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6C) Taxation System in India (Prelims PYQs)

5C) Taxation System in India (Prelims PYQs)

2021 Prelims PYQs

1] Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India? [2021]

a) Diversion of resources to the purchase of real estate and investment in luxury housing
b) Investment in unproductive activities and purchase of precious stones, jewelley, gold, etc.
c) Large donations to political parties and growth of regionalism
d) Loss of revenue to the state exchequer due to tax evasion

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Ans: d) Loss of revenue to the state exchequer due to tax evasion

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2018 Prelims PYQs

1] With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non resident entities, which of the following statement is/are correct? [2018]

1. It is introduced as a part of Income Tax Act.
2. Non Resident entities that offer advertisement services in India can claim a tax credit in their home country under the “ Double Taxation Avoidance commission”
Select the correct answer using the code given below:

a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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Ans: d) Neither 1 nor 2

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2] Consider the following items: [2018]

1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspaper containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax)?

a) 1 only
b) 2 and 3 only
c) 1, 2 and 4 only
d) 1, 2, 3 and 4

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Ans: c) 1, 2 and 4 only

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2017 Prelims PYQs

1] What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? [2017]

1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.
3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
Select the correct answer using the code given below:

a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

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Ans: a) 1 only

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2] Consider the following statements: [2017]

1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct?

a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

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Ans: d) Neither 1 nor 2

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2016 Prelims PYQs

1] The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news in the context of: [2016]

a) Mining operation by multinational companies in resource-rich but backward areas
b) Curbing of the tax evasion by multinational companies
c) Exploitation of genetic resources of a country by multinational companies
d) Lack of consideration of environmental costs in the planning and implementation of developmental projects\

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Ans: b) Curbing of the tax evasion by multinational companies

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2014 Prelims PYQs

1] The sales tax you pay while purchasing a toothpaste is a: [2014]

a) Tax imposed by the Central Government
b) Tax imposed by the central Government but collected by the State Government.
c) Tax imposed by the State Government but collected by the Central Government.
d) Tax imposed and collected by the State Government. 

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Ans: d) Tax imposed and collected by the State Government. 

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2011 Prelims PYQs

1] Which one of the following is not a feature of “value added tax”? [2011]

a) It is multi-point destination-based system of taxation.
b) It is a tax levied on value addition at each stage of transaction in the production-distribution chain.
c) It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer.
d) It is basically a subject of the central government and the state governments are only a facilitator for its successful implementation.

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Ans: d) It is basically a subject of the central government and the state governments are only a facilitator for its successful implementation.

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2010-1995 Prelims PYQs

1] In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years? [2010]

a) Service tax                   
b) Personal income tax
c) Excise duty
d) Corporation tax

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Ans: c) Excise duty

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2] Consider the following statements: [2010]

In India, taxes on transactions in Stock Exchanges and Futures Markets are
1. levied by the Union.
2. collected by the States.

Which of the statements given above is/are correct?
a) 1 only                            b) 2 only
c) Both 1 and 2                 d) Neither 1 nor 2

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Ans: a) 1 only  

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3] Consider the following: [2009]

1. Fringe Benefit Tax
2. Interest Tax
3. Securities Transaction Tax

Which of the above is/ are Direct Tax/Taxes?
a)1 only                              b)1 and 3 only
c)2 and 3 only                   d)1, 2 and 3

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Ans: d)1, 2 and 3

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4] Which one of the following is the correct statements? Service tax is a/an: [2006]

a) Direct tax levied by the Central Government.
b) Indirect tax levied by the Central Government
c) Direct tax levied by the State Government
d) Indirect tax levied by the State Government

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Ans: b) Indirect tax levied by the Central Government

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5] Which of the following is a recommendation of the task force on direct taxes under the chairmanship of Dr Vijay L. Kelkar in the year 2002? [2004]

a) Abolition of Wealth Tax
b) Increase in the exemption limit of personal income to Rs 1.20 lakh for widows
c) Elimination of standard deduction
d) Exemption from tax on dividends and capital gains from the listed equity

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Ans: a) Abolition of Wealth Tax

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6] Consider the following statements: In India, stamp duties on financial transactions are: [2003]

1. Levied and collected by the State Government
2. Appropriated by the Union Government.

Which of these statements is/are correct?
a) Only 1                             b) Only 2
c) Both 1 and 2                 d) Neither 1 nor 2

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Ans: d) Neither 1 nor 2

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7] The Kelkar proposals which were in the news recently were the: [2003]

a) Recommendations for reforms in the power sector
b) Recommendations for tax reforms
c) Guidelines for the privatisation
d) Guidelines for reducing vehicular pollution, and the promotion of CNG use

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Ans: b) Recommendations for tax reforms

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8] Consider the following taxes: [2001]

I. Corporation tax
II. Customs duty
III. Wealth tax
IV. Excise duty

Which of these is/are indirect taxes?
a) I only               b) II and IV
c) I and III            d) II and III

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Ans: b) II and IV

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9] The Standing Committee of State Finance Ministers recommended in January 2000 uniform rates across the States in respect of: [2000]

a) Value added tax
b) Sales tax
c) Stamp duty and registration fees
d) Agricultural income tax

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Ans: b) Sales tax

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10] Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct? [1999]

a) The Union levies, collects and distributes the proceeds of income tax between itself and the States
b) The Union levies, collects and keeps all the proceeds of income tax to itself
c) The Union levies and collects the tax but all the proceeds are distributed among the States
d) Only the surcharge levied on income tax is shared between the Union and the States

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Ans: a) The Union levies, collects and distributes the proceeds of income tax between itself and the States

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11] The Minimum Alternative Tax (MAT) was introduced in the Budget of the Government of India for the year: [1997]

a) 1991-92                          b) 1992-93
c) 1995-96                          d) 1996-97

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Ans: d) 1996-97

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12] Corporation tax: [1995]

a) Is levied and appropriated by the States
b) Is levied by the Union and collected and appropriated by the States
c) Is levied by the Union and shared by the Union and the States
d) Is levied by the Union and belongs to it exclusively

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Ans: d) Is levied by the Union and belongs to it exclusively

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UPSC Prelims PYQ Book
  • Collection of more than 3200 Previous Year Questions (1995-2023)
  • All questions divided into 10 Subjects
  • Subject further sub-divided into more than 75 topics
  • All answers according to official answer key
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md zeeshan.mallick

Sir plz give the explanation also for above questions