Public Finance, Budget and Taxation

VidyaarOctober 26, 20260203 views

Q180. In fiscal policy, what does the crowding-out effect principally mean?

[UPSC CSE Prelims 2026]

(A) Public borrowing stimulates additional private investment

(B) Government borrowing raises interest rates and reduces private investment

(D) Government expenditure has no effect on aggregate demand

Answer: (B) Government borrowing raises interest rates and reduces private investment

Explanation: When the government borrows heavily, demand for available loanable funds may rise, pushing up financing costs for firms. As private projects become less profitable at higher interest rates, some investments are deferred. This displacement is called crowding out.

[RRB Group D, 4 August 2026, Shift 3]

(A) 6.0%

(B) 5.2%

(D) 4.3%

Answer: (D) 4.3%

Explanation: The Union Budget for 2026–27 projected the fiscal deficit at 4.3% of GDP. This ratio compares the government’s borrowing requirement with total economic output, allowing comparisons between financial years even when expenditure and nominal GDP change.

[RRB Group D, 9 August 2026, Shift 3]

(A) 32%

(B) 51%

(D) 41%

Answer: (D) 41%

Explanation: The Sixteenth Finance Commission retained a 41% vertical tax devolution recommendation for States. The divisible pool comprises shareable Union tax proceeds after constitutional exclusions. This percentage concerns allocation between Centre and States, not distribution among individual States.

Q177. Consider the Finance Commission:
I. It is quasi-judicial.
II. It is associated with Article 280.
III. The President constitutes it.
IV. It is formed after every six years.

Which statements are correct?

[RRB NTPC (Graduate) CBT-I, 27 March 2026, Shift 2]

(A) I, II and III only

(B) I and II only

(D) IV only

Answer: (A) I, II and III only

Explanation: Article 280 provides for a Finance Commission constituted by the President every five years, or earlier when required. The institution recommends revenue sharing and grants. Thus the first three assertions are correct; the six-year interval is not constitutional.

Q176. What is a principal objective of fiscal policy in India?

[RRB NTPC (Undergraduate) CBT-I, 9 May 2026, Shift 2]

(A) Increasing inflation

(B) Economic growth and stability

(D) Restricting all foreign trade

Answer: (B) Economic growth and stability

Explanation: Fiscal policy manages public expenditure, taxation and government borrowing to influence demand, employment and resource allocation. Its broad purpose is sustainable growth with macroeconomic stability, not automatically raising prices or deficits. Measures can be expansionary or contractionary depending on circumstances.

Q175. What was the primary purpose of introducing state-level VAT in India before GST?

[SSC GD Constable, 20 May 2026, Shift 1]

(A) Replacing all direct taxes with one levy

(B) Reducing the cascading effect of indirect taxes

(D) Protecting domestic producers solely through higher customs tariffs

Answer: (B) Reducing the cascading effect of indirect taxes

Explanation: Value Added Tax allowed input-tax adjustment against tax payable on sales, thereby curbing the tax-on-tax problem. It preceded GST and modernised state sales taxation. VAT did not replace income tax or serve mainly as a protective import tariff.

Q174. Which colonial legislation first permitted discussion of the budget in Indian legislative councils?

[SSC GD Constable, 22 May 2026, Shift 3]

(A) Indian Councils Act, 1892

(B) Indian Councils Act, 1861

(D) Government of India Act, 1919

Answer: (A) Indian Councils Act, 1892

Explanation: The Indian Councils Act of 1892 expanded legislative councils and permitted discussion of the annual financial statement, although members could not vote on it. This was an early step in legislative scrutiny of public finances under British rule.

Q173. Under the Union Budget 2025–26 announcement, what ordinary-income threshold attracted no tax after rebate under the new income-tax regime?

[RRB Group D, 8 January 2026, Shift 1]

(A) ₹12 lakh

(B) ₹10 lakh

(D) ₹13 lakh

Answer: (A) ₹12 lakh

Explanation: The Budget raised the rebate mechanism so eligible resident individuals with ordinary taxable income up to ₹12 lakh paid no income tax under the new regime. This effective relief results from the section 87A rebate, not a zero-rate slab up to ₹12 lakh.

Q172. Before the insurance-premium GST exemption proposal discussed in 2025, what GST rate applied to health insurance premiums?

[RRB Group D, 10 February 2026, Shift 1]

(A) 10%

(B) 12%

(D) 18%

Answer: (D) 18%

Explanation: Health-insurance premiums had generally attracted 18% GST before the proposed exemption became a policy issue in 2025. The question concerns the historical rate, not the later applicable position. Indirect taxes are borne through the price of the taxable service.

Q171. Which Union Budget 2025–26 initiative aimed to monetise public assets worth ₹10 lakh crore by 2030?

[RRB Group D, 2 February 2026, Shift 2]

(A) Swachh Bharat Mission

(B) Postal Life Insurance

(D) National Agriculture Market

Answer: (C) Second Asset Monetisation Plan

Explanation: The Second Asset Monetisation Plan was announced to unlock value from existing infrastructure and mobilise capital for additional projects. Monetisation does not necessarily mean permanent privatisation: it can transfer operating or revenue rights for a defined period.

Q170. Which initiative announced in Union Budget 2026–27 aimed to transform the sports ecosystem over the next decade?

[RRB Group D, 18 August 2026, Shift 1]

(A) Sports Talent Nurturing

(B) Khelo India Mission

(D) National Sports Excellence Programme

Answer: (B) Khelo India Mission

Explanation: The Khelo India Mission was presented as a long-term approach to developing India’s sports ecosystem. Budget-funded initiatives can support infrastructure, talent identification and training. The question concerns the named budget announcement rather than the accounting classification of expenditure.

Q169. Which small-business support measure with an outlay of ₹10,000 crore was announced in Union Budget 2026?

[RRB Group D, 18 August 2026, Shift 1]

(A) Direct-tax slab revision for salaried employees

(B) Export incentives restricted to large corporations

(D) SME Growth Fund

Answer: (D) SME Growth Fund

Explanation: The SME Growth Fund announcement targeted support for smaller businesses through a dedicated ₹10,000-crore facility. Such budget interventions seek to address funding constraints for enterprises. Its named instrument, rather than changes to employee tax slabs, is the tested fact.

Q168. Which constitutional Article establishes the Finance Commission?

[DSSSB MTS, 1 August 2026, Shift 1]

(A) Article 280

(B) Article 19

(D) Article 51A

Answer: (A) Article 280

Explanation: Article 280 authorises the President to constitute a Finance Commission. It recommends sharing of Union tax proceeds and principles for grants-in-aid to States. Article 324 concerns the Election Commission, while Articles 19 and 51A address rights and duties.

Q167. Which policy tool directly influences aggregate demand through government spending?

[SSC Selection Post, Higher Secondary, 19 September 2026, Shift 2]

(A) Monetary policy

(B) Fiscal policy

(D) Trade policy

Answer: (B) Fiscal policy

Explanation: Fiscal policy changes public spending and taxation to affect total demand, output and employment. Government purchases directly create demand for goods and services. Monetary policy, by contrast, chiefly alters borrowing conditions and liquidity through central-bank instruments such as interest rates.

[DSSSB Court Attendant, 28 June 2026, Shift 2]

(A) Determination of foreign exchange rates

(B) Regulation of stock markets

(D) Management of government expenditure and taxation

Answer: (D) Management of government expenditure and taxation

Explanation: Fiscal policy involves decisions on how much government spends, the taxes it collects and the borrowing needed to meet expenditure. Its effect is transmitted through public demand, household disposable income and investment incentives rather than direct central-bank control of money supply.

Q165. Which fiscal-policy statements are correct?
I. It is formulated by the Central Government.
II. It deals with government revenue and expenditure.
III. It is implemented by the RBI.

