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Fiscal Policy & Revenue (Part – VI)

📆 October 15, 2024

Total Questions: 16

1. Recommendations of the Kelkar Task Force relate to: [U.P.P.C.S. (Mains) 2004]

Correct Answer: (d) Taxes
Solution:The recommendations of the Kelkar Task Force were related to taxes reform. Two Task Forces were set up in September, 2002 under the chairmanship of Dr. Vijay L. Kelkar to recommend measures for simplification and rationalisation of direct and indirect taxes. As per the terms of reference, the Task Force on Direct Taxes was mandated to make recommendations on rationalisation and simplification of direct taxes, improvement in tax payer services and redesigning procedures for strengthening enforcement. The Task Force on Indirect Taxes was mandated to make recommendation on simplification, reduction in the cost of compliance of customs and central excise duties, automation of tax administration, simplification of statutory returns, records, procedures for time-bound disposal of matters and different aspects of legal provisions to facilitate tax payers and to improve tax compliance.

2. The Committee which has recommended abolition of Tax Rebates under Section 88 of Income Tax Act of India, is: [U.P.P.C.S. (Pre) 2016, U.P.P.C.S. (Spl.) (Mains) 2008, Chhattisgarh P.C.S. (Pre) 2018]

Correct Answer: (b) Kelkar Committee
Solution:The Task Force on Direct Taxes under the chairmanship of Dr. Vijay L. Kelkar made recommendation for elimination of tax incentives under Section 88, 80L and interest income under Section 10 of the Income Tax Act. This Task Force presented its final report in December, 2002.

3. The latest committee to submit its report on tax reforms is known as: [U.P.P.C.S. (Mains) 2004]

Correct Answer: (a) Kelkar Committee
Solution:Tax Reforms Committee under the chairmanship of Dr. Raja J. Chelliah had submitted its report in 1991 while the Task Force on Direct Taxes under the chairmanship of Dr. Vijay L. Kelkar submitted its report in December, 2002. Narasimhan Commit- tees (1991 and 1998) were related to financial and banking sector reforms while Vaghul Committee (1987) was related to call money market.

4. Consider the following statements: [I.A.S. (Pre) 2005]

1. Global Trust Bank has been amalgamated with the Punjab National Bank.

2. The second report of the Kelkar Committee dealing with direct and indirect taxes has maintained its original recommendation including the abolition of exemptions relating to housing loans.

Which of the statements given above is/are correct?

 

Correct Answer: (d) Neither I nor 2
Solution:The Global Trust Bank was acquired by the Oriental Bank of Commerce in 2004. Kelkar Committee in his second report offered two options regarding the deduction for interest on housing loan from the taxable income:

The first option was to incentivise borrowings for housing by providing 2 percent interest subsidy on all home loans below Rs. 5 lakh. The other option would be to continue with the tax treatment of mortgage interest for owner occupied houses but with a reduction in the amount of mortgage interest deductible from the existing level of Rs. 1.5 lakh to Rs. 50,000 only. It is to be noted that the Committee had originally suggested doing away with this exemption on housing loans in one go or in three years by reducing the exemption limit by Rs. 50,000 every year.

Hence, both of the given statements are incorrect and option .

(d) is the correct answer

5. Recent tax reforms in India have been undertaken on the recommendations of the committee headed by: [U.P.P.C.S. (Pre) 1995]

Correct Answer: (a) R. J. Chelliah
Solution:The Government appointed a Tax Reforms Committee (TRC) under the chairmanship of Raja J. Chelliah in 1991 to lay out agenda for reforming India's tax system. This TRC had laid down a comprehensive outline on tax reforms, on which the major tax reforms of 1990s in India were based. Chelliah's recommendations provided the basis for the direct taxes emerging as the major component of tax revenue.

6. Chelliah Committee is related to: [M.P.P.C.S. (Pre) 1994]

Correct Answer: (a) Reforms in direct and indirect tax
Solution:The Government appointed a Tax Reforms Committee (TRC) under the chairmanship of Raja J. Chelliah in 1991 to lay out agenda for reforming India's tax system. This TRC had laid down a comprehensive outline on tax reforms, on which the major tax reforms of 1990s in India were based. Chelliah's recommendations provided the basis for the direct taxes emerging as the major component of tax revenue.

7. Which one of the following is different from the others from the point of view of tax relief to individuals: [U.P.P.C.S. (Pre) 1997]

Correct Answer: (c) Indira Vikas Patra
Solution:From the point of view of tax relief to individuals National Savings Certificate, Public Provident Fund and National Savings Scheme are same, because investing in them 2005 provide income tax rebate. While investing in Indira Vikas Patra did not provide income tax relief.

8. Which of the following is not eligible for any income tax rebate? [U.P.P.C.S. (Mains) 2008]

Correct Answer: (a) Kisan Vikas Patra
Solution:National Saving Certificate, Public Provident Fund and Unit-Linked Insurance Plan are savings instruments that offers the benefit of investing as well as tax deduction. On the contrary, Kisan Vikas Patra does not offer benefits of tax deduction.

9. A PAN has initially a five-alphabet series like AFZPK 7190K. Here P stands for: [U.P. R.O./A.R.O. (Pre) 2014]

Correct Answer: (a) Individual
Solution:Permanent Account Number (PAN) is a 10-character alphanumeric identifier, which is used as an identity proof. It is used mainly for the tax related purposes. The first five characters of PAN are letters from the English alphabet, the next four characters are numbers and last character is also a letter. The fourth character for a majority of PAN holders is the letter "P", which stands for 'Person (Individual)'. The other nine letters that can represent the fourth character are C, H, F, A, T, B, L, J and G:

C-Company

H-Hindu Undivided Family (HUF)

F-Firm

A-Association of Persons (AoP)

T-Trust

B-Body of Individuals (Bol)

L-Local Authority

J-Artificial Juridical Person

G-Government

10. PAN card issued by the Income Tax Department cannot be used for which of the following purpose? [U.P.P.C.S. (Pre) 2007]

Correct Answer: (a) Proof of address
Solution:Permanent Account Number (PAN) is a identification card issued by the Income Tax Department. On the PAN card name and father's name of the person, date of birth and PAN number are imprinted. Address is not mentioned on the PAN card. Hence it is not the proof of address.
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