Tag: government budget and taxation

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Questions Related to government budget and taxation

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

Direct tax is called direct because it is collected directly from __________________.

  1. The producers on goods produced

  2. The sellers on goods sold

  3. The buyers of goods

  4. The income earners
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A direct tax is the tax, the final burden of which is borne by the person on whom it is imposed. For example: Income tax is a direct tax. Thus, direct tax is called direct tax as it is collected directly from the income earners and the burden of the tax cannot be shifted to different persons.

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

The tax levied by the union government on income of individuals is known as _____.

  1. personal income tax

  2. interest tax

  3. wealth tax

  4. corporation tax
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 Personal Income Tax (PIT) is a direct tax levied on income of a person. A person means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.

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

Which of the following is/are indirect tax(es)?

  1. Customs duty

  2. Excise duty

  3. Corporation tax

  4. Both (A) & (B)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Indirect taxes are those where the burden can be shifted to another person, typically through the price of goods or services. Both Customs duty and Excise duty are classic examples of indirect taxes, making option D the correct choice.

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

__________ is a direct tax; _________ is an indirect tax.

  1. Sales tax ; Gift tax

  2. Income tax; Service tax

  3. Gift tax ; Wealth tax

  4. Excise duty ; Sales tax
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Income tax is a direct tax because the burden cannot be shifted, while service tax is an indirect tax collected on services provided. Option B correctly identifies these categories.

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

Levy of excise duty on a product has_____.

  1. income and substitution effect thus causing reduction in demand

  2. income effect only

  3. substitution effect only

  4. black marketing of the goods
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Levying an excise duty increases the price of a product, which reduces the consumer's real purchasing power (income effect) and encourages them to switch to cheaper alternatives (substitution effect), leading to lower demand.