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Fiscal Policy & Revenue (Part – I)

📆 October 12, 2024

Total Questions: 50

21. Consider the following statements: [U.P.R.O./A.R.O. (Pre) 2016]

1. GST Council is chaired by the Union Finance Minister and the Minister of State-in-charge of Revenue or Finance at the centre is a member.

2. The GST Council will decide the tax rate, exempted goods and the threshold under the new taxation regime.

3. State Governments will have the option to levy VAT, if they so decide.

Of these---

Correct Answer: (d) Only 1 and 2 are correct
Solution:Goods & Services Tax Council is a constitutional body (under Article 279A) for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union Minister of State-in-charge of Revenue or Finance and Minister-in- charge of Finance or Taxation of all the States. The GST Council will decide about the tax rate, exempted goods and will also determine the threshold under the new tax regime. The GST Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel. After the imposition of GST, State Governments do not have the option to levy VAT.

22. Which of the following tax is not included in Goods and Service Tax (GST)? [Chhattisgarh P.C.S. (Pre) 2019]

Correct Answer: (b) Custom Duty
Solution:Among the given options, Custom Duty is not included in Goods and Services Tax (GST). Taxes on alcohol for human consumption, petroleum products and electricity are also kept outside the purview of GST in India.

Custom duty, also known as import duty, is a tax levied on goods brought into a country from another country. It's a key part of the Indian trade regime, impacting international trade and influencing domestic industries.
Types of Customs Duty:

  • Basic Customs Duty (BCD): The primary duty levied on imported goods, ranging from 0% to 100% depending on the item.
  • Countervailing Duty (CVD): Applied to counter the effect of subsidies given to goods in exporting countries, protecting domestic industries from unfair competition.
  • Anti-Dumping Duty: Imposed on goods sold below their normal value to prevent unfair trade practices.
  • Special Safeguard Duty: Applied when imports cause serious damage to domestic industries, providing temporary relief.
  • Social Welfare Surcharge (SWS): A surcharge added to customs duty to fund welfare projects.
  • Integrated Goods and Services Tax (IGST): Applied on imports along with the relevant GST rate.
  • Compensation Cess: Levied on certain goods, like tobacco and pollution-causing products, to offset environmental or social costs.

23. What has been kept under the purview of Goods and Service Tax (GST)? [R.A.S./R.T.S.(Pre) 2018]

Correct Answer: (d) Ghee
Solution:At present, Alcohol for human consumption, Electricity and Petroleum products are kept outside the purview of Goods and Services Tax (GST) in India, while Ghee has been kept under the purview of GST.

The Goods and Services Tax is a form of Indirect Tax levied on most of the goods and services sold in India for domestic consumption. It is based on the principle of Value Added Tax (VAT) and is applicable throughout India. It is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. It has subsumed and replaced various indirect taxes that were previously levied by the central and state governments.

24. The collection of 'Goods and Service Tax' in Indian economy in October, 2020 has been: [U.P.R.O./A.R.O. (Mains) 2016]

Correct Answer: (a) More than its. One lakh crore
Solution:The collection of gross 'Goods and Services Tax (GST) October, 2020 was revenue in Indian economy in Rs. 105,155 crore. The gross GST collection for the months of January, February and March, 2024 stands at Rs. 174,106 crore, Rs. 168,337 crore and Rs. 178,484 crore respectively. while in April, 2024 the government has collected the all time highest (till date) monthly gross GST revenue (Rs. 210,267 crore).

