Public finance - MCQs with answers
1. Which of the following is a union tax?a. Corporation tax
b. Taxes on agricultural income
c. Capitation taxes
d. Land revenues
View Answer / Hide AnswerANSWER: a. Corporation tax
Union taxes are given in the list of 7th schedule in the constitution.
a. Taxes on railway freights and fares
b. Stamp duties on financial documents
c. Tolls
d. A and b only
View Answer / Hide AnswerANSWER: d. A and b only
Taxes on railway freights and fares and Stamp duties on financial documents are union taxes while tolls are state tax
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.
a. i only
b. ii only
c. both
d. none
View Answer / Hide AnswerANSWER: b. ii only
Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.
a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax
View Answer / Hide AnswerANSWER: a. Personal income tax
It is based on the principle of ability to pay. The tax levied by the union government on income of individuals is known as income tax.
a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax
View Answer / Hide AnswerANSWER: d. Corporation tax
The tax on net income of companies is corporate tax. Tax rates are uniform for all categories of companies.
i. Wealth tax is collected from productive as well as unproductive assets
ii. Estate duty was a type of inheritance tax of large estates
a. i only
b. ii only
c. both
d. none
View Answer / Hide AnswerANSWER: b. ii only
Wealth tax is collected from unproductive assets only. Estate duty was abolished in 1985.
a. Interest tax
b. Estate duty
c. Gift tax
d. All the above
View Answer / Hide AnswerANSWER: d. All the above
Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.
a. Sales tax
b. Service tax
c. Excise duty
d. None of the above
View Answer / Hide AnswerANSWER: a. Sales tax
Sales tax is the tax on sale of goods and is influenced by the value added tax system.
a. Sales tax
b. Excise tax
c. Service tax
d. Central sales tax
View Answer / Hide AnswerANSWER: d. Central sales tax
The tax levied on the interstate trade of goods is the central sales tax.
i. The 14th finance commission is headed by C. Rangarajan
ii. The recommendations of the commission will come into effect from April, 1, 2015
a. i only
b. ii only
c. both
d. none
View Answer / Hide AnswerANSWER: b. ii only
The 14th finance commission was appointed in 2013. It is headed by Y V Reddy.
a. Revenue deficit
b. Fiscal deficit
c. Budget deficit
d. Primary deficit
View Answer / Hide AnswerANSWER: a. Revenue deficit
Revenue deficit= revenue expenditure –revenue receipts
a. Fiscal deficit
b. Budget deficit
c. Effective revenue deficit
d. Primary deficit
View Answer / Hide AnswerANSWER: c. Effective revenue deficit
Effective revenue deficit= revenue deficit-grants for creation of capital assets.
a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit
View Answer / Hide AnswerANSWER: b. Budget deficit
Budget deficit= total expenditure-total receipts
a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit
View Answer / Hide AnswerANSWER: a. Fiscal deficit
Fiscal deficit= total expenditure-total receipts except loans and other liabilities.
a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit
View Answer / Hide AnswerANSWER: c. Primary deficit
Primary deficit= fiscal deficit-interest payments.