[UPHESC Assistant Professor (Commerce), 19 April 2026, Shift 2]

(A) I and III only

(B) I and II only

(D) I, II and III

Answer: (B) I and II only

Explanation: The elected government frames fiscal choices through the budget and associated legislation. These cover taxes, public expenditure and borrowing. The Reserve Bank manages monetary-policy operations rather than implementing the central government’s fiscal policy, so the third statement is incorrect.

Q164. Who appoints the Chairperson of the Finance Commission of India?

[MP Police Sub-Inspector, 18 January 2026, Shift 1]

(A) Vice-President

(B) Prime Minister

(D) President of India

Answer: (D) President of India

Explanation: Article 280 empowers the President to constitute the Finance Commission, including its chairperson and other members. The Commission advises on divisible taxes and grants between the Union and States. Its recommendations inform fiscal transfers but are not an independent power to levy tax.

Q163. What total expenditure was estimated in the Union Budget 2025–26?

[RRB NTPC Undergraduate CBT-I, 19 June 2026, Shift 2]

(A) ₹40 lakh crore

(B) ₹55 lakh crore

(D) ₹50.65 lakh crore

Answer: (D) ₹50.65 lakh crore

Explanation: The Union Budget 2025–26 put total estimated expenditure at approximately ₹50.65 lakh crore. This comprises both revenue and capital spending, including substantial infrastructure allocations. Budget estimates are prospective allocations, so they can differ from revised estimates and eventual audited expenditure.

Q162. Under which framework were State governments urged in December 2025 to keep their borrowing within prescribed fiscal limits?

[RRB NTPC Graduate CBT-I, 16 March 2026, Shift 1]

(A) FRBM framework

(B) Monetary Policy framework

(D) GST framework

Answer: (A) FRBM framework

Explanation: Fiscal Responsibility and Budget Management rules and corresponding State legislation support prudent deficit and borrowing policies. States receive fiscal-deficit and borrowing guidance through constitutional and financial arrangements. Monetary policy and GST serve different purposes and are not debt-limit frameworks.

Q161. Which of these statements about capital receipts are true?
I. They create a liability or reduce government assets.
II. Borrowing and disinvestment are capital receipts.
III. Interest received on government loans creates a government liability.

[UPSC CSE Prelims 2025]

(A) I and II only

(B) II and III only

(D) I, II and III

Answer: (A) I and II only

Explanation: Borrowing increases liabilities, while selling equity in public enterprises reduces financial assets; both are capital receipts. Interest earned on advances represents non-tax revenue and does not create a repayment obligation. Consequently, statements I and II alone hold.

Q160. If revenue expenditure is ₹80,000 crore, revenue receipts ₹60,000 crore, borrowing ₹10,000 crore and interest payments ₹6,000 crore, which are true?
I. Revenue deficit ₹20,000 crore.
II. Fiscal deficit ₹10,000 crore.
III. Primary deficit ₹4,000 crore.

[UPSC CSE Prelims 2025]

(A) I and II only

(B) II and III only

(D) I, II and III

Answer: (D) I, II and III

Explanation: Revenue deficit equals ₹80,000 minus ₹60,000, or ₹20,000 crore. Government borrowing of ₹10,000 crore reflects the fiscal shortfall. Deducting ₹6,000 crore interest from fiscal deficit gives a ₹4,000-crore primary deficit. All three statements therefore agree with the definitions.

Q159. A government has fiscal deficit ₹50,000 crore and interest liabilities ₹1,500 crore. Non-debt capital receipts are ₹10,000 crore. What is the gross primary deficit?

[UPSC CSE Prelims 2025]

(A) ₹48,500 crore

(B) ₹51,500 crore

(D) None of these

Answer: (A) ₹48,500 crore

Explanation: Gross primary deficit is fiscal deficit less net interest liabilities. Subtracting ₹1,500 crore from ₹50,000 crore gives ₹48,500 crore. The ₹10,000-crore non-debt capital receipt is already accounted for when fiscal deficit is measured and is not removed again.

Q158. Regarding the Fifteenth Finance Commission, which are correct?
I. ₹4,800 crore education grants.
II. 45% central-tax devolution.
III. ₹45,000 crore agricultural-reform incentive.
IV. Restoration of tax-effort criterion.

[UPSC CSE Prelims 2025]

(A) I, II and III

(B) I, II and IV

(D) II, III and IV

Answer: (C) I, III and IV

Explanation: The Fifteenth Commission proposed the education and agricultural incentives and reintroduced tax effort as a distribution criterion. However, its States’ vertical share was 41%, not 45%, of the divisible pool. Hence the incorrect second statement must be excluded.

Q157. Which comparison about agricultural income and rural land under the Income-tax Act, 1961 is accurate?
I. Rural poultry and wool income is always tax-exempt.
II. Rural agricultural land is excluded from the definition of capital asset.

[UPSC CSE Prelims 2025]

(A) Both correct; II explains I

(B) Both correct; II does not explain I

(D) Only II correct

Answer: (D) Only II correct

Explanation: Exemption of agricultural income is tied to qualifying agricultural land, not automatically to poultry or wool production. Separately, rural agricultural land is generally excluded from capital assets for capital-gains purposes. Thus the two statements have different legal treatments.

Q156. Regarding government revenue enforcement, how many of these alignments are correct?
I. Enforcement Directorate—Home Ministry Internal Security Division.
II. Directorate of Revenue Intelligence—Department of Revenue, Customs Act.
III. DG Systems and Data Management—lead agency for CBIC risk analytics.

[UPSC CSE Prelims 2025]

(A) Only one

(B) Only two

(D) None

Answer: (A) Only one

Explanation: The Directorate of Revenue Intelligence operates within the Department of Revenue on customs intelligence and enforcement. The Enforcement Directorate also belongs under the Finance Ministry, not the indicated Home division. CBIC’s dedicated risk-analytics agency is DGARM.

Q155. Consider:
I. Income tax and dividends received from public-sector companies are revenue receipts.
II. Disinvestment proceeds from PSU shares are revenue receipts.

Which statement is correct?

[SSC CGL Tier I, 26 September 2025, Shift 2]

(A) Only I

(B) Only II

(D) Neither I nor II

Answer: (A) Only I

Explanation: Income tax is tax revenue and PSU dividends are non-tax revenue, so both appear in the revenue account. Sale of government shareholding reduces financial assets and is recorded as non-debt capital receipt. Consequently the second proposition is incorrect.

Q154. Why is a revenue deficit considered economically concerning?

[SSC CGL Tier I, 23 September 2025, Shift 2]

(A) It necessarily raises productive investment

(B) It improves the trade surplus

(D) It automatically boosts asset creation

Answer: (C) It suggests borrowing to finance current expenditure

Explanation: When ordinary receipts cannot cover salaries, interest, subsidies and similar recurrent spending, the government may rely on borrowing. This creates repayment commitments without necessarily creating productive assets, limiting fiscal space in future years. Hence a persistent revenue deficit merits attention.

Q153. Which is an example of a government capital receipt?

[SSC CGL Tier I, 22 September 2025, Shift 3]

(A) Income-tax collection

(B) Dividends from public-sector companies

(D) Fees earned from public services

Answer: (C) A loan taken from the RBI

Explanation: An RBI loan received by the government produces a repayment liability and therefore qualifies as a capital receipt. Income taxes, PSU dividends and administrative fees do not create such a liability or dispose of an asset; these are revenue receipts.

Q152. What is another term for the revenue account of the government budget?

[SSC CGL Tier I, 21 September 2025, Shift 2]

(A) Finance budget

(B) Expenditure budget

(D) Capital budget

Answer: (C) Revenue budget

Explanation: The revenue budget reports recurring receipts, including taxes and fees, together with revenue expenditure such as interest and salaries. The capital budget separately records loans, asset sales, capital formation and repayment. Therefore the revenue account is termed the revenue budget.

Q151. How is the revenue deficit calculated?

[SSC CGL Tier I, 20 September 2025, Shift 3]

(A) Revenue expenditure minus revenue receipts

(B) Revenue receipts minus capital receipts

(D) Capital expenditure minus revenue expenditure

Answer: (A) Revenue expenditure minus revenue receipts

Explanation: The revenue deficit isolates a shortfall on the recurring side of the budget. It arises when revenue expenditure exceeds tax and non-tax revenue receipts. Capital receipts and capital expenditure belong to a different account and cannot replace these two terms.

