Federal Finance System in India - General Knowledge Multiple Choice Questions and Answers | Page-7

Answer: Option [D]

‘Quota’ is Limit on the quantity of imports. An import quota is a type of trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time.

Answer: Option [C]

The ‘Canons of Taxation’ were propounded by Adam Smith. The canons of taxation were first presented by Adam Smith in his famous book “The Wealth of Nations.” These canons of taxation define numerous rules and principles upon which a good taxation system should be built.

Answer: Option [D]

‘PROTECTION’ means All of the above.

Answer: Option [A]

Agricultural income tax is a source of revenue to State Government. The state governments are vested with the power to tax agricultural income, land and buildings, sale of goods (other than inter-state), and excise on alcohol. Local authorities such as Panchayat and Municipality also have power to levy some minor taxes.

Answer: Option [A]

Beyond a certain point deficit financing will certainly lead to Inflation. Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.

Answer: Option [B]

The tax levied on gross sales revenue from business transactions is called Turnover Tax. A turnover tax is similar to a sales tax or a VAT, with the difference that it taxes intermediate and possibly capital goods. It is charged on gross sales revenue from business transactions. Unlike a sales tax, which is levied only on gross value at the point of retail sale, a turnover tax is levied on all intermediate transactions between businesses leading to and including the final sale.

Answer: Option [B]

The duties levied on alcoholic liquors, narcotic drugs and opium come under State Excise Duty. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty.

Answer: Option [C]

Multinational Corporation is also called Trans-national Corporation. Multinational corporation (MNC), also called transnational corporation, any corporation that is registered and operates in more than one country at a time. Generally the corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in other countries.

Answer: Option [B]

Corporation tax is a tax imposed on the net incomes of the companies. Companies, both private and public which are registered in India under the Companies Act 1956, are liable to pay corporate tax.

Answer: Option [C]

Parallel economy emerges due to Tax Evasion. Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. It involves taxpayers intentionally manipulating the true state of their affairs to the tax authorities to reduce their tax liability.