50 interesting questions on Fiscal System

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Fiscal System

1. Which of the following is not a direct tax?

(a) Wealth Tax (b) Sales Tax (c) Income tax (d) Estate Duty

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2. The largest revenue in India is obtained from (Investigators’ Exam, 1990)

(a) Sales Tax (b) Direct Taxes

(c) Excise Duties (d) None of these

3. Which of the following is not true about ‘vote-on-account’? (Bank, P.O. 1991)

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(a) It is a budget presented in the Parliament to cover the deficit left by the last budget.

(b) It does not allow the Government to set for the economic policies of the new plan which starts from April 1.

(c) It prevents the Government from imposing fresh taxes or withdrawing old one.

(d) This allows the Government to withdraw an amount for a period with the consent of Parliament.

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4. The sale proceeds of Government Bonds come under the budget head Of (Stenographers’ Exam, 1994)

(a) Revenue receipts (b) Capital Receipts

(c) Capital outlay (d) Current expenditure

5. Which of the following taxes is not levied by the Union Government?

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(a) Wealth Tax (b) Excise Duty

(c) Profession Tax (d) Income Tax

6. Which of the following is not shared by the Centre and the states?

(a) Sales Tax (b) Corporation Tax

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(c) Income Tax (d) Union Excise Duties

7. Fresh evaluation of every item of expenditure from the very beginning of each financial year is called (S.B.I. P.O. 1991)

(a) Fresh Budgeting (b) Deficit Budgeting

(c) Performance Budgeting (d) Zero-based Budgeting

8. The balance of payments deficit in India can be eased by

(a) Conserving the foreign exchange reserves

(b) Promotion of exports

(c) Liberalizations of imports

(d) Export promotion and import substitution

9. Government imposes taxes to (Assistant Grade, 1991)

(a) Uplift weaker sections

(b) Check the accumulation of wealth among the rich

(c) Run the machinery of the state

(d) None of these

10. An ad valorem duty is a tax on the basis of (IA.S. 1988)

(a) The price of a commodity

(b) The value added

(c) The advertisement expenditure

(d) The unit of the commodity

11. The budget is presented to the Parliament on (R.R.B. 1991)

(a) The last day of February (b) 15th March

(c) The last day of March (d) 1st April

12. The principal source of revenue to the State Government in India is

(a) Income Tax (b) Sales Tax

(c) State Excise Duties (d) Land Revenue

13. The income tax in India is a- Tax & Central Excise, 1990)

(a) Indirect and progressive (b) Direct and proportional

(c) Direct and progressive’ (d) Indirect and proportional

14. Which of the following is not a state tax?

(a) Estate duty (b) Entertainment tax

(c) Excise duty on liquor (d) none of these

15. Fiscal policy is connected with (Intelligence Bureau, 1994)

(a) Issue of currency

(b) Exports and imports

(c) Public revenue and expenditure

(d) None of these

16. Which of the following is not true about the Gold Bonds Scheme launched by the Union Government?

(a) The scheme was launched to mobilize idle gold resources of resident Indians

(b) Only NRIs are eligible to invest in this scheme

(c) Subscribers will get an exemption in direct taxes

(d) Minimum deposit is 500 grams of gold

(e) Subscribers need not disclose the source of money / gold

17. The term ‘fiscal crisis’ in India currently refers primarily to (Teachers’ Exam, 1991)

(a) Increase in public debt

(b) Phenomenal increase in external indebtedness

(c) Increase in non-developmental government expenditure

(d) Recurring deficit on current account in the government budget

18. According to the Union – Budget for 2001-02, the fiscal deficit has been pegged at

(a) 3.9% (b) 4.7%

(c) 5.8% (d) 6.7%

19. Which of the following taxes is/are levied by the Union and collected and appropriated by the states? (I.A.S. 1994)

(a) Stamp Duties (b) Taxes on Newspapers

(c) Estate Duty * (d) Passenger and goods tax

20. Zero Based Budgeting (ZBB) lays emphasis on (I.A.S. 1989)

1. Unlimited deficit financing

2. Preparing new budget right from the scratch

3. Preparing the budget neglecting the history of expenditure

(a) 1 & 2 (b) & 3

(c) 1 & 3 (d) 1, 2 & 3

21. Which of the following is an indirect tax?

(a) Corporation Tax (b) Excise Duty

(c) Wealth Tax (d) Capital Gains Tax

22. Deficit financing is spending (Stem;’ Exam, 92)

(a) By getting foreign aid (b) less than what is needed

(c) In excess of revenue (d) by borrowing from abroad

23. Main bearers of the burden of indirect tax are

(a) Manufacturers (b) Traders

(c) Consumers (d) Tax payers

24. A tax that takes away a higher proportion of one’s income as the income rises is termed as G- lax & Central Excise, 1990)

(a) Indirect tax (b) Progressive tax

(c) Regressive tax (d) Proportional tax

25. Which of the following schemes was intended to tap the black money?

(a) SBI Deposit Scheme

(b) UTI Bonds

(c) Long term Operations Scheme

(d) India Development Bonds

26. Which of the following taxes is not levied by any State government? (Bank P.O. 1990)

(a) Excise Duty (b) Professional Tax

(c) Income Tax (d) Sales Tax

(e) None of these

27. Customs duties, export duties, corporation taxes, taxes on capital value of assets, (excluding agricultural land of individuals and companies) are (Assistant Grade, 92)

(a) Taxes and duties levied by the Centre but collected by the states.

