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Tax System in India GK Quiz for Students
Which of the following represents a capital inflow in the government’s budget?
a) Selling government bonds
b) Earnings from public sector enterprises
c) Taxes collected from citizens
d) Grants received from foreign nations
Option a – Selling government bonds
How is a budget deficit defined?
a) When government revenue surpasses expenditure
b) Funds allocated specifically for Defence
c) Money earmarked for Social welfare programs
d) When government spending exceeds revenue
Option d – When government spending exceeds revenue
Which of the following qualifies as a non-borrowed capital receipt in the government budget?
a) Sale of government-owned land
b) Loans taken from international financial institutions
c) Interest paid on government-issued bonds
d) Tax revenue collected from citizens
Option a – Sale of government-owned land
What does a balanced budget imply?
a) Government spending does not match revenue
b) Government spending equals revenue
c) Government spending exceeds revenue
d) Government spending is less than revenue
Option b – Government spending equals revenue
Which of the following is an aim of the government budget?
a) Promote GDP growth
b) Reallocate resources effectively
c) Encourage balanced regional development
d) All of the above
Option d – All of the above
Which of these is not considered part of the government’s non-plan revenue expenditure?
a) Employee salaries and pensions
b) Subsidies
c) Defence services
d) Central grants to states and union territories
Option d – Central grants to states and union territories
Select the correct statement(s) about a budgetary deficit: i. The deficit functions as a flow that adds to total debt ii. The deficit acts as a stock independent of debt iii. The deficit places a burden on future generations
a) Only i
b) Only i and ii
c) Only ii
d) Only i and iii
Option d – Only i and iii
What is the full form of CBIC?
a) Central Bureau of Investigation and Committee
b) Central Board on Issues Related to Caste
c) Central Board of Information and Communication
d) Central Board of Indirect Taxes and Customs
Option d – Central Board of Indirect Taxes and Customs
Which is a function of the government budget?
a) Managing Money supply
b) Ensuring strict budgetary balance
c) Redistributing Income and wealth
d) Fixing prices
Option c – Redistributing Income and wealth
Which of the following is excluded from the ‘Operating Surplus’?
a) Rent
b) Profit
c) Interest
d) Cash wages
Option d – Cash wages
Match the following correctly: i. Pension for retired government employees – Revenue Receipt ii. Purchase of Railway machinery – Capital Expenditure
a) Both i and ii
b) Only i
c) Only ii
d) Neither i nor ii
Option c – Only ii
In which year did the Government of India first incorporate gender considerations in budget allocations?
a) 2004-05
b) 2005-06
c) 2006-07
d) 2007-08
Option b – 2005-06
Revenue expenditure minus revenue receipts is termed as:
a) Budget deficit
b) Revenue deficit
c) Always positive
d) Always negative
Option b – Revenue deficit
When was India’s first sovereign wealth fund, the National Investment and Infrastructure Fund (NIIF), introduced?
a) 2015-16
b) 2017-18
c) 2019-20
d) 2021-22
Option a – 2015-16
In the government budget, how are expenditures and receipts presented?
a) Actual expenditure; estimated receipts
b) Estimated expenditure; actual receipts
c) Estimated expenditure; estimated receipts
d) Actual expenditure; actual receipts
Option c – Estimated expenditure; estimated receipts
Which of the following is not a type of factor payment?
a) Interest
b) Wages
c) Rent
d) Pension
Option d – Pension
The SET of all goods bundles a consumer can purchase with their Income at prevailing prices is called:
a) Budget constraint
b) Budget SET
c) Budget line
d) Budget anomaly
Option b – Budget SET
Gross primary deficit is calculated as the difference between:
a) Revenue deficit and interest receipts
b) Gross fiscal deficit and interest receipts
c) Revenue deficit and interest payments
d) Gross fiscal deficit and NET interest liabilities
Option d – Gross fiscal deficit and NET interest liabilities
Which Indian budget first included a statement highlighting gender-sensitive allocations?
a) 2001-02
b) 2005-06
c) 2008-09
d) 2010-11
Option b – 2005-06
Which government budget function deals with Income redistribution?
