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Tax Structure in India

Description: Tax Structure in India
Number of Questions: 15
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Tags: Tax Structure in India Tax Structure Banking and Money
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The following taxes are levied, collected and retained by the centre. (a) Customs duty (b) Tax on railway fares and freights (c) Corporation tax (d) Tax on capital (other than agricultural land) Which of the above is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Only (a) and (c)

  4. Only (d)

Show answer
Correct Option: B
Explanation:

Customs duty corporation tax and tax on capital (other than agricultural land) are not only levied and collected by the centre but also retained whereas tax on railway fares and freights is levied and collected by the centre but distributed among states.

High rates of income tax encourage tax evasion and burgeoning black money. Which of the following is incorrect? (a) Income tax is progressive in India. (b) There has been spurt in tax rates. (c) People resort to under declaration of income.

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. None of these

Show answer
Correct Option: B
Explanation:

Income tax rate structure is progressive in India, i.e. rate of tax is not uniform. With a view to avoid tax, people tend to suppress their income. That is why there has been reduction in tax rates during the last two decades.

The following taxes are levied and collected by the Union but entire proceeds are assigned to the states: (a) Taxes on railway fright and fares (b) Excise duty (c) Taxes on sale and purchase of newspapers and ads therein (d) Taxes on transactions in stock exchange

Which of the above is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Both (b) and (c)

  4. Only (d)

Show answer
Correct Option: B
Explanation:

Excise duties are levied by the Union government but are collected and appropriated by the states.

Service tax, introduced in 1994, was initially imposed on three basic services. (a) Banking drafts (b) General Insurance (c) Telephone

Which of the above is incorrect?

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. None of the above

Show answer
Correct Option: A
Explanation:

Service tax was levied at the start on three basic services viz. general insurance, telephone and stock broking.

Consider the following statements regarding stamp duty: (a) It affords legality to the document, i.e. it is enforceable in a court of law. (b) It is collected by the state government. (c) It is uniform in all the states of the country.

With which of the above you do not agree?

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. None of the above

Show answer
Correct Option: C
Explanation:

Stamp duty comes within the jurisdiction of the state and hence, it varies from state to state.

Implementing GST will be an impetus to growth. Which of the following statements does not support this view? (a) It will lower the tax rate. (b) It will broaden the tax base. (c) It will reduce compliance cost. (d) It will boost exports. (e) It will cause unemployment.

  1. Both (a) and (b)

  2. (c), (d) and (e)

  3. Only (d)

  4. Only (e)

Show answer
Correct Option: D
Explanation:

As implementing GST will promote exports, facilitate investment decisions and will foster a common market across the country. These will be conducive to growth which will generate employment.

Levying of the following taxes fall within the state jurisdiction. (a) Professional tax (b) Stamp duty (Property transfer) (c) Service tax (d) Land revenue

Which of the above is/are incorrect?

  1. Both (a) and (b)

  2. Only (d)

  3. Only (c)

  4. Both (c) and (d)

Show answer
Correct Option: C
Explanation:

Imposition of service tax rests with the Union.

Raja Chelliah Committee submitted its recommendations on (a) land reforms (b) tax reforms (c) banking reforms

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. Both (a) and (b)

Show answer
Correct Option: B
Explanation:

In 1991, a special committee was set up to studythe tax structure in the country headed by Raja Chelliah. The government implemented a large number of recommendations.

Consider the following statements: (a) PAN (Permanent Account Number) is an eleven-character alphanumeric number. (b) STT refers to Service Transaction Tax.

Which of the given statements is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Both (a) and (b)

  4. Neither (a) or (b)

Show answer
Correct Option: C
Explanation:

PAN - Permanent Account Number is a ten-character alphanumeric number increasingly being recognised as an identity proof and is a mandatory document for key transaction viz purchase of property, bank account opening, share transaction, etc. (ii) STT stands for Securities Transaction Tax. Equity shares and their derivatives attract STT. Service Tax, surcharge and education less are not leviable on STT.

To widen the tax net under capital gains, capital asset is being redefined so as to include:

(a) sculptures/figurines (b) paintings (c) archaeological collections (d) literary books/scriptures

Which of the above do you not agree with?

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. Only (d)

Show answer
Correct Option: D
Explanation:

Only art objects are being brought within the purview of the capital assets. Literary books do not fall in this category.

Which of the following is the correct expansion of TAN?

  1. Transaction Accounting Number

  2. Tax Deduction and Collection Account Number

  3. Tax Account Number

  4. None of these

Show answer
Correct Option: B
Explanation:

All those who are responsible for tax deduction at source or tax collection at source have to apply for and obtain a tax deduction and collection account number, a 10 character alpha-numeric number, which is required to be quoted on transactions involving TDS/TCS.

The following assets attract wealth tax. Examine the undernoted: (a) Guest houses (b) Commercial buildings (c) Agriculture land (d) Jewellery (e) Aircrafts and yachts

Which of the above is/are incorrect?

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. Both (d) and (e)

Show answer
Correct Option: C
Explanation:

Agricultural land is outside the purview of wealth tax.

Taxing power in India is a two-tier structure. Consider the following:

(a) Levies on pre-production stage with centre (b) Levies on post-production stage with the states (c) Levies on international imports with the centre (d) Levies on exports with the states

Which of the above statements is/are incorrect?

  1. Both (a) and (c)

  2. Both (b) and (d)

  3. Only (c)

  4. Only (d)

Show answer
Correct Option: D
Explanation:

Taxing pattern in India is a two-layer structure. Levies of excise duties are with the centre whereas VAT is levied at the state level.

Which of the following is/are not exempted from excise duties of the centre?

(a) Water treatment plants (b) Medium industries (c) SSI (d) Cottage industries

  1. (a) and (d)

  2. Only (b)

  3. Only (c)

  4. (b) and (d)

Show answer
Correct Option: B
Explanation:

Water treatment and food processing are exempted. Likewise, certain establishments such as those generating employment viz. SSI, cottage and tiny industries are exempted from excise duty.

Which of the following taxes is not levied by local bodies?

  1. Octroi

  2. Water and sewage

  3. Entertainment

  4. Property tax

Show answer
Correct Option: C
Explanation:

The jurisdiction of levying entertainment tax lies with the concerned state government.

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