iv)

  2. (ii), (iii) & (iv)

  3. (i), (ii) & (iii)

  4. (i), (ii) & (iv).
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Custom duties, excise duties, and sales tax are all indirect taxes. Estate duty is a direct tax levied on the estate of a deceased person.

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

What does the term 'incidence of taxation' suggest about?

  1. The rate of taxation is high.

  2. The one who bears the ultimate money burden of the tax.

  3. The one who is immediately responsible to pay the tax.

  4. The effect produced by the tax.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Incidence of taxation refers to the final resting place of the tax burden. While the impact is the initial payment, the incidence is who ultimately pays the cost.