a) Allocation function
b) Redistribution function
c) Neither I nor II
d) Only II
Option d – Only II
If a Bank’s total assets exceed its liabilities, it is recorded as:
a) Assets
b) Reserves
c) Liabilities
d) NET worth
Option d – NET worth
Which of the following is an example of a capital inflow?
a) Sale of government assets
b) Grants-in-aid from other governments
c) Interest earned on government bonds
d) Income taxes
Option a – Sale of government assets
In which scenario does the government operate a deficit budget?
a) When both revenue and expenditure are zero
b) When government expenditure exceeds revenue
c) When expenditure equals revenue
d) When revenue exceeds expenditure
Option b – When government expenditure exceeds revenue
When the tax rate increases with Income, this type of tax system is known as:
a) Progressive
b) Regressive
c) Proportional
d) Digressive
Option a – Progressive
What are the key goals of fiscal policy? 1. Stimulate economic growth 2. Manage inflation
a) Only 1
b) Only 2
c) Both 1 and 2
d) Neither 1 nor 2
Option c – Both 1 and 2
How do proportional taxes affect the Economy?
a) Increase the autonomous expenditure multiplier
b) Increase the induced expenditure multiplier
c) Decrease the autonomous expenditure multiplier
d) Raise the marginal propensity to consume
Option c – Decrease the autonomous expenditure multiplier
Non-tax revenue in the government budget is classified as:
a) Revenue Expenditure
b) Revenue Receipts
c) Capital Expenditure
d) Capital Receipts
Option b – Revenue Receipts
Which tax serves as an automatic stabilizer in the Economy?
a) Professional tax
b) Wealth tax
c) Capital gains tax
d) Proportional Income Tax
Option d – Proportional Income Tax
Taxes applied to domestically produced goods are called:
a) Custom duties
b) Anti-dumping duties
c) Excise taxes
d) Wealth taxes
Option c – Excise taxes
Which taxes are often referred to as “paper taxes”? i. Gift tax
ii. Wealth tax
a) Both i and ii
b) Only i
c) Only ii
d) Neither i nor ii
Option a – Both i and ii
When was the Direct Tax Code Bill introduced in India’s Parliament?
a) 2005
b) 2010
c) 2015
d) 2020
Option b – 2010
When government revenue exceeds expenditure, the budget is considered:
a) Surplus
b) Deficit
c) Economic spread
d) Balanced
Option a – Surplus
Which of these goods are exempted from GST?
a) Hand sanitizers
b) Pens
c) Alcohol for human consumption
d) Ventilators
Option c – Alcohol for human consumption
Taxes levied on imported or exported goods are called:
a) Excise tax
b) Corporation tax
c) Capital gains tax
d) Customs duty
Option d – Customs duty
A tax system that collects more from high-Income individuals than from low-Income ones is called:
a) Regressive tax
b) Proportional tax
c) Progressive tax
d) Payroll tax
Option c – Progressive tax
Arrange the following taxes in the correct order of introduction: i. Land revenue ii. Sales tax iii. MODVAT iv. Service tax
a) IV, I, V, II
b) III, I, II, IV
c) V, II, I, III
d) I, II, III, IV
Option d – I, II, III, IV
Which is an example of non-tax revenue for the government?
a) Value-added tax
b) Personal Income Tax
c) Corporate Income Tax
d) Fees and fines
Option d – Fees and fines
Section 56(2)(vii b) of the Income Tax Act deals with:
a) Normal Investments
b) Angel Fund
c) Normal Taxing
d) Angel Tax
Option d – Angel Tax
According to David Ricardo, in situations of high deficits, taxation and borrowing are considered:
a) Prudent ways to finance spending
b) Differentiated methods
c) Subsidized approaches
d) Equivalent methods
Option d – Equivalent methods
Which of the following represents a source of tax revenue?
a) Profit
b) Customs
c) Grants
d) Penalties
Option b – Customs
In which tax does the marginal rate exceed the average rate?