(b) Taxes and duties levied by the Centre but wholly appropriated by the states.

(c) Taxes levied and collected by the Union but shared with the states.

(d) Taxes and duties that accrue wholly to the Union Government.

28. Excise Duties are taxes on

(a) Sale of commodities

(b) Export of commodities

(c) Production of commodities

(d) Import of commodities

29. The minimum effect of Direct Taxes is on

(a) Food price (b) Consumer goods

(c) Capital goods (d) Income

30- MODVAT relates to rationalization of tax structure in (Stenographer’s Exam, 1991)

(a) Sales tax (b) Income tax

(c) Excise duty (d) Gift tax

31. Companies pay Corporation Tax on their (U.D.C. 1993)

(a) Investment (b) Production

(c) Sales proceeds (d) Incomes

32. What was the main purpose of introducing ‘Gold Bond Scheme’ in the 1992-93 Union Budget ? (R.B.I. Exam, 1993)

(a) To raise money for various Govt, schemes

(b) To mobilize the idle gold resources of people to supplement official reserves

(c) To discourage people to purchase gold from market at a higher cost

(d) To encourage NRIs to bring more gold in the country

33. Which of the following taxes was scrapped by the Union Budget of 1992?

(a) Corporation tax

(b) Customs duty on petrochemicals

(c) Wealth tax on production assets

(d) Excise duty on non-ferrous material

34. In a country like India, why should an increase of direct taxes be preferred to an increase in indirect taxes?

(a) Direct taxes serve the end of Socialism by taking away the excessive wealth from the rich.

(b) Direct taxes involve the well off sections of the society while indirect taxes affect the masses

(c) It is easy to realize direct taxes and is thus useful in a country troubled by tax evasion

(d) All of the above

35. The Union Budget for 1993-94 provided for

(a) Ready exchangeability of rupee

(b) Partial convertibility of rupee

(c) Full convertibility of rupee

(d) 100% convertibility at market determined rate

36. Temporary tax levied to obtain additional revenue is called

(a) Cess (b) Rate

(c) Fee (d) Surcharge

37. All revenues received, loans raised and money received in repayments of loans by the Union Government go into

(a) Contingency Fund of India (b) Consolidated Fund of India (c) Public Account of India (d) None of these

38. The system of Budget was introduced in India during the viceroyalty Of (Central Excise, 94)

(a) Canning (b) Dalhousie

(c) Ripon (d) Elgin

39. What is the best socio-economic justification for the levy of income tax?

(a) Reducing inequalities of incomes and wealth.

(b) Collecting revenue for projects to promote public welfare.

(c) Checking profiteering.

(d) Preventing circulation of black money.

40. Fiscal Policy is concerned with (S.S.C.2001)

(a) Public revenue (b) Public expenditure and debt

(c) Bank rate policy (d) both (a) and (b)

41. Companies pay Corporation Tax on their

(a) Production (b) Sales proceeds

(c) Income (d) Investment

42. Who among the following is the Chairman of the Central Board of Direct Taxes?

(a) Ravi Kant (b) Justice A.S. Anand

(c) A.S. Dulat (d) Amrita Patel

43. Which of the following interferes least with the allocation of resources in a market which is otherwise accepted as ideal?

(a) A progressive income tax (b) A regressive tax (c) A poll tax (d) A value added tax

44. Fiscal deficit in the Union Budget means

(a) The sum of monetized deficit and budgetary deficit.

(b) Net increase in Union Governments’ borrowings from the Reserve Bank of India.

(c) The sum of budgetary deficit and net increase in internal and external borrowings.

(d) The difference between current expenditure and current revenue.

45. Fiscal deficit in the Union Budget means (I-A.S. 1994)

(a) The difference between current expenditure and current revenue.

(b) Net increase in Union Government’s borrowings from the Reserve Bank of India.

(c) The sum of budgetary deficit and net increase in internal and external borrowings.

(d) The sum of monetized deficit and budgetary deficit.

46. The Indian budget includes

(a) Revised estimates for the current year

(b) Budget estimates for the following year

(c) Actual figures of the preceding year

(d) All of these

47. Private investment will be most likely to be increased as a result of a rise in

(a) The rate of interest

(b) Personal taxation

(c) Expected yield on new capital

(d) The price of shares

48. A regressive tax will tend to redistribute income more,

(a) Equally (b) Unequally

(c) Equitably (d) Inequitably

49. of the various ways of financing governments ‘investment expenditure, the least inflationary is. (P.C.S. 1994)

(a) Foreign aid (b) Deficit financing

(c) Taxation (d) Public borrowing

50. The long term fiscal policy proposes to maintain the stability of.

(a) Direct tax rates

(b) Indirect tax rates

(c) Ratio of tax revenue to national income

(d) Ratio of direct tax-revenue to revenue from indirect taxes.

ANSWERS

1

2.

(b)

(c)

3. (a)

4(d)

5. (c)

6. (a)

7.(d)

8.

(d)

9. (c)

10. (a)

12.

(b)

13. (c)

14. (a)

15. (c)

16. (c)

17. (b)

18.

(b)

19. (a)

20.(b)

22.

(c)

23. (c)

24.(b)

25.(d)

26. (e)

27.(d)

28.

(c)

29.(d)

30. (c)

32.

(b)

33. (c)

34. (a)

35. (c)

36. (d)

37. (b)

38.

(a)

39. (a)

40.(d)

42.

(a)

43. (c)

44. (c)

45. (c)

46. (d)

47. (c)

48.

(b)

49. (c)

50. (a)

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