Test: Public Finance - CA Foundation MCQ

Tax is levied by government on their citizens to generate income for undertaking projects to boost the economy of the country and to raise the standard of living of its citizens. Union tax is a tax paid to central government. Stamp duties on financial documents, Taxes on railway freights and fares are not the examples of Union tax.

It is based on the principle of ability to pay. The tax levied by the union government on income of individuals is known as income tax.

The tax on net income of companies is corporate tax. Tax rates are uniform for all categories of companies.

Wealth tax is collected from unproductive assets only. Estate duty was abolished in 1985.

Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.

Sales tax is the tax on sale of goods and is influenced by the value added tax system.

The tax levied on the interstate trade of goods is the central sales tax.

The 14th finance commission was appointed in 2013. It is headed by Y V Reddy.

Revenue deficit= revenue expenditure “revenue receipts

Effective revenue deficit= revenue deficit-grants for creation of capital assets.

Budget deficit= total expenditure-total receipts

Fiscal deficit= total expenditure-total receipts except loans and other liabilities.

Primary deficit= fiscal deficit-interest payments.