Q150. On capital expenditure, assess:
I. It never creates physical or financial assets.
II. Buying machinery is capital expenditure.

Which is correct?

[SSC CHSL Tier I, 25 November 2025, Shift 1]

(A) Only I

(B) Only II

(D) Neither I nor II

Answer: (B) Only II

Explanation: Capital expenditure typically creates or acquires durable assets or reduces government liabilities. Machinery purchases ordinarily fall in this category. The claim that capital spending cannot create financial or physical assets is the opposite of its defining accounting characteristic.

Q149. What is the common name of the annual financial statement placed before Parliament?

[SSC Selection Post (Matriculation), 30 July 2025, Shift 1]

(A) Budget

(B) Economic Survey

(D) Fiscal policy

Answer: (A) Budget

Explanation: Article 112 requires an annual statement of estimated government receipts and expenditure for each financial year. This document is commonly called the Union Budget. The Economic Survey is separate and reviews the economy rather than replacing the annual financial estimates.

Q148. In the cited examination, which term was used as another name for a budgetary deficit?

[SSC Selection Post (Higher Secondary), 30 July 2025, Shift 2]

(A) Fiscal deficit

(B) Revenue deficit

(D) Trade deficit

Answer: (A) Fiscal deficit

Explanation: The examination used fiscal deficit as the relevant modern measure of a government budgetary shortfall. Fiscal deficit compares total outlay with non-borrowing receipts, revealing the borrowing requirement. Revenue, primary and trade deficits each capture a different balance.

Q147. What is a benefit of the input-tax-credit mechanism under GST?

[RPSC RAS Prelims 2024 (held 2 February 2025), Q40]

(A) It prevents cascading or double taxation

(B) It completely removes taxes on production

(D) It removes the need for traders to maintain records

Answer: (A) It prevents cascading or double taxation

Explanation: The input tax credit mechanism permits eligible businesses to offset GST already paid on purchases against the GST owed on outward supplies. Tax then effectively applies to incremental value instead of being repeatedly charged on the full value at successive stages.

Q146. About Rajasthan’s fiscal deficit, examine:
A. It was 3.76% of GSDP in 2022–23.
B. This was below the relevant FRBM limit.
C. It exceeded the 2021–22 fiscal deficit.
Which combination did the official examination key mark correct?

[RPSC RAS Prelims 2024 (held 2 February 2025), Q48]

(A) A and C only

(B) A and B only

(D) A, B and C

Answer: (D) A, B and C

Explanation: The Rajasthan state fiscal accounts were assessed against both the corresponding borrowing limit and the preceding year’s deficit. In the official key, all three statements were accepted. Such questions require reading the particular state budget’s historical figures, not national deficit numbers.

Q145. Article 243J of the Constitution concerns which aspect of Panchayat finances?

[CGPSC Prelims, 9 February 2025, Paper I]

(A) Constitution of a Finance Commission

(B) Audit of Panchayat accounts

(D) None of these

Answer: (B) Audit of Panchayat accounts

Explanation: Article 243J empowers the State Legislature to make provisions for maintaining and auditing Panchayat accounts. It concerns local financial accountability, whereas Article 243I deals with the State Finance Commission and the latter recommends fiscal transfers for Panchayati Raj bodies.

Q144. Which of these does NOT characterise expansionary fiscal policy?

[SSC CGL Tier I, 26 September 2025, Shift 1]

(A) Reduction in personal taxes

(B) Increase in government expenditure

(D) Reduction in business taxes

Answer: (C) Decrease in government expenditure

Explanation: Expansionary fiscal policy attempts to raise aggregate demand using higher public spending or lower taxation. Reduced government expenditure tends to have a contractionary effect instead. The other three measures generally support greater private disposable income or direct public demand.

Q143. Assertion: Revenue receipts create no repayment obligation for the government.
Reason: Such receipts are normally taxes or recurring non-tax inflows that do not have to be returned.

Which statement is accurate?

[SSC CGL Tier I, 25 September 2025, Shift 1]

(A) Both are correct and the reason explains the assertion

(B) Both are correct but the reason does not explain the assertion

(D) Assertion incorrect; reason correct

Answer: (A) Both are correct and the reason explains the assertion

Explanation: Revenue receipts include taxation and non-tax income such as interest, dividends and fees. They neither create an obligation to repay nor arise from selling government assets. The non-repayable character described in the reason therefore explains the assertion about liabilities.

Q142. Arrange these GST milestones chronologically:
I. GST Council constituted.
II. Constitution (101st Amendment) Act enacted.
III. Nationwide GST launched.

[SSC CGL Tier I, 16 September 2025, Shift 1]

(A) I, II, III

(B) II, I, III

(D) II, III, I

Answer: (B) II, I, III

Explanation: The constitutional amendment received assent in September 2016, and the GST Council was established under the newly inserted Article 279A shortly afterwards. Goods and Services Tax was rolled out on 1 July 2017. Hence the correct sequence is amendment, council, launch.

Q141. The recommendations of the Chellaiah Committee led to reform efforts in which field?

[CGPSC Prelims, 9 February 2025, Paper I]

(A) Monetary policy

(B) Trade policy

(D) Tax policy

Answer: (D) Tax policy

Explanation: The Raja J. Chelliah Tax Reforms Committee was constituted in 1991 to examine India’s tax structure. Its proposals emphasised rationalising rates, broadening the base and simplifying administration. Such work belongs to direct and indirect tax reform, not the management of money supply.

Q140. Match the Finance Commissions with their Chairpersons:

A. Eleventh; B. Twelfth; C. Thirteenth; D. Fourteenth.

Names: 1. C. Rangarajan; 2. Y. V. Reddy; 3. A. M. Khusro; 4. Vijay Kelkar.

[UPPSC PCS Prelims 2025, General Studies Paper I]

(A) A-3, B-1, C-4, D-2

(B) A-2, B-3, C-4, D-1

(D) A-1, B-3, C-2, D-4

Answer: (A) A-3, B-1, C-4, D-2

Explanation: A. M. Khusro led the Eleventh Finance Commission, C. Rangarajan the Twelfth, Vijay Kelkar the Thirteenth and Y. V. Reddy the Fourteenth. Remembering their award periods from 2000–05 through 2015–20 helps separate the chairpersons and associated tax-sharing recommendations.

Q139. What percentage of Madhya Pradesh’s total expenditure budget for 2023–24 was allocated to education?

[MPPSC State Service Prelims, 16 February 2025, Paper I]

(A) 12.22%

(B) 10.5%

(D) 15.0%

Answer: (C) 18.0%

Explanation: The examined state budget identified education as receiving about 18% of Madhya Pradesh’s expenditure allocation. Such sectoral shares reveal spending priorities, although actual expenditure can diverge from estimates. The percentage belongs to the particular budget year and should not be generalized to later budgets.

Q138. In which year was India’s Fiscal Responsibility and Budget Management Act enacted?

[SSC CHSL Tier I, 29 November 2025, Shift 3]

(A) 2007

(B) 2001

(D) 2005

Explanation: The FRBM Act was enacted in 2003 to strengthen fiscal transparency, budgeting discipline and responsibility for deficits. It required fiscal-policy statements alongside the Union Budget and provided a framework for monitoring borrowing and debt, although targets have been amended over time.

Q137. What is the primary objective of government fiscal policy?

[SSC Stenographer, 7 August 2025, Shift 1]

(A) To regulate money supply and interest rates

(B) To promote trade alone

(D) To supervise stock exchanges

Answer: (C) To influence economic activity using government spending and taxes

Explanation: Government purchases, transfers and taxation influence household spending, private investment and total output. This makes fiscal policy a tool for stabilising demand and supporting public services. Interest-rate setting belongs mainly to monetary policy, while securities supervision serves a different regulatory purpose.

