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

What was Haq-e-Sherb?

  1. Religious tax

  2. Irrigation tax

  3. Prostitution tax

  4. Haj tax
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Haq-e-Sherb was an irrigation tax levied by Firoz Shah Tughlaq to fund the construction and maintenance of canals and water management systems. It was part of his comprehensive revenue system and supported agricultural development through irrigation infrastructure.

Multiple choice

The income tax paid by the proprietor on his personal income should be

  1. debited to capital account

  2. debited to P and L a/c

  3. debited to current a/c

  4. credited to capital a/c

  5. debited to proprieter loan a/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The income tax on his personal income should be debited to proprietor's capital account due to personal expenditure of the proprietor treated as drawings of the proprietor.

Multiple choice

Which of the following is not a form of tax revenue?

  1. Customs

  2. Excise duty

  3. License fee

  4. Sales tax

  5. Income tax
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An amount of money paid by an individual or business to a government agency for the privilege of performing a certain service or engaging in a certain line of business

Multiple choice

Which of the following is a direct tax?

  1. Sales tax

  2. Income tax

  3. Value added tax

  4. Entertainment tax

  5. Corporate tax
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A tax that governments impose on financial income generated by all entities within their jurisdiction.

Multiple choice

The following taxes are levied, collected and retained by the centre. (a) Customs duty (b) Tax on railway fares and freights (c) Corporation tax (d) Tax on capital (other than agricultural land) Which of the above is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Only (a) and (c)

  4. Only (d)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Customs duty corporation tax and tax on capital (other than agricultural land) are not only levied and collected by the centre but also retained whereas tax on railway fares and freights is levied and collected by the centre but distributed among states.

Multiple choice

High rates of income tax encourage tax evasion and burgeoning black money. Which of the following is incorrect? (a) Income tax is progressive in India. (b) There has been spurt in tax rates. (c) People resort to under declaration of income.

  1. Only (a)

  2. Only (b)

  3. Only (c)

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

Income tax rate structure is progressive in India, i.e. rate of tax is not uniform. With a view to avoid tax, people tend to suppress their income. That is why there has been reduction in tax rates during the last two decades.

Multiple choice

The following taxes are levied and collected by the Union but entire proceeds are assigned to the states: (a) Taxes on railway fright and fares (b) Excise duty (c) Taxes on sale and purchase of newspapers and ads therein (d) Taxes on transactions in stock exchange

Which of the above is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Both (b) and (c)

  4. Only (d)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Excise duties are levied by the Union government but are collected and appropriated by the states.

Multiple choice

Implementing GST will be an impetus to growth. Which of the following statements does not support this view? (a) It will lower the tax rate. (b) It will broaden the tax base. (c) It will reduce compliance cost. (d) It will boost exports. (e) It will cause unemployment.

  1. Both (a) and (b)

  2. (c), (d) and (e)

  3. Only (d)

  4. Only (e)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As implementing GST will promote exports, facilitate investment decisions and will foster a common market across the country. These will be conducive to growth which will generate employment.