Q20. Who proposed merging the Finance Commission and Planning Commission?
[MPPSC General Studies 2015, Official Paper]
(A) D. D. Basu
(B) Bhalchandra Goswami
(C) M. V. Mathur
(D) Ashutosh Pandey
Answer: (C) M. V. Mathur
Explanation: M. V. Mathur proposed combining these institutions to streamline fiscal transfer and planning functions. The Finance Commission has constitutional status under Article 280, whereas the Planning Commission was an executive body later replaced by NITI Aayog. The question concerns a historical reform proposal.
Q19. In which circumstances may capital gains arise?
I. Increased sales of ordinary products.
II. Appreciation in owned property.
III. Appreciation in a painting after its popularity rises.
[UPSC CSE Prelims 2012]
(A) I only
(B) II and III only
(C) II only
(D) I, II and III
Answer: (B) II and III only
Explanation: Capital gains concern appreciation in capital assets such as property or investments, not turnover from ordinary trading stock. In taxation, a capital gain is generally realised on a transfer, so mere appreciation should be distinguished from the taxable gain recognised when an asset is disposed of.
Q18. Which of the following was NOT a feature of India’s value-added tax system?
[UPSC CSE Prelims 2011]
(A) A multistage destination-based consumption tax
(B) Tax on incremental value at each production or distribution stage
(C) A tax ultimately borne by final consumers
(D) An exclusively central-government tax with States serving only as facilitators
Answer: (D) An exclusively central-government tax with States serving only as facilitators
Explanation: State VAT was collected by State governments before most such levies were subsumed under GST. It permitted credits for tax paid on purchases and sought to prevent cascading. Calling VAT exclusively a central-government arrangement ignores State taxing authority under the earlier system.
Q17. Which body advises a State Governor on taxes and duties that may be assigned to Panchayats?
[UPSC CSE Prelims 2010]
(A) District Planning Committee
(B) State Finance Commission
(C) State Finance Department alone
(D) State Panchayati Raj Ministry alone
Answer: (B) State Finance Commission
Explanation: Under Article 243-I the Governor constitutes a State Finance Commission to review local-body finances. It recommends principles for allocation of taxes, tolls and fees, grants to Panchayats and measures to strengthen their fiscal position. This differs from the national Finance Commission.
Q16. In a recession, which actions constitute fiscal stimulus?
I. Lower taxes.
II. Increase government spending.
III. Abolish subsidies.
[UPSC CSE Prelims 2010]
(A) I and II only
(B) II only
(C) I and III only
(D) All three
Answer: (A) I and II only
Explanation: Fiscal stimulus deliberately supports aggregate demand in a slowdown. Tax cuts raise disposable income, while higher government purchases directly support activity. Eliminating subsidies generally removes fiscal support and can depress demand, so it is not an expansionary stimulus measure.
Q15. Which Ministry of Finance department is responsible for preparing the Union Budget for presentation to Parliament?
[UPSC CSE Prelims 2010]
(A) Department of Revenue
(B) Department of Economic Affairs
(C) Department of Financial Services
(D) Department of Expenditure
Answer: (B) Department of Economic Affairs
Explanation: The Budget Division of the Department of Economic Affairs has traditionally coordinated preparation of the Union Budget. Other departments supply inputs on revenues, financial services and expenditure. Budget presentation is undertaken by the Finance Minister, but the drafting responsibility rests with this division.
Q14. Which measures directly help contain India’s fiscal deficit?
I. Encourage private FDI.
II. Privatise higher education.
III. Reduce bureaucratic size.
IV. Sell government PSU shares.
[UPSC CSE Prelims 2010]
(A) I, II and III
(B) II, III and IV
(C) I, II and IV
(D) III and IV only
Answer: (D) III and IV only
Explanation: Reducing the administrative wage bill can lower public spending, while PSU disinvestment generates non-debt capital receipts. General private-sector FDI does not directly finance the budget. The exam singled out downsizing and disinvestment as identifiable fiscal-deficit measures.
Q13. Which tax’s share in India’s gross tax revenue declined significantly during the five years preceding the 2010 examination?
[UPSC CSE Prelims 2010]
(A) Service tax
(B) Personal income tax
(C) Excise duty
(D) Corporation tax
Answer: (C) Excise duty
Explanation: The relevant historical budget data showed a substantial decline in the share of Union excise receipts. Changes in rates, production and the increasing contribution from income and service taxes affected the tax mix. This answer refers to the period specified in the 2010 paper.
Q12. Which of the following were direct taxes?
I. Fringe Benefit Tax.
II. Interest Tax.
III. Securities Transaction Tax.
[UPSC CSE Prelims 2009]
(A) I only
(B) I and III only
(C) II and III only
(D) I, II and III
Answer: (D) I, II and III
Explanation: All three named taxes were categorised as direct taxes in the context of the 2009 examination. Fringe Benefit Tax and Interest Tax have since been withdrawn or phased out, so the answer must be understood historically rather than as a description of current collections.