Q136. Statutory grants under Article 275 to States are primarily recommended by which institution?

[SSC Stenographer, 8 August 2025, Shift 2]

(A) National Development Council

(B) Finance Commission

(D) NITI Aayog

Answer: (B) Finance Commission

Explanation: Article 275 deals with grants-in-aid from the Union to States, subject to parliamentary appropriation. The Finance Commission recommends principles and amounts for such grants in its fiscal-federalism mandate. Its constitutional foundation is Article 280, which distinguishes it from an executive planning body.

Q135. As of 1 May 2025, which of these persons was NOT a full-time member of India’s Sixteenth Finance Commission?

[RRB NTPC Undergraduate CBT-I, 8 September 2025, Shift 2]

(A) Annie George Mathew

(B) Ajay Narayan Jha

(D) Soumya Kanti Ghosh

Answer: (D) Soumya Kanti Ghosh

Explanation: Soumya Kanti Ghosh was associated with the Sixteenth Finance Commission as a part-time member. The other listed names were full-time members at the date specified. Such distinctions are important because a Finance Commission consists of a chairperson and appointed specialists with differing roles.

Q134. According to the Union Budget presented on 1 February 2025, ordinary income up to what level could qualify for nil income tax under the new regime through rebate?

[RRB NTPC Graduate CBT-I, 17 June 2025, Shift 1]

(A) ₹10 lakh

(B) ₹12 lakh

(D) ₹12.75 lakh

Answer: (B) ₹12 lakh

Explanation: The 2025 Budget provided a rebate resulting in nil income tax for eligible individuals with ordinary taxable income up to ₹12 lakh under the new regime. The effective benefit arises through tax rebate provisions, and the higher salary figure sometimes cited includes standard deduction.

Q133. Which was NOT an intended feature of the Income-tax Bill introduced in Parliament in February 2025?

[RRB NTPC Graduate CBT-I, 16 June 2025, Shift 2]

(A) Logical reorganisation of sections

(B) Discarding existing taxation principles without maintaining continuity

(D) Elimination of redundant provisions

Answer: (B) Discarding existing taxation principles without maintaining continuity

Explanation: The proposed income-tax legislation emphasised readability, streamlined numbering and removal of unnecessary repetition without arbitrarily abandoning the underlying policy architecture. Simplification of tax law concerns presentation and administration as well as legislative substance. The option proposing destruction of continuity contradicts that aim.

Q132. According to the Finance Ministry figure cited in this exam, what percentage of India’s population filed income-tax returns in FY 2023–24?

[RRB NTPC Graduate CBT-I, 14 June 2025, Shift 2]

(A) 66.8%

(B) 16.68%

(D) 36.68%

Answer: (C) 6.68%

Explanation: The examination referred to 6.68% of the population as filing income-tax returns during the specified fiscal year. Return filing is not equivalent to actually owing positive income tax, since exempt or zero-liability taxpayers may also be required to submit returns.

Q131. Under the original FRBM framework, to what percentage of GDP was the Union fiscal deficit targeted to be reduced by 2008–09?

[RRB NTPC Graduate CBT-I, 14 June 2025, Shift 1]

(A) 4%

(B) 2%

(D) 0.5%

Answer: (C) 3%

Explanation: The original FRBM fiscal-consolidation trajectory contemplated a deficit ceiling of 3% of GDP by 2008–09. Subsequent economic shocks and statutory changes altered timetables and targets. The question tests the original commitment rather than the fiscal-deficit level subsequently recorded.

Q130. In which financial year was the concept of Effective Revenue Deficit introduced in government budgeting?

[RRB NTPC Graduate CBT-I, 10 June 2025, Shift 2]

(A) 2011–12

(B) 2003–04

(D) 2008–09

Answer: (A) 2011–12

Explanation: Effective revenue deficit adjusts revenue deficit by excluding grants earmarked to create capital assets. The indicator was introduced in the 2011–12 budget framework to distinguish revenue expenditure that supports asset formation from expenditure for routine consumption or operations.

Q129. Which legislation was enacted in 2003 to institutionalise fiscal discipline and address deficits?

[RRB NTPC Undergraduate CBT-I, 19 August 2025, Shift 2]

(A) Companies Act

(B) Banking Regulation Act

(D) Fiscal Responsibility and Budget Management Act

Answer: (D) Fiscal Responsibility and Budget Management Act

Explanation: The FRBM Act of 2003 created a statutory framework for fiscal transparency, deficit management and government borrowing discipline. The Companies Act governs corporate affairs, banking legislation regulates banks and FEMA governs specified foreign-exchange matters. None of those alternatives is primarily the fiscal-deficit statute.

Q128. Which of these is NOT a direct tax?

[RRB NTPC Graduate CBT-II, 13 October 2025, Shift 1]

(A) Tax on capital gains

(B) Value Added Tax

(D) Income tax

Answer: (B) Value Added Tax

Explanation: VAT is levied through transactions involving goods and can be passed through the supply chain, so it is an indirect tax. Income tax, corporation tax and capital-gains taxation address earnings or gains attributable to the taxpayer and are classified as direct taxes.

Q127. For how many additional years did Budget 2025–26 extend the startup-incorporation deadline for claiming specified income-tax benefits?

[RRB NTPC Graduate CBT-I, 19 June 2025, Shift 2]

(A) Five years

(B) Six years

(D) Four years

Answer: (A) Five years

Explanation: The Budget extended the relevant incorporation cut-off for tax benefits under Section 80-IAC by five years. The provision supports qualifying start-ups by allowing a specified profit deduction subject to eligibility conditions. The extension changes the cut-off, not the definition of taxable profit.

Q126. Which tax was introduced in India in July 2017 to replace several central and state indirect taxes?

[RRB NTPC Undergraduate CBT-I, 1 September 2025, Shift 3]

(A) Income tax

(B) Excise duty

(D) Sales tax

Answer: (C) Goods and Services Tax

Explanation: GST began on 1 July 2017, bringing numerous indirect levies into a common value-added framework. Input tax credits reduce cascading, while the GST Council coordinates rates and administrative arrangements. Income tax remained a separate direct-tax levy rather than being replaced by GST.

Q125. Which direct-tax collection had increased according to the February 2023 budget comparison cited in the question?

[SSC CGL Tier I, 11 September 2024, Shift 1]

(A) Personal income tax

(B) Octroi

(D) Commercial tax

Answer: (A) Personal income tax

Explanation: The question identified personal income-tax collection as having risen in the specified budget comparison. Personal income tax is levied directly on eligible earners, whereas octroi and several commercial levies are indirect or local charges and are not equivalent categories.

Q124. Which is a non-tax revenue source for the government?

[SSC CGL Tier I, 13 September 2024, Shift 3]

(A) Fees and fines

(B) Personal income tax

(D) Value-added tax

Answer: (A) Fees and fines

Explanation: Fees for government services and penalties imposed under law are non-tax receipts. Income tax, corporation tax and VAT are tax receipts. Non-tax income can also include dividends, profits and interest earned on government lending.

Q123. Which Constitutional Amendment established the framework for a Goods and Services Tax Council?

[SSC CGL Tier I, 25 September 2024, Shift 3]

(A) 102nd Amendment

(B) 100th Amendment

(D) 103rd Amendment

Answer: (C) 101st Amendment

Explanation: The Constitution (One Hundred and First Amendment) Act, 2016 inserted Article 279A for the GST Council and enabled the GST framework. The Council coordinates recommendations on rates and related matters; GST was implemented from July 2017.

Q122. When is a government budget described as a deficit budget?

[SSC CGL Tier I, 26 September 2024, Shift 2]

(A) When both receipts and spending are zero

(B) When receipts exceed spending

(D) When spending exceeds receipts

Answer: (D) When spending exceeds receipts

Explanation: In elementary budget classification, a deficit arises when estimated government outgo exceeds incoming receipts. A surplus reverses the inequality, while equality defines a balanced budget. More specific concepts such as fiscal or revenue deficit apply particular exclusions and adjustments.