25. Which of the following statement/s is/are correct? [U.P.R.O./A.R.O. (Pre) 2023]

1. ITC means the credit of Input Tax on the supplies of goods and services or both received by a registered person.

2. Eligibility of ITC which may be as under-taxable supply, non-taxable supply, zero-rated supply.

Select the correct answer using the code given below-

Code:

Correct Answer: (d) Only 1
Solution:Uninterrupted and seamless chain of input tax credit (ITC) is one of the key features of Goods and Services Tax. ITC is a mechanism to avoid cascading of taxes. Any registered person can avail credit of tax paid on the inward supply of goods or services or both, which is used or intended to be used in the course or furtherance of business subject to certain conditions. Thus, ITC means the credit of input tax on the supplies of goods and services or both received by a registered person. Eligibility of ITC includes taxable supply and zero-rated supply, but non-taxable, exempt and nil-rated supplies are not eligible for ITC. Zero-rated supply is different from nil-rated supply (goods and services on which 0% GST is applicable). Any supplies made by a registered dealer as an export (both goods or services) or supply to an SEZ qualifies for zero-rated supplies in GST and ITC is available for them. Hence, statement 1 is correct while statement 2 is incorrect.

26. Saksham Project approved by Govt. of India is related to: [U.P.P.C.S. (Pre) 2017]

Correct Answer: (c) A new indirect tax network.
Solution:Project Saksham, a new indirect tax network of the Central Board of Excise and Customs (CBEC), had been approved by the Cabinet Committee on Economic Affairs (CCEA) in September, 2016. The total cost of the project was estimated to be Rs. 2256 crore, which has to be incurred over a period of seven years. Project Saksham is designed to help in the smooth implementation of GST. It will also help in the extension of the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) and other taxpayer-friendly initiatives under Digital India and Ease of Doing Business of CBEC

27. In India, which one among the following formulates the fiscal policy? [U.P.P.C.S. (Mains) 2012, Chhattisgarh P.C.S. (Pre) 2014]

Correct Answer: (c) Ministry of Finance
Solution:In India, Ministry of Finance of the Central Government formulates the fiscal policy. The Reserve Bank of India is vested with the responsibility of conducting monetary policy. Finance Commission is constituted by the President of India under Article 280 of the Constitution, mainly to give its recommendations on distribution of tax revenue between Union and the States. The NITI Aayog (in place of erstwhile Planning Commission) is a policy think tank of the Government of India.

28. Long-term fiscal policy was announced by which finance minister of India? [U.P.R.O./A.R.O. (Pre) 2014]

Correct Answer: (a) V.P. Singh
Solution:Long-term fiscal policy in India was announced by then Finance Minister Vishwanath Pratap Singh (V.P. Singh) in his Budget Speech 1985-86. Through this policy, government revenue and expenditure was framed with a long-term framework.

Fiscal policy involves how the government uses its spending and tax rules to affect the economy. It mainly targets big economic factors like total demand for products and services, job rates, inflation, and general economic growth. This policy is essential for controlling economic performance, job availability, and inflation. The government carries out fiscal policy by making budget choices, which include deciding on tax rates, how much to spend, and whether to run a budget deficit or surplus.

29. The controlling authority of government expenditure is: [B.P.S.C (Pre) 2015]

Correct Answer: (c) The Ministry of Finance
Solution:The Ministry of Finance is responsible for the administration of finances of the Central Government. It is concerned with all economic and financial matters affecting the country as a whole including mobilization of resources for development and other purposes. It regulates expenditure of the government including transfer of resources to the States. The Ministry comprises of the six Departments, namely: (i) Economic Affairs; (ii) Expenditure; (iii) Revenue; (iv) Investment and Public Asset Management; (v) Financial Services; (vi) Public Enterprises.

30. Which one of the following is not a Department in the Ministry of Finance? [Jharkhand P.C.S. (Pre) 2013]

Correct Answer: (c) Banking Division
Solution:The Ministry of Finance is responsible for the administration of finances of the Central Government. It is concerned with all economic and financial matters affecting the country as a whole including mobilization of resources for development and other purposes. It regulates expenditure of the government including transfer of resources to the States. The Ministry comprises of the six Departments, namely: (i) Economic Affairs; (ii) Expenditure; (iii) Revenue; (iv) Investment and Public Asset Management; (v) Financial Services; (vi) Public Enterprises.
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