a) Regressive
b) Proportional
c) Digressive
d) Progressive
Option d – Progressive
The Service Tax, applied to services like telecommunication, stockbrokers, Health clubs, and salons, was first introduced in:
a) 1992-93
b) 1991-92
c) 1993-94
d) 1994-95
Option d – 1994-95
If government revenue expenditure is higher than revenue receipts, it results in:
a) Capital Deficit
b) Revenue Deficit
c) Fiscal Deficit
d) Budgetary Deficit
Option b – Revenue Deficit
The Goods and Services Tax (Compensation to States) Bill was passed in which year?
a) 2002
b) 2014
c) 2017
d) 2007
Option c – 2017
Which tax is commonly called a “paper tax”?
a) Corporation tax
b) Gift tax
c) Excise tax
d) Customs duty
Option b – Gift tax
What is the main reason for introducing GST?
a) To simplify the taxation system
b) To reduce all consumption
c) To make the tax system more complex
d) To eliminate all indirect taxes
Option a – To simplify the taxation system
What is the primary purpose of customs duty in international trade?
a) To allow unrestricted imports
b) To protect domestic industries by taxing imports
c) To standardize products internationally
d) To regulate exports
Option b – To protect domestic industries by taxing imports
Regarding the expenditures of a company or organization, which statement(s) is/are accurate? 1. Purchasing new Technology is categorized as capital expenditure. 2. Debt financing counts as capital expenditure, whereas equity financing is considered revenue expenditure.
a) Only 1
b) Only 2
c) Neither 1 nor 2
d) Both 1 and 2
Option a – Only 1
The Population of which year was first considered in the formula for distributing Union tax revenue to the States?
a) Thirteenth finance Commission
b) Fourteenth finance Commission
c) Fifteenth finance Commission
d) Twelfth finance Commission
Option b – Fourteenth finance Commission
Which of the following items form part of the Government of India’s capital receipts? 1. NET market borrowings 2. Interest income 3. Small savings 4. Proceeds from disinvestment
a) 1 and 3 only
b) 2 and 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
Option c – 1, 3 and 4 only
What is the term for the increase in private investment that results from a rise in government spending?
a) Deficit financing
b) Crowding in
c) Crowding out
d) Pumping out
Option b – Crowding in
Who originally introduced the idea of deficit financing?
a) Alfred Marshall
b) Adam Smith
c) Milton Friedman
d) John Maynard Keynes
Option d – John Maynard Keynes
Which of the following is excluded from the scope of GST?
a) Medical grade oxygen
b) Cosmetics
c) Jewellery
d) Petrol
Option d – Petrol
What is the term for the decline in private investment caused by government deficit spending?
a) Crowding out
b) Crowding in
c) Pump priming
d) Dumping
Option a – Crowding out
Which type of expenditure is deducted from Fiscal Deficit to determine the Primary Deficit?
a) Defence expenditure
b) Subsidy expenditure
c) Interest payments
d) Pension payments
Option c – Interest payments
Which of the following statements about GST is inaccurate?
a) Constitutional Amendment 115 excluded Alcohol for human consumption and five petroleum products from GST.
b) Amendment 122 excluded only Alcohol for human consumption from GST.
c) Precious Metals are levied a 1% GST rate.
d) Uncut diamonds are taxed at 0.25% under GST.
Option c – Precious Metals are levied a 1% GST rate.
Which Central Government taxes on petroleum products are not divisible with the States? 1. Basic Excise Duty 2. Additional Excise Duty 3. Special Additional Excise Duty
a) 1, 2 and 3
b) 1 and 2 only
c) 2 and 3 only
d) 3 only
Option c – 2 and 3 only
Which tax is not part of the Central Pool shared with States according to the finance Commission?
a) Corporate Profit Tax
b) Personal Income Tax
c) Excise Duties
d) Surcharge and Cess
Option d – Surcharge and Cess
Which item constitutes the largest share of revenue expenditure for the Union Government of India?
a) Salaries
b) Interest payments
c) Road Transport and highways
d) Defence services
Option b – Interest payments
Why are wealth and gift taxes referred to as “paper taxes” in India?
a) The government is not required to collect them mandatorily
b) Only government officials and legislators are required to pay them
c) They produce relatively small revenue compared to other taxes
d) Taxpayers submit their returns on paper forms only
Option c – They produce relatively small revenue compared to other taxes
What are the start and end dates of the financial year in India?