Q121. From which Union Budget year was the separate practice of showing a budget deficit discontinued?

[SSC GD Constable, 5 March 2024, Shift 1]

(A) 1996–97

(B) 1995–96

(D) 1992–93

Explanation: India discontinued separately presenting the traditional budget-deficit measure from the 1997–98 Budget, placing more emphasis on fiscal deficit as the indicator of overall borrowing need. Modern deficit measures show the financing gap more consistently than the earlier budget-deficit presentation.

Q120. Assess the Uttar Pradesh Budget 2023–24 claims:
I. Total size ₹7,60,000 crore.
II. Fiscal deficit ₹84,883.16 crore.

Which is correct?

[UPPSC RO/ARO, 11 February 2024]

(A) Both I and II

(B) Only II

(D) Only I

Answer: (B) Only II

Explanation: The Uttar Pradesh Budget 2023–24 was approximately ₹6.90 lakh crore, so the first amount is overstated. The cited fiscal-deficit estimate of ₹84,883.16 crore was correct. The question tests precise state-budget figures for that financial year.

Q119. About the Union Budget:
I. The Finance Minister lays the Annual Financial Statement for the government headed by the Prime Minister.
II. No demand for a grant can be made without the President’s recommendation.

Which answer was accepted in the UPSC key?

[UPSC CSE Prelims 2024]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (C) Both I and II

Explanation: The UPSC key accepted both statements. Article 112 governs the annual statement, while Article 113 expressly requires presidential recommendation for demands for grants. Note the wording of statement I has drawn constitutional criticism because the President formally causes presentation of the statement.

Q118. Consider two claims about US Treasury debt:
I. In a default, bondholders cannot obtain due payments.
II. Treasury debt is backed by government credit rather than pledged hard assets.

Which answer did UPSC accept?

[UPSC CSE Prelims 2024]

(A) Both correct and II explains I

(B) Both correct but II does not explain I

(D) I incorrect, II correct

Answer: (A) Both correct and II explains I

Explanation: UPSC treated both assertions as correct, linking payment failure during default with reliance on government credit rather than collateral. A legal distinction remains: default does not extinguish the underlying claim. This item reproduces the accepted examination interpretation, not a universal legal conclusion.

Q117. Who was appointed Chairman of India’s Sixteenth Finance Commission?

[MPPSC Assistant Professor, Economics Paper II, 4 August 2024]

(A) Raghuram Rajan

(B) M. K. Singh

(D) Arvind Panagariya

Answer: (D) Arvind Panagariya

Explanation: Arvind Panagariya was appointed Chairman of the Sixteenth Finance Commission. Constituted under Article 280, the commission examines the sharing of central taxes and fiscal transfers between tiers of government. A chairman’s appointment does not itself prescribe the actual devolution percentage.

Q116. What does a budget deficit show?

[SSC MTS, 11 November 2024, Shift 2]

(A) Government expenditure exceeds government revenue

(B) No expenditure is allocated to public services

(D) Government revenue exceeds expenditure

Answer: (A) Government expenditure exceeds government revenue

Explanation: A deficit signals that government expenditure is greater than the receipts considered in the relevant budget definition. Borrowing, drawing down balances or other financing arrangements may be needed. Do not confuse this general concept with the more precise fiscal-deficit and revenue-deficit accounting measures.

Q115. Which of the following constitutes a capital receipt in the government budget?

[SSC CGL Tier I, 25 September 2024, Shift 2]

(A) Grants received from another government

(B) Interest received on government bonds

(D) Personal income tax receipts

Answer: (C) Proceeds from selling government assets

Explanation: Selling an existing government asset reduces the public sector’s stock of assets, so the proceeds are a capital receipt. Grants, interest and income tax generally form revenue receipts. This distinction is essential when measuring the non-borrowing components of fiscal deficit.

Q114. Select the historical order of these Indian levies:
I. Land revenue.
II. Sales tax.
III. MODVAT.
IV. Service tax.

[SSC CGL Tier I, 17 September 2024, Shift 3]

(A) III, II, IV, I

(B) IV, II, I, III

(D) II, IV, I, III

Answer: (C) I, II, III, IV

Explanation: Land revenue is among the oldest forms of government taxation. Sales taxes followed in modern tax administration; MODVAT was introduced in 1986, and service tax began in 1994. These successive changes illustrate how India’s indirect-tax system evolved before GST.

Q113. Why were wealth tax and gift tax sometimes described as paper taxes in India?

[SSC MTS, 21 October 2024, Shift 1]

(A) Collection was optional for government

(B) Their revenue yield was small compared with other taxes

(D) Only legislators paid them

Answer: (B) Their revenue yield was small compared with other taxes

Explanation: The expression paper tax referred to levies whose administrative presence was much more prominent than their revenue contribution. It did not imply voluntary payment or physical paper filing. India abolished the former wealth-tax levy and has separate income-tax rules for taxable gifts.

Q112. If a tax rate rises as the taxable base rises, what type of tax is it?

[SSC MTS, 9 October 2024, Shift 3]

(A) Digressive

(B) Progressive

(D) Proportional

Answer: (B) Progressive

Explanation: A progressive tax schedule subjects higher taxable income ranges to higher marginal rates. This differs from proportional taxation, which applies a constant rate, and regressive taxation, whose average burden falls as income rises. Progressive taxation is associated with ability-to-pay considerations.

Q111. Which levy is excluded from the divisible pool of central taxes shared with States?

[CDS-II General Knowledge, 1 September 2024]

(A) Personal income tax

(B) Corporation tax

(D) Union excise duties

Answer: (C) Surcharge and cess

Explanation: Under the constitutional tax-devolution framework, shareable Union tax proceeds constitute the divisible pool. Surcharges under Article 271 and cesses earmarked for specific purposes are generally excluded. Ordinary corporation and personal income taxes contribute to the shareable proceeds, subject to constitutional arrangements.

Q110. What constitutes a revenue deficit in a government budget?

[SSC CHSL Tier I, 11 July 2024, Shift 3]

(A) Expenditure exceeding revenue, excluding interest payments

(B) Revenue exceeding expenditure, excluding interest payments

(D) Revenue expenditure exceeding revenue receipts, including interest payments

Answer: (D) Revenue expenditure exceeding revenue receipts, including interest payments

Explanation: Revenue deficit equals revenue expenditure minus revenue receipts. Revenue expenditure includes regular spending such as salaries, pensions, subsidies and interest. Therefore interest payments are not excluded in this measure. A positive deficit suggests that current receipts fail to cover recurring commitments.

Q109. What is a principal objective of the Fiscal Responsibility and Budget Management Act, 2003?

[SSC CHSL Tier I, 2 July 2024, Shift 2]

(A) Reducing the fiscal deficit

(B) Reducing subsidies alone

(D) Increasing exports

Answer: (A) Reducing the fiscal deficit

Explanation: The FRBM legislation seeks prudent deficit and debt management along with transparency in government finances. Lowering unsustainable fiscal shortfalls is central to that purpose. It does not prescribe excise-tax increases or export growth as its sole or direct statutory objective.

Q108. Which Article of the Constitution deals with the Finance Commission of India?

[SSC GD Constable, 21 February 2024, Shift 1]

(A) Article 280

(B) Article 290

(D) Article 270

Answer: (A) Article 280

Explanation: Article 280 mandates the periodic constitution of the Finance Commission by the President. Its recommendations address tax devolution, grants and local-body fiscal support. Article 270, by contrast, concerns the sharing of certain taxes, not the creation of the Commission itself.

Q107. The Finance Commission of India consists of a chairperson and how many other members?

[SSC GD Constable, 5 March 2024, Shift 1]

(A) Six

(B) Three

(D) Four

Answer: (D) Four

Explanation: The Finance Commission comprises a chairperson and four other members appointed by the President. Parliament prescribes qualifications and selection requirements. This five-person structure enables expertise in public administration, economics and fiscal transfers, and differs from membership of the GST Council.

