Which of the following taxes is such that which does not cause a rise in price?
(a) Import duty
(b) Income tax
(c) Octoroi
(d) Sales tax
Solution: (b)
The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body of individuals and association of persons) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. It does not lead to increase in price as it is dependent of income of individuals.
Excise duty on a commodity is payable with reference to its
(a) production
(b) production and sale
(c) production and transportations
(d) production, transportation, and sale
Solution: (a)
Excise duty is a type of tax charged on goods produced within the country. In India, an excise tax is levied on the manufacturer of goods when those goods leave the place of manufacturer. Formerly called the Central Excise duty, this tax is now known as the Central Value Added Tax (CENVAT)
What is Value Added Tax (VAT)?
(a) A simple, transparent, easy-to-pay tax imposed on consumers
(b) A new initiative was taken by the Government to increase the tax burden on high-income groups
(c) A single tax that replaces State taxes like surcharges, turnover tax, etc.
(d) A new tax to be imposed on the producers of capital goods
Solution: (c)
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties. Most of the Indian States have replaced Sales tax with Value Added Tax (VAT) from 1 April, 2005. VAT is imposed on goods only and not services and it has replaced sales tax.
The ‘Interest Rate Policy’ is a component of
(a) Fiscal Policy
(b) Monetary Policy
(c) Trade Policy
(d) Direct Control
Solution: (b)
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates. Monetary authorities in different nations have differing levels of control of economy-wide interest rates.
When a large number of investors in a country transfer investments elsewhere because of disturbed economic conditions, it is called
(a) Transfer of Capital
(b) Escape from Capital
(c) Outflow of Capital
(d) Flight of Capital
Solution: (d)
Flight of capital refers to the movement of money from one investment to another in search of greater stability or increased returns. Sometimes, it specifically refers to the movement of money from investments in one country to another in order to avoid country-specific risk (such as high inflation or political turmoil) or in search of higher returns. Capital flight is seen most commonly in massive foreign capital outflows from a specific country, often at times of currency instability.
An industrial exit policy means
(a) forcing foreign companies to leave India
(b) forcing business units to move out of congested localities
(c) allowing manufacturers to shift their line of products
(d) allowing business units to close down
Solution: (d)
The term ‘exit’ is the obverse of the term ‘entry’ into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve. The need for such a policy arises as a result of modernization, technology upgradation, restructuring as well as closure of industrial units. Such a policy will allow employers to shift workers from one unit to another and also retrench excess labor.
If the tax rate increases with a higher level of income, it shall be called
(a) Proportional tax
(b) Progressive tax
(c) Lump sum tax
(d) Regressive tax
Solution: (b)
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.” Progressive” describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
Which of the following is the classification of Industries on the basis of raw materials?
(a) Small Scale – Large scale
(b) Primary and Secondary
(c) Basic and Consumer
(d) Agro-based and Mineral based
Solution: (d)
Industries are classified on the bases of source of raw material. There are two types of industries agro based and mineral based industries. Agro based industries are the one that produce jute, cotton, silk, tea, coffee, rubber etc. Mineral based industries are iron and steel, cement, aluminum, machine tools, and petrochemicals producing industries
In India, disguised unemployment is generally observed in
(a) the Agricultural sector
(b) the Factory sector
(c) the Service sector
(d) All these sectors
Solution: (a)
As the word suggests, disguised unemployment refers to a situation when a person is apparently employed, but in effect unemployed. It is a phenomenon of concealed unemploy-ment, not visible to the open eyes. Here it is not possible to identify as to who are unemployed, as all “appear to be working.” Disguised unemployment is especially seen in the field of agriculture. Most of the people are observed to be engaged in agriculture; however, in reality a sufficient number of them are unemployed. Their contribution regarding production is negligible.
Which of the following taxes is not collected by the Central Government?
(a) Income tax
(b) Customs duty
(c) Professional tax
(d) Excise duty
Solution: (c)
A professional tax, also known as an occupation tax or a professional privilege tax, is a tax that a professional must pay to receive the right to practice a professional service. Many state and local governments collect professional tax, and a professional who has clients in more than one state may owe professional taxes in several states.
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