Fiscal Policy & Revenue (Part – Iv)

Total Questions: 50

11. Following are the estimated source of revenue of the Union Budget 2020-21. Match List-I with List-II and select the correct answer from the codes given below: [U.P.R.O./A.R.O. (Pre) (Re- Exam) (Pre) 2016]

List - I (Source)	List - II (Percentage of Revenue)
A. Corporate Tax	(1) 17 percent
B. Income Tax	(2) 18 percent
C. Customs	(3) 7 percent
D. Central Excise	(4) 4 percent

Codes:

	A	B	C	D
(a)	1	2	3	4
(b)	4	3	2	1
(c)	3	4	1	2
(d)	2	1	4	3

Correct Answer: (d)

Solution:As per the estimated source of revenue of the Union Budget 2020-21, the correctly matched order is as follows:

List - I (Source)	List - II (Percentage of Revenue)
Corporate Tax	18 percent
Income Tax	17 percent
Customs	4 percent
Central Excise	7 percent

In the Interim Union Budget 2024-25, the largest sources of revenue are as follows: Income Tax (19%), GST (18%), Corporation Tax (17%), Non-tax receipts (7%), Union Excise Duties (5%) and Customs (4%).

Note: Here percentage of important sources of tax revenue is given in terms of total receipts (inclusive of States' share of taxes and duties) of the Union Government.

12. Consider the following important sources of tax revenue for the Central Government: [B.P.S.C. (Pre) 2015]

1. Corporation tax

2. Tax on income other than corporation tax

3. Customs

4. Union Excise Duties

Which of the following is the correct descending order in terms of gross tax revenue?

(a) 1,2,4,3
(b) 1,2,3,4
(c) 3,1,2,4
(d) 2,3,1,4

Correct Answer: (b) 1,2,3,4

Solution:As per the question period, option (b) was the correct answer. At present, the share of main sources of tax revenue in gross tax revenue is as follows:

Tax	Share in Gross Tax Revenue (2023-24 R.E.) (%)	Share in Gross Tax Revenue (2024-25 B.E.) (%)
Taxes on Income	29.74	30.18
Corporation Tax	26.84	27.22
Customs	6.36	6.04
Union Excise Duties	8.83	8.32
GST	27.83	27.87

13. Which one of the following has been the most important source of the tax revenue of the Union Government in 2009-10? [U.P.P.C.S. (Mains) 2009*, U.P.P.C.S. (Spl.) (Mains) 2008]

(a) Service Tax
(b) Union Excise Duties
(c) Corporation Tax
(d) Income Tax

Correct Answer: (c) Corporation Tax

Solution:As per the question year, option (c) was the correct answer. For the latest data

Tax	Share in Gross Tax Revenue (2023-24 R.E.) (%)	Share in Gross Tax Revenue (2024-25 B.E.) (%)
Taxes on Income	29.74	30.18
Corporation Tax	26.84	27.22
Customs	6.36	6.04
Union Excise Duties	8.83	8.32
GST	27.83	27.87

14. In the year 2013-14, largest source of tax revenue of the Union Government was: [U.P. Lower Sub. (Pre) 2015]

(a) Central excise duty
(b) Customs duty
(c) Corporation Tax
(d) Income Tax

Correct Answer: (c) Corporation Tax

Solution:As per the question year, option (c) was the correct answer. In Interim Budget estimates 2024-25, revenue estimated from various taxes are as follows: Income Tax (Rs. 1156000 crore), Goods and Services Tax (Rs. 1067650 crore), Corporation Tax (Rs.1042830 crore), Union Excise Duties (Rs. 318780 crore) and Customs Duty (Rs. 231310 crore).

15. Which one of the following taxes is the largest source of revenue in India? [U.P.P.C.S. (Spl.) (Mains) 2004, B.P.S.C. (Pre) 2005]

(a) Income Tax
(b) Excise tax
(c) Union excise duties
(d) Custom duties

Correct Answer: (a) Income Tax

Solution:As per the question year (in 2004-05 and 2005-06) Union excise duties was the largest source of revenue in India. At present, Income Tax is the largest source of revenue. According to the Interim Budget estimates 2024-25, Income Tax, Goods and Services Tax (GST) and Corporation Tax are three largest sources of tax revenue respectively.

16. Which of the following taxes yielded maximum revenue to the Centre during 2007-08? [U.P.P.C.S. (Mains) 2006]

(a) Corporation Tax
(b) Income Tax
(c) Customs Duty
(d) Union Excise Duty

Correct Answer: (a) Corporation Tax

Solution:As per the question year, option (a) was the correct answer. According to Interim Budget estimates 2024-25, maximum revenue (as percentage of total receipts of the Government which is inclusive of States' share of taxes and duties) is estimated from Income Tax-19%, Goods and Services Tax (GST)-18% and Corporation Tax-17%.

17. In the Union Budget 2005-06 the largest source of revenue was- [U.P.P.C.S. (Mains) 2005, 2006*]

(a) Corporation Tax
(b) Customs Tax
(c) Excise Tax
(d) Income Tax

Correct Answer: (a) Corporation Tax

Solution:As per the question year, option (a) was the correct answer. For the latest data, As per the question year, option (a) was the correct answer. According to Interim Budget estimates 2024-25, maximum revenue (as percentage of total receipts of the Government which is inclusive of States' share of taxes and duties) is estimated from Income Tax-19%, Goods and Services Tax (GST)-18% and Corporation Tax-17%.

18. 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? [I.A.S. (Pre) 2010*]

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

Correct Answer: (c) Excise duty

Solution:As per the Economic Survey 2009-10, in India, the tax proceeds of Union excise duties as a percentage of gross tax revenue had significantly declined in the previous five years, which is as follows:

Year	Share in Gross Tax Revenue (%)
2005-06	30.4
2006-07	24.8
2007-08	20.8
2008-09	17.9
2009-10	16.5

The share of Union excise duties in gross tax revenue is estimated at 8.32% (5% in total receipts of the Government which is inclusive of States' share of taxes and duties) in the Interim Budget estimates for 2024-25.

19. Which of the following is not a tax/duty levied by the Government of India? [Jharkhand P.C.S. (Pre) 2011, U.P.P.C.S.(Pre) 2013]

(a) Service Tax
(b) Education Cess
(c) Customs Duty
(d) Road Tax

Correct Answer: (d) Road Tax

Solution:Road tax is not a tax/duty levied by the Government of India, it is levied by the State governments. While remaining three taxes/duties are levied by the Union Government.

Service tax was a tax imposed by India on services provided or agreed to be provided, excluding services covered by the negative list, and collected from the person liable to pay service tax according to the Point of Taxation Rules, 2011 and the Place of Provision of Service Rules, 2012.
Educational Cess refers to an additional tax imposed by the government on taxpayers in order to generate revenue for the primary, secondary and tertiary educational institutions. Educational cess is applicable on both individuals and corporations. The percentage of cess depends on the annual budget.
Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on import and export of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.

20. Which of the following Tax is levied by Union and collected and appropriated by States? [B.P.S.C. (Pre) 2016, I.A.S. (Pre) 1994]

Correct Answer: (a) Stamp Duties

Solution:Among the given options, Stamp Duties (as are mentioned in the Union List of the Constitution) are levied by the Union and collected and appropriated by the States.

Article 268: This constitutional provision ensures that even though the Union government has the authority to impose certain taxes, the revenue generated from those taxes is assigned to the states for their own use.
Example: Stamp duties on instruments like bills of exchange, cheques, and policies of insurance are levied by the Union, but the states collect the revenue from these duties.

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