Tag: economics

Questions Related to economics

In $2011-12$ direct taxes are around ______% of GDP.

meaning and importance of taxes government and taxes tax civics economics

  1. $5.48$

  2. $15.26$

  3. $12.83$

  4. $7.75$

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Correct Option: A
Explanation:

In 2011-12 direct taxes were around 5.48% of GDP where as for indirect taxes it was 4.4% 

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

meaning and importance of taxes government and taxes tax civics economics

  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

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Correct Option: C

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?

meaning and importance of taxes government and taxes tax civics economics

  1. $Rs. 32,000$

  2. $Rs. 8000$

  3. $Rs. 4,000$

  4. $Rs. 20,000$

Show answer
Correct Option: A
Explanation:

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

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

meaning and importance of taxes government and taxes tax civics economics

  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

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Correct Option: C

Transfer payment includes:

meaning and importance of taxes government and taxes tax civics economics

  1. Old age pensioin

  2. Tax payments

  3. Consumer's debt interest

  4. All of the above

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Correct Option: D
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.

________ is not a Direct Tax.

meaning and importance of taxes government and taxes tax civics economics

  1. Income Tax

  2. Wealth Tax

  3. Gift Tax

  4. Entertainment Tax

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Correct Option: D
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.

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

meaning and importance of taxes government and taxes tax civics economics

  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

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Correct Option: D

Which one of the following sources of Central revenue belongs to the category of Indirect taxes?

meaning and importance of taxes government and taxes tax civics economics

  1. Corporation tax

  2. Customs

  3. Wealth tax

  4. Interest Receipts

Show answer
Correct Option: B
Explanation:

Custom Duty is a indirect tax for goods when import or export. The tax is collected by Central Board of Indirect Taxes and Customs.

If final goods attracts an excise duty of Rs. 8000 and Rs. 1050 has already been paid on inputs then the firm will pay the 7000 towards excise duty. It is paying tax according to

meaning and importance of taxes government and taxes tax civics economics

  1. VAT

  2. CENVAT

  3. MODVAT

  4. None of the above

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Correct Option: C
Explanation:

The firm pays tax according to the MODVAT system. MODVAT means Modified Value added tax.This was an excise duty scheme introduced in 1986 for allowing relief to final manufacturers on the excise duty borne by their suppliers of raw material. This scheme has now been replaced by the CENVAT Scheme.

VAT was introduced in india in which year ?

meaning and importance of taxes government and taxes tax civics economics

  1. 2005

  2. 2000

  3. 2001

  4. 2002

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Correct Option: A
Explanation:

VAT was introduced in India in the year 2005 which was valid from 1st april 2005.