Q1. States earn more revenue directly through which of the following taxes ?
(a) Sales tax
(b) Custom duties
(c) Excise duties
(d) Income tax
(UPSC Prelims 1982)
Answer: (a)
Explanation: Sales tax was a major source of direct revenue for State Governments before the introduction of GST. Unlike custom and excise duties, which are levied by the Central Government, sales tax was collected on intra-state transactions.
Q2. Which tax is not levied by the Central Government ?
(a) Wealth tax
(b) Profession tax
(c) Income tax
(d) Excise duty
(UPSC Prelims 1982)
Answer: (b)
Explanation: Profession tax is levied by State Governments, not the Central Government. It applies to individuals earning income through employment or profession, and varies across states.
Q3. Multinational means
(a) A person having passports and visas of many countries
(b) A person having property in many countries
(c) A person holding citizenship of many countries
(d) A company operating in more than one country
(UPSC Prelims 1982)
Answer: (d)
Explanation: A multinational company operates in multiple countries, managing production, marketing, and services across borders. It plays a key role in global trade, investment, and economic integration.
Q4. Wealth tax on agricultural property is levied by
(a) Central Government
(b) State Government
(c) Both the Central and State Governments
(d) None of the above
(UPSC Prelims 1984)
Answer: (b) State Government
Q5. The major source of revenue for executing Five-Year Plans is
(a) Direct taxes
(b) Indirect taxes
(c) Foreign loans
(d) Interest on investments
(UPSC Prelims 1984)
Answer: (b) Indirect taxes
Explanation: Indirect taxes, such as excise duty, customs duty, and sales tax, have traditionally been the largest contributors to government revenue in India. This revenue is crucial for funding development programs under the Five-Year Plans.
Q6. The important function of taxation in India is to
(a) Reduce black money
(b) Generate funds for Government expenditure
(c) Reduce inflation
(d) None of the above
(UPSC Prelims 1986)
Answer: (b) Generate funds for Government expenditure
Explanation: The primary role of taxation is to mobilize resources for the government to fund public services, infrastructure, and welfare schemes. While it may influence other areas, its main function is revenue generation.
Q7. Direct taxation was introduced by the committee
(a) Wanchoo
(b) Chetty
(c) Kaldor
(d) Raja Chelliah
(UPSC Prelims 1986)
Answer: (a) Wanchoo
Explanation: The Wanchoo Committee played a key role in recommending reforms related to direct taxation in India. Its suggestions led to improvements in tax administration and compliance, making it the correct answer.