Q106. What is a principal purpose of the government budget in the economy?

[SSC GD Constable, 1 March 2024, Shift 3]

(A) Measuring inflation directly

(B) Promoting international trade alone

(D) Calculating GDP directly

Answer: (C) Allocating available resources efficiently

Explanation: A budget authorises and prioritises spending on public services, infrastructure and transfers, using revenue and borrowing resources. It also influences economic stability and distribution. Inflation and GDP are measured using separate statistical systems rather than being calculated by the budget itself.

Q105. The government statement showing expected receipts and expenditure for the upcoming financial year is called what?

[SSC GD Constable, 26 February 2024, Shift 3]

(A) Policy

(B) Revenue

(D) Budget

Answer: (D) Budget

Explanation: The government budget summarises anticipated receipts, expenditure and related fiscal measures for the coming year. In constitutional terminology, the Union’s Annual Financial Statement is submitted under Article 112. Its forward-looking estimates should be distinguished from actual accounts of the preceding year.

Q104. In a government budget, what does fiscal deficit represent?

[SSC GD Constable, 6 March 2024, Shift 2]

(A) A surplus of funds available for spending

(B) The full outstanding stock of public debt

(D) The amount spent on defence

Answer: (C) The shortfall of receipts excluding borrowings against expenditure

Explanation: Fiscal deficit measures expenditure exceeding revenue receipts plus non-debt capital receipts, thereby approximating the government’s borrowing requirement for the period. Outstanding public debt is a stock accumulated over time and is not identical to a single year’s deficit.

Q103. How many priorities were identified under the Saptarishi framework of Union Budget 2023–24?

[SSC GD Constable, 23 February 2024, Shift 2]

(A) Seven

(B) Five

(D) Nine

Answer: (A) Seven

Explanation: The 2023–24 Budget described seven Saptarishi priorities, encompassing inclusive development, reaching the last mile, infrastructure, unleashing potential, green growth, youth and the financial sector. These themes organised budget policy commitments and should not be confused with seven individual expenditure accounts.

Q102. What is the standard financial year for government budgeting in India?

[SSC GD Constable, 23 February 2024, Shift 1]

(A) 1 October to 30 September

(B) 1 April to 31 March

(D) 1 July to 30 June

Answer: (B) 1 April to 31 March

Explanation: India’s government financial year begins on 1 April and ends on 31 March of the following calendar year. Annual revenue, expenditure, fiscal-deficit estimates and direct-tax assessments are ordinarily organised around this period, rather than the January-to-December calendar year.

Q101. About revenue receipts, consider:
A. They do not create a repayment claim against government.
B. They comprise tax and non-tax receipts.

Which is correct?

[SSC GD Constable, 26 February 2024, Shift 1]

(A) Both A and B

(B) Neither A nor B

(D) B only

Answer: (A) Both A and B

Explanation: Revenue receipts do not increase repayment liabilities or result in disposal of government assets. They include taxes, fees, dividends and some grants. Borrowing proceeds, by contrast, are capital receipts because lenders acquire a claim against the government for repayment.

Q100. In economic accounting, a fiscal deficit is regarded as which kind of variable?

[SSC MTS, 1 October 2024, Shift 1]

(A) Surplus concept

(B) Stock concept

(D) Flow concept

Answer: (D) Flow concept

Explanation: A fiscal deficit is measured over a financial year, making it a flow. Public debt outstanding on a particular date is a stock. The distinction matters because one year’s deficit contributes to changes in the stock of government liabilities over time.

Q99. Which statements about India’s Union Budget are correct?
A. It reflects government priorities.
B. It reports financial performance.
C. It gives ministry-wise expenditure details.

[SSC MTS, 8 October 2024, Shift 3]

(A) A, B and C

(B) A and B only

(D) A only

Answer: (A) A, B and C

Explanation: The Union Budget communicates government policy objectives, presents estimates alongside earlier actuals or revisions and details spending by ministries and services. Together these elements enable legislative scrutiny and comparisons with policy promises. Hence the examination treats all three descriptions as correct.

Q98. Which expression represents the revenue deficit?

[SSC MTS, 5 November 2024, Shift 3]

(A) Primary deficit plus fiscal deficit

(B) Revenue expenditure plus revenue receipts

(D) Revenue expenditure minus revenue receipts

Answer: (D) Revenue expenditure minus revenue receipts

Explanation: Revenue deficit equals revenue expenditure less revenue receipts. It indicates that recurrent revenues cannot finance all recurrent expenditures such as interest, salaries and subsidies. The concept differs from fiscal deficit, which also incorporates capital spending and non-debt capital receipts.

Q97. Which equation represents gross fiscal deficit in borrowing-source terms?

[SSC CGL Tier I, 24 July 2023, Shift 2]

(A) Domestic borrowing − RBI borrowing + foreign borrowing

(B) Domestic borrowing + RBI borrowing + foreign borrowing

(D) Domestic borrowing − RBI borrowing − foreign borrowing

Answer: (B) Domestic borrowing + RBI borrowing + foreign borrowing

Explanation: Gross fiscal deficit indicates the government’s financing requirement and can be matched with borrowing from domestic markets, the central bank and external creditors. Adding all relevant borrowing sources produces the correct financing-side expression rather than subtracting an individual source.

Q96. Which combination of expenditure and receipts does a budget show for the forthcoming financial year?

[SSC CGL Tier I, 21 July 2023, Shift 4]

(A) Estimated expenditure; actual receipts

(B) Actual expenditure; estimated receipts

(D) Estimated expenditure; estimated receipts

Answer: (D) Estimated expenditure; estimated receipts

Explanation: A budget is a forward-looking financial plan containing estimated receipts and expenditure. Actual figures are known only after transactions occur and are reported through accounts and subsequent budget documents. Hence both figures in the statement are estimates.

Q95. Who chaired the Fifteenth Finance Commission of India?

[SSC CGL Tier I, 21 July 2023, Shift 4]

(A) Vijay Kelkar

(B) N. K. Singh

(D) A. K. Chanda

Answer: (B) N. K. Singh

Explanation: N. K. Singh chaired the Fifteenth Finance Commission, which recommended intergovernmental transfers for 2021–26. Vijay Kelkar chaired the Thirteenth Commission and Y. V. Reddy the Fourteenth. Finance Commissions are constituted under Article 280.

Q94. Goods and Services Tax is an example of which category?

[SSC CGL Tier I, 20 July 2023, Shift 3]

(A) Compensation of employees

(B) Direct tax

(D) Indirect tax

Answer: (D) Indirect tax

Explanation: GST is imposed on taxable supplies and ultimately borne through purchases by consumers, making it an indirect tax. Direct taxes generally fall on income or wealth of the payer. Employee compensation and transfer payments are expenditure concepts, not taxes.

Q93. What is a principal function of the Finance Commissions of India?

[WBCS Mains (Polity and Economy) 2023]

(A) Evaluate only the Union government’s own financial condition

(B) Recommend distribution of tax revenue between Union and States

(D) Lay down rates of all taxes

Answer: (B) Recommend distribution of tax revenue between Union and States

Explanation: The Finance Commission recommends distribution of divisible Union tax proceeds vertically and among States horizontally, plus certain grants. It does not itself enact tax rates or approve the Union Budget. Its recommendations are advisory and concern fiscal federalism.

Q92. After what regular interval is the Finance Commission constituted by the President?

[WBCS Mains (Polity and Economy) 2023]

(A) Ten years

(B) Five years

(D) Twelve years

Answer: (B) Five years

Explanation: Article 280 calls for appointment of a Finance Commission every fifth year or earlier if the President thinks necessary. Its periodic recommendations address tax devolution and grants across the federal system, not a ten-year census cycle.

[UPSC CSE Prelims 2023]

(A) Only one

(B) Only two

(D) None

Answer: (A) Only one

Explanation: The Pact establishes fiscal-discipline rules for European Union members, including deficit and debt reference values. It does not create compulsory infrastructure-sharing or technology-sharing arrangements. Only the first description falls within its stated public-finance purpose.

