Multiple Choice Questions and Answers on Public Finance

(1) Which of the following is a union tax?

[A] Corporation tax

[B] Taxes on agricultural income

[C] Capitation taxes

[D] Land revenues

Answer: Corporation tax

(2) 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

Answer: ii only

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(3) 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

Answer: Personal income tax

(4) Which from the following statement(s) is/are NOT true?

I. Projects have defined objectives

II. Programs have a larger scope than projects

III. The projects and programs in a portfolio must be directly related

[A] I only

[B] II only

[C] III only

[D] II and III only

Answer: III only

(5) The tax on net income of companies is

[A] Personal income tax

[B] Interest tax

[C] Wealth tax

[D] Corporation tax

Answer: Corporation tax

(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

Answer: ii only

(7) Which of the following taxes is/are withdrawn or abolished?

[A] Interest tax

[B] Estate duty

[C] Gift tax

[D] All the above

Answer: All the above

(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

Answer: Sales tax

(9) The tax levied on the interstate trade of goods is

[A] Sales tax

[B] Excise tax

[C] Service tax

[D] Central sales tax

Answer: 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

Answer: ii only

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