Public finance - MCQs with answers

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

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ANSWER: a. Corporation tax

Union taxes are given in the list of 7th schedule in the constitution.



2. Which of the following is not a union tax?

a. Taxes on railway freights and fares
b. Stamp duties on financial documents
c. Tolls
d. A and b only

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ANSWER: 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



3. Consider the following statements and identify the right ones.

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

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ANSWER: b. ii only

Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.



4. The tax levied by the union government on income of individuals is known as

a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax

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ANSWER: 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.



5. The tax on net income of companies is

a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax

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ANSWER: d. Corporation tax

The tax on net income of companies is corporate tax. Tax rates are uniform for all categories of companies.



6. Consider the following statements and identify the right ones.

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

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ANSWER: b. ii only

Wealth tax is collected from unproductive assets only. Estate duty was abolished in 1985.



7. Which of the following taxes is/are withdrawn or abolished?

a. Interest tax
b. Estate duty
c. Gift tax
d. All the above

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ANSWER: d. All the above

Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.



8. The most important source of revenue to the states is

a. Sales tax
b. Service tax
c. Excise duty
d. None of the above

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ANSWER: a. Sales tax

Sales tax is the tax on sale of goods and is influenced by the value added tax system.



9. The tax levied on the interstate trade of goods is

a. Sales tax
b. Excise tax
c. Service tax
d. Central sales tax

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ANSWER: d. Central sales tax

The tax levied on the interstate trade of goods is the central sales tax.



10. Consider the following statements and identify the right ones.

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

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ANSWER: b. ii only

The 14th finance commission was appointed in 2013. It is headed by Y V Reddy.



11. The difference between revenue expenditure and revenue receipts is

a. Revenue deficit
b. Fiscal deficit
c. Budget deficit
d. Primary deficit

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ANSWER: a. Revenue deficit

Revenue deficit= revenue expenditure –revenue receipts



12. The difference between revenue deficit and grants for creation of capital assets is called

a. Fiscal deficit
b. Budget deficit
c. Effective revenue deficit
d. Primary deficit

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ANSWER: c. Effective revenue deficit

Effective revenue deficit= revenue deficit-grants for creation of capital assets.



13. The difference between total expenditure and total receipts is

a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit

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ANSWER: b. Budget deficit

Budget deficit= total expenditure-total receipts



14. The difference between total expenditure and total receipts except loans and other liabilities is called

a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit

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ANSWER: a. Fiscal deficit

Fiscal deficit= total expenditure-total receipts except loans and other liabilities.



15. The difference between fiscal deficit and interest payment during the year is called

a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit

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ANSWER: c. Primary deficit

Primary deficit= fiscal deficit-interest payments.


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    Discussion

  • RE: Public finance - MCQs with answers -Aman tiwari (07/24/19)
  • Give more mcqs
  • RE: Public finance - MCQs with answers -Chandar (08/25/17)
  • Q2 is in the negative that is not in central list but answer is given for central list
  • RE: Public finance - MCQs with answers -Anindita Basak (03/12/17)
  • Very nice questions for practice. This website is my favourite.
  • RE: Public finance - MCQs with answers -tapash chakraborty (09/20/16)
  • Sir,
    It is very nice post . I want more MCQ for departmental examination on chapter like Public debt,Public expenditure Public budget,balanced budget, fiscal policy, federal finance etc.
    Yours faithfully
    tapash chakraborty