Q90. On Infrastructure Investment Trusts:
I. Interest distributions to investors are exempt while dividends are taxable.
II. InvITs are recognised as borrowers under SARFAESI legislation.

Which is correct?

[UPSC CSE Prelims 2023]

(A) Both correct and II explains I

(B) Both correct but unrelated

(D) Only II correct

Answer: (D) Only II correct

Explanation: Interest flowing through an InvIT to unitholders is generally taxed in their hands, invalidating the proposed blanket exemption. Legislative changes recognise pooled investment vehicles as borrowers for SARFAESI purposes. This makes the second statement correct and the first false.

Q89. Which constitutional Article provides for discretionary grants by the Union or States for any public purpose?

[CGPSC Prelims 2023, General Studies]

(A) Article 275

(B) Article 281

(D) Article 228

Answer: (C) Article 282

Explanation: Article 282 allows the Union and State governments to make grants for any public purpose even if that purpose is outside their ordinary legislative field. These discretionary grants are distinct from the statutory grants-in-aid envisaged by Article 275 of the Constitution.

Q88. What does the expression budget deficit indicate?

[SSC MTS, 1 September 2023, Shift 3]

(A) Government revenue exceeding expenditure

(B) The allocation exclusively for defence

(D) Government expenditure exceeding revenue

Answer: (D) Government expenditure exceeding revenue

Explanation: A budget deficit is a shortfall when the government’s expenditure exceeds its receipts under the relevant budget presentation. It is different from a particular departmental allocation. Modern Indian fiscal reporting emphasizes fiscal, revenue and primary deficits, each defined by specified receipt and expenditure categories.

Q87. What is a government budget?

[SSC MTS, 8 September 2023, Shift 3]

(A) A historical report measuring GDP

(B) A family’s financial plan

(D) A statement of foreign-policy priorities

Answer: (C) A statement of estimated government receipts and expenditure for a period

Explanation: The government budget sets out proposed revenues, borrowings, spending and related fiscal policy for the financial year. In India, the Constitution calls the principal document the Annual Financial Statement, and Parliament exercises control over the proposed withdrawals from the Consolidated Fund.

Q86. Under Union Budget 2023–24, how much of every rupee of government receipts was shown as coming from corporation tax?

[SSC MTS, 12 May 2023, Shift 1]

(A) 4 paise

(B) 15 paise

(D) 7 paise

Answer: (B) 15 paise

Explanation: The Union Budget 2023–24 composition infographic attributed fifteen paise per rupee of receipts to corporation tax. Budget receipt charts commonly express tax and borrowing sources as portions of one rupee, which must not be confused with rates imposed on corporate profits.

Q85. Non-tax revenue forms part of which section of government accounts?

[SSC CGL Tier I, 25 July 2023, Shift 3]

(A) Revenue expenditure

(B) Revenue receipts

(D) Capital receipts

Answer: (B) Revenue receipts

Explanation: Non-tax income such as fees, interest, fines and dividends belongs to revenue receipts because it does not normally generate repayment obligations or dispose of government assets. Government borrowings and proceeds from disinvestment, by contrast, are classified within capital receipts.

Q84. In which Union Budget was the National Investment and Infrastructure Fund (NIIF) first announced?

[SSC CGL Tier I, 20 July 2023, Shift 4]

(A) 2015–16

(B) 2021–22

(D) 2019–20

Answer: (A) 2015–16

Explanation: The NIIF was first announced in the Union Budget 2015–16 as a vehicle for attracting long-term capital into infrastructure investments. Its funding model sought participation alongside private and institutional investors. The question refers to the budget announcement rather than the later operational development.

Q83. Who chaired the Twelfth Finance Commission of India?

[MPPSC State Service Prelims, 17 December 2023, Paper I]

(A) A. M. Khusro

(B) C. Rangarajan

(D) Y. V. Reddy

Answer: (B) C. Rangarajan

Explanation: The President constituted the Twelfth Finance Commission in 2002 with former RBI Governor C. Rangarajan as chairperson. Its recommendations covered fiscal transfers for 2005–10. Khusro, Kelkar and Reddy led the Eleventh, Thirteenth and Fourteenth Commissions respectively.

Q82. Which category of tax is NOT subsumed under India’s Goods and Services Tax?

[CDS General Knowledge, 3 September 2023]

(A) Customs duties

(B) Central excise duties

(D) Taxes on petroleum and petroleum products

Answer: (D) Taxes on petroleum and petroleum products

Explanation: The listed petroleum products remain outside the effective GST levy, so their applicable excise and VAT arrangements continue. The original indirect-tax regime also retained basic customs duty. The examined option emphasises petroleum taxation, making the petroleum category the intended answer.

Q81. A reduction in taxes usually has what multiplier effect on aggregate demand compared with an equal rise in government spending?

[SSC CHSL Tier I, 3 August 2023, Shift 4]

(A) No multiplier effect

(B) A smaller multiplier effect

(D) An equivalent multiplier effect

Answer: (B) A smaller multiplier effect

Explanation: When the government spends directly, the amount immediately adds to demand. Tax reductions first increase disposable income, some of which households may save. Therefore, under a simple Keynesian model, the tax multiplier’s absolute size is generally smaller than the spending multiplier.

Q80. Which of the following equations is incorrect?

[SSC CHSL Tier I, 10 August 2023, Shift 3]

(A) Revenue receipts = net tax revenue minus non-tax revenue

(B) Fiscal deficit = total expenditure minus revenue receipts and non-debt capital receipts

(D) Revenue deficit = revenue expenditure minus revenue receipts

Answer: (A) Revenue receipts = net tax revenue minus non-tax revenue

Explanation: Government revenue receipts combine tax revenue and non-tax revenue; they are not obtained by subtracting the latter. The remaining identities express standard deficit measures: the fiscal gap excludes borrowings, while the primary gap removes interest from the fiscal deficit.

Q79. Which is an example of a direct tax?

[SSC CHSL Tier I, 17 August 2023, Shift 2]

(A) Escheat

(B) Income tax

(D) Goods and Services Tax

Answer: (B) Income tax

Explanation: Income tax is imposed on a taxpayer’s earnings and remitted directly according to the income-tax framework. Customs duty and GST are levies on goods or supplies and therefore indirect. Escheat involves property passing to the State without legal heirs and is not the named direct tax.

Q78. Which of the following statements is true?

[SSC CHSL Tier I, 3 August 2023, Shift 3]

(A) Income tax is an indirect tax

(B) GST is a direct tax

(D) Government borrowing is a revenue receipt

Answer: (C) Fees and fines are non-tax government receipts

Explanation: Fees and fines are government income outside tax collections and normally enter non-tax revenue. Income tax is direct and GST indirect. Borrowing, by contrast, creates a repayment liability and thus belongs under capital receipts rather than recurring revenue receipts.

Q77. Under Finance Bill 2023, the Section 87A income threshold for eligible new-regime taxpayers rose from ₹5 lakh to what amount?

[SSC CHSL Tier I, 11 August 2023, Shift 3]

(A) ₹7 lakh

(B) ₹11 lakh

(D) ₹10 lakh

Answer: (A) ₹7 lakh

Explanation: The 2023 proposals increased the rebate eligibility ceiling to ₹7 lakh under the new income-tax regime, reducing the liability of qualifying individuals. The provision operates through a rebate against calculated tax rather than simply establishing a zero-rate slab up to the ceiling.

Q76. Why do proportional taxes reduce the autonomous expenditure multiplier?

[SSC CHSL Tier I, 9 August 2023, Shift 1]

(A) Taxes raise the marginal propensity to consume

(B) Marginal propensity to consume becomes irrelevant

(D) Taxes lower the marginal propensity to spend out of gross income

Answer: (D) Taxes lower the marginal propensity to spend out of gross income

Explanation: With a proportional income tax, each additional rupee of gross income leaves less disposable income available for consumption. The effective response of spending to gross income therefore falls, reducing the multiplier. The underlying behavioural marginal propensity to consume disposable income need not itself change.

