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Public Finance and Fiscal Policy 01
Question
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of 15
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Q1. Which of the following is an indirect tax?
A.
Corporation tax
B.
Capital gains tax
C.
Excise duty
D.
Income tax
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
Excise duty is a tax on the production of goods, which is passed on to the final consumer.
Q2. With reference to the Finance Commission of India, which is correct?
A.
encourages foreign capital
B.
facilitates PSU distribution
C.
ensures transparency
D.
None of the above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
The Finance Commission's primary job is to recommend the distribution of tax revenues between the Union and States.
Q3. Principle of taxation to achieve optimality based on?
A.
Total benefit
B.
Total benefit received
C.
Average benefit received
D.
Ability to pay for the benefit
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
The 'Ability to Pay' principle suggests that taxes should be levied according to an individual's financial capacity.
Q4. Which of the following is the largest source of Tax Revenue for the Central Govt?
A.
Income Tax
B.
Corporation Tax
C.
Customs Duty
D.
Excise Duty
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
Historically, Corporation Tax has been the largest contributor to the government's direct tax revenue.
Q5. Of the various ways of financing Government’s investment expenditure, the least inflationary is
A.
foreign aid
B.
deficit financing
C.
taxation
D.
public borrowing
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
Taxation is least inflationary as it reduces the disposable income of the public unlike deficit financing which increases money supply.
Q6. Chairman of the Committee on Pricing and Taxation of Petroleum products?
A.
Raja J Chelliah
B.
C Rangarajan
C.
Y V Reddy
D.
Abid Hussian
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
The C. Rangarajan Committee (2006) was tasked with examining the pricing and taxation of petroleum products.
Q7. Which committee was constituted for reforms in tax structure?
A.
Narsimham Committee
B.
Chelliaha Committee
C.
Gadgil Committee
D.
Kelker Committee
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
The Kelkar Task Force (2002) recommended major reforms to both direct and indirect taxes.
Q8. Temporary tax levied to obtain additional revenue is called
A.
cess
B.
rate
C.
fee
D.
surcharge
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
A surcharge is an additional tax levied on the existing tax liability usually for a specific period.
Q9. Non Tax revenues can be increased by improving the working of the
A.
State Road Transport
B.
electricity boards
C.
commercial irrigation projects
D.
All of the above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
User charges and profits from these public utilities contribute significantly to non-tax revenue.
Q10. The Goods and Services tax (GST) covers taxes like
A.
Trade/Sale Tax
B.
service tax
C.
service excise
D.
excise service VAT
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
GST subsumed multiple indirect taxes including Central Excise, Service Tax
Q11. Fiscal Deficit means-
A.
Public Expenditure-Debts
B.
Public Capital Expenditure-Surplus
C.
Govt. Expenditure-Revenue receipts
D.
Public Expenditure-Tax and non-tax revenue receipts
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Fiscal deficit is the difference between the government's total expenditure and its total non-debt receipts (revenue + non-debt capital).
Q12. Which state was the first to ratify GST Constitution Amendment Bill?
A.
Assam
B.
Haryana
C.
Rajasthan
D.
Gujarat
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Assam was the first state to pass the GST Constitution Amendment Bill in August 2016.
Q13. Which committee recommended abolition of tax rebates under Section 88?
A.
Chelliah Committee
B.
Kelkar Committee
C.
Shome Committee
D.
None of these
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
The Kelkar Task Force (2002) recommended the removal of many exemptions to simplify the tax structure.
Q14. The Finance Commission is appointed after every
A.
2 years
B.
3 years
C.
4 years
D.
5 years
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Under Article 280, the President of India constitutes the Finance Commission every five years.
Q15. Rising prices lead to all but one of the following
A.
promotional inequalities
B.
generation of black money
C.
adverse effect on BOP
D.
adverse effect on speculation
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Inflation generally encourages speculation rather than having an adverse effect on it.
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