Tag: meaning and importance of taxes

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Questions Related to meaning and importance of taxes

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Which of the following statements is correct?

  1. Income tax was abolished in India in $1991$.

  2. Gift tax was abolished in India in $1998$, but income tax on gift (received) without adequate consideration was partially reintroduced in April $2004$.

  3. No states have adopted VAT system of indirect taxation.

  4. Estate duty was abolished in $1995$.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Gift Tax Act was repealed in 1998, but the Finance Act of 2004 reintroduced taxation on gifts received without adequate consideration under the Income Tax Act. The other statements contain incorrect dates or claims regarding tax history in India.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

As part of the Taxation Reforms in 1991, the rates of taxation were reduced in respect of_______________.

  1. Corporate Income Tax

  2. Personal Income Tax

  3. Customs Duties

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

The 1991 taxation reforms in India aimed to broaden the tax base and improve compliance by reducing high rates across various categories, including corporate income tax, personal income tax, and customs duties.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

The VDIS-Voluntary Disclosure of Income Scheme was the brainchild of ______________.

  1. P.Chidambaram

  2. Ram Jethmalani

  3. Atal Behari Vajpayee

  4. Sonia Gandhi
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Voluntary Disclosure of Income Scheme (VDIS) was the brainchild of P Chidambaram. Chidambaram introduced the scheme in the 1997-98 budget, had actually targeted an ancient mindset : a man pays tax only when he is bludhgeoned.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Which of the following is not an effect of simplification of procedural aspects in Taxation?

  1. Improvement in tax compliance

  2. Increased revenue generation for the Government

  3. More work for Tax Authorities and Taxpayers

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

Simplification of tax procedures is intended to reduce the burden on taxpayers and authorities, thereby improving compliance and revenue. It does not result in more work for them.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Suppose a shopkeepers buys inputs worth $Rs. 2,00,000$ and his sales are worth $Rs. 4,00,000$ in a month. The input tax rate is $4$% and output tax rate is $10$%. What is value added tax here after set off of input tax credit?

  1. $Rs. 32,000$

  2. $Rs. 8000$

  3. $Rs. 4,000$

  4. $Rs. 20,000$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Output tax $= 10$% of $400000 = Rs. 40000$;
Input tax $= 4$% of $200000 = Rs. 8000$ 
Hence,  Value Added Tax $= 40000 - 8000 = Rs. 32000$.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Which of the following is not part of the Taxation Reforms in 1991?

  1. Increase in Basic Exemption Limits for Individuals & Hindu Undivided Families (HUFs)

  2. Reduction & rationalization of Income Tax Rates

  3. Compulsory filing of returns in respect of Individuals having income below Basic Exemption Limits

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

Taxation reforms in 1991 focused on rationalizing rates and improving compliance. Compulsory filing for those below the exemption limit contradicts the goal of simplifying the process for small taxpayers.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Transfer payment includes:

  1. Old age pensioin

  2. Tax payments

  3. Consumer's debt interest

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

Transfer payments are those payments which are made without production. These payments are characterized with transfer of money in exchange for no direct receivables in terms of products or services.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

________ is not a Direct Tax.

  1. Income Tax

  2. Wealth Tax

  3. Gift Tax

  4. Entertainment Tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income tax, wealth tax and gift tax are all direct taxes. Entertainment tax is an indirect tax. It is a tax on any kind of entertainment activities. It might include cinema, theaters etc. Entertainment falls in List 2 of the Seventh Schedule of the Constitution of India and is exclusively reserved as a revenue source for the state governments.

Multiple choice meaning and importance of taxes government and taxes tax civics economics

Which of the following is not part of the Taxation Reforms in 1991?

  1. General policy for introduction of State-level VAT

  2. Rationalisation of Excise Duties towards CENVAT concept

  3. Reduction in the peak rate of Customs Duties

  4. Increase in Customs, Excise and Sales Tax Rates
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The 1991 reforms aimed to reduce the tax burden to stimulate the economy. Increasing customs, excise, and sales tax rates would be contrary to the liberalization and rationalization policies of that era.