MCQs
Total Questions : 163
| Page 8 of 17 pages
Answer: Option A. -> Price elasticity of demand for it is high
Answer: (a)
The price elasticity of demand for goods also depends on the proportion of the income the buyers spend on the goods.
Therefore, if the sales tax on a commodity is raised, but the revenue earned through its sale decrease sharply, the price elasticity of demand for the commodity would be high.
Answer: (a)
The price elasticity of demand for goods also depends on the proportion of the income the buyers spend on the goods.
Therefore, if the sales tax on a commodity is raised, but the revenue earned through its sale decrease sharply, the price elasticity of demand for the commodity would be high.
Question 72. Consider the following statements regarding ‘Fiscal Consolidation’ policy:
Select the correct answer using the code given below:
- It is an effort by the government to bring down the fiscal deficit
- It is an effort to reduce public debt
- It is an effort to reduce the current account deficit
- It is an effort to raise revenues and bring down wasteful expenses
Select the correct answer using the code given below:
Answer: Option A. -> (i), (ii) & (iv) only
Answer: (a)
Fiscal Consolidation policy is an effort by the Government to bring down the fiscal deficit.
It is an effort to reduce public debt, raise revenues and bring down wasteful expenses.
Answer: (a)
Fiscal Consolidation policy is an effort by the Government to bring down the fiscal deficit.
It is an effort to reduce public debt, raise revenues and bring down wasteful expenses.
Question 73. Consider the following statements regarding "Tax Avoidance" and "General Anti Avoidance Rules (GAAR)":
Select the correct answer using the code given below:
- Tax avoidance is legal
- Tax avoidance is illegal
- GAAR targets business transactions that are entered into with the objective of avoiding tax
- GAAR target transactions entered into for tax evasion and tax avoidance both
Select the correct answer using the code given below:
Answer: Option C. -> (i) & (iii) only
Answer: (c)
The tax liability of a person can be reduced through Tax Planning, Tax avoidance and Tax Evasion. Although in common parlance these terms are used interchangeably, these terms are technically different from each other and should not be used interchangeably. Although the objective of all three is to reduce the taxes, the method adopted by them is different.
Tax Planning is the art of reducing the tax liability of a person by making use of the various provisions of law. The government in many cases provides various deductions and exemptions which can be used by a person to reduce his tax liability. Tax planning is 100% legal and all taxpayers are advised to make use of the same to reduce their tax burden.
Tax Avoidance basically means the use of the loopholes in the tax law to one's own advantage to reduce the tax burden.
Although tax avoidance is legal, it is not advisable as the taxpayer has defeated the intention of the lawmaker and used this to his own advantage. Although both tax planning and tax avoidance are legal ways to reduce tax, there is only a thin line of difference between tax planning and tax avoidance. In tax planning, a taxpayer is doing what the government wants him to do whereas, in tax avoidance, a taxpayer is doing something which the government did not expect the taxpayer to do.
Tax evasion involves breaking the law, not paying one's taxes where the law clearly states that they must be paid. Tax evasion is the method by which a person illegally reduces his tax burden by either deflating their income or inflating their expenses.
General Anti Avoidance Rules (GAAR) refer to the rules that target any transaction or business arrangement that is entered into with the objective of avoiding tax.
Tax avoidance is legal; but now, large scale revenue loss is occurring due to aggressive tax planning by corporate using avoidance opportunities. Governments in many countries are introducing anti-avoidance rules to check this revenue loss from excessive avoidance. GAAR has come into effect from 1st April 2017.
After the implementation of GAAR, the Income-tax Department will have powers to deny tax benefits if a transaction was carried out exclusively for the purpose of avoiding tax.
For example, if an entity is set up in Mauritius with the sole intention of claiming exemption from the capital gains tax, the tax authorities will have the right to deny the claim for the exemption provided under the India-Mauritius tax treaty.
Answer: (c)
The tax liability of a person can be reduced through Tax Planning, Tax avoidance and Tax Evasion. Although in common parlance these terms are used interchangeably, these terms are technically different from each other and should not be used interchangeably. Although the objective of all three is to reduce the taxes, the method adopted by them is different.
Tax Planning is the art of reducing the tax liability of a person by making use of the various provisions of law. The government in many cases provides various deductions and exemptions which can be used by a person to reduce his tax liability. Tax planning is 100% legal and all taxpayers are advised to make use of the same to reduce their tax burden.
Tax Avoidance basically means the use of the loopholes in the tax law to one's own advantage to reduce the tax burden.
Although tax avoidance is legal, it is not advisable as the taxpayer has defeated the intention of the lawmaker and used this to his own advantage. Although both tax planning and tax avoidance are legal ways to reduce tax, there is only a thin line of difference between tax planning and tax avoidance. In tax planning, a taxpayer is doing what the government wants him to do whereas, in tax avoidance, a taxpayer is doing something which the government did not expect the taxpayer to do.
Tax evasion involves breaking the law, not paying one's taxes where the law clearly states that they must be paid. Tax evasion is the method by which a person illegally reduces his tax burden by either deflating their income or inflating their expenses.
General Anti Avoidance Rules (GAAR) refer to the rules that target any transaction or business arrangement that is entered into with the objective of avoiding tax.
Tax avoidance is legal; but now, large scale revenue loss is occurring due to aggressive tax planning by corporate using avoidance opportunities. Governments in many countries are introducing anti-avoidance rules to check this revenue loss from excessive avoidance. GAAR has come into effect from 1st April 2017.
After the implementation of GAAR, the Income-tax Department will have powers to deny tax benefits if a transaction was carried out exclusively for the purpose of avoiding tax.
For example, if an entity is set up in Mauritius with the sole intention of claiming exemption from the capital gains tax, the tax authorities will have the right to deny the claim for the exemption provided under the India-Mauritius tax treaty.
Answer: Option A. -> Public Finance Division under department of Expenditure
Answer: (a)Public Finance (Central) Division under Department of Expenditure, Ministry of Finance in consultation with the Budget Division, Department of Economic Affairs, Ministry of Finance decides the outlay for Centrally Sponsored Schemes (CSS) and Central Sector Schemes.
Answer: (a)Public Finance (Central) Division under Department of Expenditure, Ministry of Finance in consultation with the Budget Division, Department of Economic Affairs, Ministry of Finance decides the outlay for Centrally Sponsored Schemes (CSS) and Central Sector Schemes.
Answer: Option D. -> Corporation Tax
Answer: (d)
Answer: (d)
Answer: Option C. -> 1994-95
Answer: (c)
Answer: (c)
Answer: Option A. -> the Finance Ministry
Answer: (a)The Department of Economic Affairs (DEA) under Ministry of Finance is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management.
Answer: (a)The Department of Economic Affairs (DEA) under Ministry of Finance is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management.
Answer: Option D. -> The Constitution of India
Answer: (d)
Answer: (d)
Answer: Option B. -> (i) & (iii) only
Answer: (b)
Money received in Public Account of India creates liability on Govt. of India and hence it’s a part of capital receipt/budget.
India Post Payment Bank is a PSU and expenditures done by Govt. to create a PSU (an asset) will come under capital budget/expenditure of Govt. of India. A PSU purchasing a capital equipment is not part of Govt. of India budget.
Answer: (b)
Money received in Public Account of India creates liability on Govt. of India and hence it’s a part of capital receipt/budget.
India Post Payment Bank is a PSU and expenditures done by Govt. to create a PSU (an asset) will come under capital budget/expenditure of Govt. of India. A PSU purchasing a capital equipment is not part of Govt. of India budget.
Answer: Option C. -> Stamp Duties
Answer: (c)
Answer: (c)
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