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Test: Tax Structure in India - B Com MCQ


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10 Questions MCQ Test - Test: Tax Structure in India

Test: Tax Structure in India for B Com 2025 is part of B Com preparation. The Test: Tax Structure in India questions and answers have been prepared according to the B Com exam syllabus.The Test: Tax Structure in India MCQs are made for B Com 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Tax Structure in India below.
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Test: Tax Structure in India - Question 1
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What is the primary purpose of taxation?

Detailed Solution for Test: Tax Structure in India - Question 1
Taxation primarily serves the purpose of funding government spending and various public expenditures. It provides the government with the necessary financial resources to carry out its functions and provide essential services to the citizens.
Test: Tax Structure in India - Question 2
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Which tax is an example of a direct tax?

Detailed Solution for Test: Tax Structure in India - Question 2
Income Tax is a classic example of a direct tax as it is levied directly on an individual's or organization's income. The burden of income tax cannot be shifted to someone else.
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Test: Tax Structure in India - Question 3
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Which principle of taxation emphasizes that every person should pay taxes in proportion to their income?

Detailed Solution for Test: Tax Structure in India - Question 3
The Canon of Equality emphasizes that taxes should be proportional to income, ensuring that individuals pay taxes according to their ability to pay.
Test: Tax Structure in India - Question 4
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What is the key characteristic of indirect taxes?
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Indirect taxes are generally regressive because they impose the same tax rate on both the rich and the poor, which can lead to increased income disparities.
Test: Tax Structure in India - Question 5
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What is the primary objective of raising revenue through taxation?
Detailed Solution for Test: Tax Structure in India - Question 5
The primary objective of raising revenue through taxation is to fund government activities, including the provision of public goods and services.
Test: Tax Structure in India - Question 6
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Which tax is considered a contribution for the common benefit of society?
Detailed Solution for Test: Tax Structure in India - Question 6
Property Tax is considered a contribution for the common benefit of society as it is levied on property owners to fund local government activities and services.
Test: Tax Structure in India - Question 7
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Why are indirect taxes considered regressive in nature?
Detailed Solution for Test: Tax Structure in India - Question 7
Indirect taxes are considered regressive because they impose the same tax rate on all consumers, regardless of their income levels, which can disproportionately affect lower-income individuals.
Test: Tax Structure in India - Question 8
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What is the major advantage of direct taxes over indirect taxes?
Detailed Solution for Test: Tax Structure in India - Question 8

The major advantage of direct taxes over indirect taxes is that direct taxes are always progressive. This means that the tax rate increases as the taxable amount increases, which typically aligns with the ability of individuals to pay. This system aims to distribute the tax burden more equitably among taxpayers, depending on their income levels.
 

Direct taxes are less susceptible to evasion : is incorrect

Yes, stating that direct taxes are less susceptible to evasion is incorrect. In fact, direct taxes, like income tax, can sometimes be more susceptible to evasion compared to indirect taxes like sales tax. This is because direct taxes often depend on individuals and businesses accurately reporting their own income and financial status, which provides more opportunities for underreporting or misreporting income. Indirect taxes, on the other hand, are collected at the point of sale and are harder to evade since they are automatically added to the price of goods and services.

Test: Tax Structure in India - Question 9
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How does taxation contribute to social welfare?
Detailed Solution for Test: Tax Structure in India - Question 9
Taxation contributes to social welfare by imposing heavy taxes on luxury goods, discouraging their consumption, and generating revenue for government programs and services that benefit society as a whole.
Test: Tax Structure in India - Question 10
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What was the significant change in indirect taxation in India on July 01, 2017?
Detailed Solution for Test: Tax Structure in India - Question 10
The significant change in indirect taxation in India on July 01, 2017, was the implementation of a unified indirect tax regime known as the Goods and Services Tax (GST), which replaced a large number of Central and State indirect taxes.
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