MCQ on Tax System in India
Q1. Which of the following is the primary indirect tax in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: c) Goods and Services Tax (GST)
Explanation: The Goods and Services Tax (GST) is the primary indirect tax in India. It is a comprehensive tax levied on the supply of goods and services, replacing multiple taxes like excise duty, service tax, and value-added tax (VAT).
Q2. Which of the following is a direct tax in India?
a) Income tax
b) Goods and Services Tax (GST)
c) Value Added Tax (VAT)
d) Customs duty
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Correct Answer: a) Income tax
Explanation: Income tax is a direct tax in India. It is levied on the income of individuals, firms, and companies, and is collected by the central government.
Q3. Which of the following taxes is levied on the import and export of goods in India?
a) Income tax
b) Goods and Services Tax (GST)
c) Value Added Tax (VAT)
d) Customs duty
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Correct Answer: d) Customs duty
Explanation: Customs duty is a tax levied on the import and export of goods in India. It is collected by the central government and is used to regulate international trade and protect domestic industries.
Q4. Which of the following is a component of the Goods and Services Tax (GST) in India?
a) Central Goods and Services Tax (CGST)
b) State Goods and Services Tax (SGST)
c) Integrated Goods and Services Tax (IGST)
d) All of the above
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Correct Answer: d) All of the above
Explanation: The Goods and Services Tax (GST) in India comprises three components: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). CGST and SGST are levied on intra-state transactions, while IGST is levied on inter-state transactions.
Q5. Which of the following is a tax levied by the state governments in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Stamp duty
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Correct Answer: d) Stamp duty
Explanation: Stamp duty is a tax levied by state governments in India on the transfer of property and certain legal documents. It is collected to provide revenue to the state governments and to maintain a record of property transactions.
Q6. Which of the following is a tax levied on the profits of companies in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: b) Corporate tax
Explanation: Corporate tax is a tax levied on the profits of companies in India. It is collected by the central government and is used to finance various government programs and initiatives.
Q7. Which of the following is a tax levied on the sale of goods within a state in India?
a) Income tax
b) Corporate tax
c) Value Added Tax (VAT)
d) Customs duty
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Correct Answer: c) Value Added Tax (VAT)
Explanation: Value Added Tax (VAT) was a tax levied on the sale of goods within a state in India. However, it has been replaced by the Goods and Services Tax (GST) since July 1, 2017.
Q8. Which of the following is a tax levied on the income of individuals in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: a) Income tax
Explanation: Income tax is a tax levied on the income of individuals in India. It is collected by the central government and is used to finance various government programs and initiatives.
Q9. Which of the following is a tax levied on the production and sale of goods in India?
a) Excise duty
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: a) Excise duty
Explanation: Excise duty was a tax levied on the production and sale of goods in India. However, it has been replaced by the Goods and Services Tax (GST) since July 1, 2017.
Q10. Which of the following is a tax levied on the provision of services in India?
a) Income tax
b) Service tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: b) Service tax
Explanation: Service tax was a tax levied on the provision of services in India. However, it has been replaced by the Goods and Services Tax (GST) since July 1, 2017.
Q11. Which of the following is a tax levied on the transfer of property in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Capital gains tax
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Correct Answer: d) Capital gains tax
Explanation: Capital gains tax is a tax levied on the transfer of property in India. It is collected by the central government and is used to finance various government programs and initiatives.
Q12. Which of the following is a tax levied on the sale of goods and services in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: c) Goods and Services Tax (GST)
Explanation: The Goods and Services Tax (GST) is a tax levied on the sale of goods and services in India. It is a comprehensive tax that replaces multiple taxes like excise duty, service tax, and value-added tax (VAT).
Q13. Which of the following is a tax levied on the import of goods in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: d) Customs duty
Explanation: Customs duty is a tax levied on the import of goods in India. It is collected by the central government and is used to regulate international trade and protect domestic industries.
Q14. Which of the following is a tax levied on the export of goods in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: d) Customs duty
Explanation: Customs duty is a tax levied on the export of goods in India. It is collected by the central government and is used to regulate international trade and protect domestic industries.
Q15. Which of the following is a tax levied on the income of firms in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: b) Corporate tax
Explanation: Corporate tax is a tax levied on the income of firms in India. It is collected by the central government and is used to finance various government programs and initiatives.
Q16. Which of the following is a tax levied on the capital gains arising from the sale of assets in India?
a) Income tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Capital gains tax
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Correct Answer: d) Capital gains tax
Explanation: Capital gains tax is a tax levied on the capital gains arising from the sale of assets in India, such as stocks, bonds, and real estate. It is collected by the central government and is used to finance various government programs and initiatives.
Q17. Which of the following is a tax levied on the wealth of individuals in India?
a) Wealth tax
b) Corporate tax
c) Goods and Services Tax (GST)
d) Customs duty
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Correct Answer: a) Wealth tax
Explanation: Wealth tax was a tax levied on the wealth of individuals in India. However, it was abolished in 2015 and replaced by an additional surcharge on the income tax of high net worth individuals.
Q18. Which of the following is a tax levied on the sale of goods within a state in India?
a) Income tax
b) Corporate tax
c) Value Added Tax (VAT)
d) Customs duty
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Correct Answer: c) Value Added Tax (VAT)
Explanation: Value Added Tax (VAT) was a tax levied on the sale of goods within a state in India. However, it has been replaced by the Goods and Services Tax (GST) since July 1, 2017.
Q19. Which of the following is a tax levied on the sale of goods and services across state borders in India?
a) Income tax
b) Corporate tax
c) Integrated Goods and Services Tax (IGST)
d) Customs duty
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Correct Answer: c) Integrated Goods and Services Tax (IGST)
Explanation: Integrated Goods and Services Tax (IGST) is a tax levied on the sale of goods and services across state borders in India. It is a component of the Goods and Services Tax (GST) system and is levied on inter-state transactions.
Q20. Which of the following is a tax levied on the sale of goods and services within a state in India?
a) Income tax
b) Corporate tax
c) Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST)
d) Customs duty
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Correct Answer: c) Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST)
Explanation: Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) are taxes levied on the sale of goods and services within a state in India. They are components of the Goods and Services Tax (GST) system and are levied on intra-state transactions.