a) 1st April to 31st March
b) 31st July to 30th June
c) 30th June to 31st May
d) 1st May to 31st May
Option a – 1st April to 31st March
In economic terms, a deficit is usually regarded as a ______ concept.
a) Flow
b) Stock
c) Surplus
d) Margin
Option a – Flow
When does the Primary Deficit become zero? ( Tax System in India GK Quiz )
a) Fiscal Deficit itself is zero
b) Interest payments equal the Fiscal Deficit
c) Neither I nor II
d) Only II
Option d – Only II
What is the main focus of the stabilisation function of the government budget? ( Tax System in India GK Quiz )
a) Allocation of resources among sectors
b) Policies to adjust overall demand in the Economy
c) Providing public goods and services
d) Ensuring equitable income distribution
Option b – Policies to adjust overall demand in the Economy
Which of the following statements about government budgets is INCORRECT? ( Tax System in India GK Quiz )
a) Revenue receipts do not require repayment in the future
b) Profits earned by Indian Railways count as non-tax revenue
c) Fees and fines are categorized as capital receipts
d) Loan recoveries are treated as capital receipts
Option c – Fees and fines are categorized as capital receipts
What is the primary aim of the Fiscal Responsibility and Budget Management Act (FRBMA), 2003? ( Tax System in India GK Quiz )
a) Reduce fiscal deficit
b) Cut down on subsidies
c) Increase excise duties
d) Promote exports
Option a – Reduce fiscal deficit
If a government shows a primary deficit of Rs. 6,900 crore and interest payments are Rs. 400 crore, the Fiscal Deficit will be: ( Tax System in India GK Quiz )
a) Rs. 6,500 crore
b) Rs. 6,900 crore
c) Rs. 7,100 crore
d) Rs. 7,300 crore
Option d – Rs. 7,300 crore
Recoveries from loans and advances, along with borrowings, fall under which category? ( Tax System in India GK Quiz )
a) Non-tax receipts
b) Capital receipts
c) Revenue receipts
d) Tax receipts
Option b – Capital receipts
What distinguishes aggregates at market price from factor cost?
a) Depreciation
b) Indirect taxes
c) NET indirect taxes
d) Direct taxes
Option c – NET indirect taxes
The excess of total government expenditure over total revenue (excluding borrowings) in a fiscal year is called: ( Tax System in India GK Quiz )
a) Income deficit
b) Fiscal deficit
c) Structural deficit
d) Gross primary deficit
Option b – Fiscal deficit
Government spending on Health, including facilities, education, and fixed assets, is classified as: ( Tax System in India GK Quiz )
a) Revenue expenditure
b) Non-plan revenue expenditure
c) Capital expenditure
d) Plan expenditure
Option c – Capital expenditure
Key objectives of the government budgetary process in India include: I. Stabilising overall demand in the Economy II. Redistributing income according to constitutional provisions III. Launching schemes to appeal to citizens democratically IV. Allocating funds to different economic sectors
a) Only I, II and III
b) Only I and II
c) Only I, II and IV
d) All I, II, III and IV
Option c – Only I, II and IV
Which of the following is NOT included as a capital receipt? ( Tax System in India GK Quiz )
a) Borrowing
b) Loan recovery
c) Disinvestment proceeds
d) Tax revenue
Option d – Tax revenue
How is a revenue deficit defined in the government budget? ( Tax System in India GK Quiz )
a) Expenditure exceeds revenue, excluding interest payments
b) Revenue exceeds expenditure, excluding interest payments
c) Revenue exceeds expenditure, including interest payments
d) Expenditure exceeds revenue, including interest payments
Option d – Expenditure exceeds revenue, including interest payments
Which country first adopted zero-based budgeting? ( Tax System in India GK Quiz )
a) India
b) Germany
c) United States
d) United Kingdom
Option c – United States
What is the main purpose of zero-based budgeting? ( Tax System in India GK Quiz )
a) Linking inputs to outputs
b) Reviewing the objectives behind fund allocation
c) Re-assessing all activities each year during budget preparation
d) Evaluating the effectiveness of each program relative to its output
Option c – Re-assessing all activities each year during budget preparation
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