Q75. Which statements describe direct taxation?
I. It is levied on taxable income of persons and companies.
II. Gift tax is a form of direct tax.

[SSC CHSL Tier I (2022 cycle), 20 March 2023, Shift 4]

(A) Only I

(B) Neither I nor II

(D) Only II

Answer: (C) Both I and II

Explanation: Direct taxes are imposed on the person or entity legally responsible for the tax, unlike consumption taxes that can be passed onward. Income and corporation taxes are examples. Gift tax has historically been treated as direct taxation, though India’s current rules differ from the former Gift-tax Act.

Q74. Which of the following is a fiscal-policy instrument rather than a monetary-policy instrument?

[SSC CHSL Tier I, 8 August 2023, Shift 3]

(A) Taxes

(B) Statutory Liquidity Ratio

(D) Bank rate

Answer: (A) Taxes

Explanation: Taxes directly affect household disposable income, corporate incentives and public revenue, placing them within fiscal policy. SLR, CRR and the bank rate are monetary or banking instruments used by the central bank to influence credit conditions and financial-system liquidity.

Q73. Which statements are true?
A. Fiscal deficit is financed by borrowing.
B. Recovery of earlier government loans is revenue receipt.

[SSC CHSL Tier I, 4 August 2023, Shift 2]

(A) B only

(B) Neither A nor B

(D) A only

Answer: (D) A only

Explanation: A fiscal deficit expresses the government’s borrowing requirement after non-debt resources are considered. Repayment of loans earlier advanced to others reduces a financial asset, so it is a non-debt capital receipt rather than current revenue. Only statement A is correct.

Q72. India’s financial year normally begins and ends on which dates?

[SSC CHSL Tier I, 14 August 2023, Shift 2]

(A) 1 April and 31 March

(B) 1 February and 31 January

(D) 1 January and 31 December

Answer: (A) 1 April and 31 March

Explanation: Budget documents, tax accounts and fiscal statements ordinarily follow the financial year 1 April to 31 March. The period spans parts of two calendar years and is cited accordingly, such as FY 2023–24. This differs from the year used by some foreign governments.

Q71. If both the primary deficit and government interest payments double, how does the fiscal deficit change?

[SSC CHSL Tier I, 3 August 2023, Shift 4]

(A) It increases by 100%

(B) It increases by 200%

(D) It decreases by 100%

Answer: (A) It increases by 100%

Explanation: Fiscal deficit equals primary deficit plus interest payments. Doubling both components doubles their sum, assuming the quantities are measured consistently. A doubling means the final fiscal deficit is 200% of its initial level, or a 100% increase over the original.

Q70. Which deficit measure provides the best estimate of the government’s overall borrowing requirement?

[SSC CHSL Tier I, 3 August 2023, Shift 2]

(A) Primary deficit

(B) Revenue receipts

(D) Fiscal deficit

Answer: (D) Fiscal deficit

Explanation: Fiscal deficit measures total expenditure less non-borrowed receipts, giving a broad estimate of the financing gap. Primary deficit removes interest payments and therefore measures a narrower need. Revenue receipts are funding inflows, whereas money supply is a monetary aggregate.

Q69. An annual statement of estimated government receipts and expenditure for a financial year is called what?

[SSC CGL Tier I, 17 July 2023, Shift 2]

(A) Income sheet

(B) Plan

(D) Budget

Answer: (D) Budget

Explanation: A budget is the government’s annual financial proposal for spending and financing public commitments. It contains projected tax and non-tax revenue, capital receipts and expenditure, and deficit indicators. It differs from a final account recording only completed transactions.

Q68. Which of these is an indirect tax?

[SSC CGL Tier II (2022 cycle), 3 March 2023]

(A) Capital-gains tax

(B) Goods and Services Tax

(D) Gift tax

Answer: (B) Goods and Services Tax

Explanation: Goods and Services Tax is collected on supplies and can be passed on in prices to the buyer. Capital gains, wealth and gift taxes are conventionally classed as direct taxes. The examination belongs to the SSC CGL 2022 recruitment cycle, held in 2023.

Q67. Which of these was not an indirect tax?

[SSC CGL Tier I, 5 December 2022, Shift 2]

(A) Excise duty

(B) Goods and Services Tax

(D) Wealth tax

Answer: (D) Wealth tax

Explanation: Wealth tax was imposed directly on assessable wealth and is therefore categorised as a direct tax, although the Indian levy was abolished from assessment year 2016–17. Excise, GST and customs duties are indirect levies associated with goods or supplies.

Q66. Regarding an organisation’s spending:
I. Buying new technology is capital expenditure.
II. Debt financing is capital expenditure, whereas equity financing is revenue expenditure.

Which is correct?

[UPSC CSE Prelims 2022]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (A) I only

Explanation: Technology that yields benefits over multiple accounting periods can be a capital asset. Raising finance by issuing debt or equity is a financing transaction, not automatically an expenditure. Consequently, only the first proposition correctly identifies capital expenditure.

Q65. Regarding government debt:
I. Some household financial savings fund government borrowing.
II. Auctioned dated securities form a large component of internal public debt.

Which is correct?

[UPSC CSE Prelims 2022]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (C) Both I and II

Explanation: Household savings can reach government securities directly or through institutions such as banks, insurers and pension funds. Market-auctioned dated government securities make up a substantial part of internal debt. Therefore both statements correctly describe public-debt financing.

Q64. Which advantages apply to Inflation-Indexed Bonds?
I. They can permit lower real coupons.
II. They protect investors against unexpected inflation.
III. Interest and capital gains are exempt from tax.

[UPSC CSE Prelims 2022]

(A) I and II only

(B) II and III only

(D) I, II and III

Answer: (A) I and II only

Explanation: Indexation links bond payments to inflation, safeguarding investors’ real purchasing power and potentially lowering the government’s inflation-risk premium. The bonds do not enjoy a blanket exemption for interest or capital gains. Thus the first two statements are correct.

Q63. In India’s tax discussions, which situation illustrates an indirect transfer?

[UPSC CSE Prelims 2022]

(A) An Indian firm pays overseas tax on outward investment

(B) A foreign investor pays ordinary home-country tax

(D) Shares of an overseas company derive major value from assets in India and are sold

Answer: (D) Shares of an overseas company derive major value from assets in India and are sold

Explanation: An indirect transfer occurs when foreign-company shares change hands and derive substantial value from assets situated in India. The economic ownership of Indian assets changes despite the offshore transaction. It became prominent in debates on retrospective capital-gains taxation.

Q62. About the Finance Commission:
I. It has five members.
II. At least one must already be a judge.
III. Its Chairman cannot be reappointed. IV. K. Santhanam was the first Chairman.

Which statements are true?

[CGPSC Civil Services 2021 Prelims (held 13 February 2022)]

(A) I, II and IV

(B) I, II and III

(D) I only

Answer: (D) I only

Explanation: The constitutional Finance Commission consists of a Chairman and four members. Judicial experience is one permissible qualification rather than a compulsory sitting-judge post. Members may be reappointed, and K. C. Neogy, not K. Santhanam, was its inaugural Chairman.

Q61. Who chairs the Goods and Services Tax (GST) Council?

[NDA General Ability, 10 April 2022]

(A) Prime Minister

(B) Union Finance Minister

(D) President of India

Answer: (B) Union Finance Minister

Explanation: The Union Finance Minister is the constitutional Chairperson of the GST Council under Article 279A. State finance or taxation ministers participate in its decisions. Despite being constituted by a presidential notification, the President does not chair this tax coordination institution.

Q60. Which is NOT a matter that by itself qualifies a bill as a Money Bill under Article 110?

[CDS-I General Knowledge, 10 April 2022]

(A) Imposition or regulation of a central tax

(B) Appropriation from the Consolidated Fund

(D) Custody of Consolidated or Contingency Funds

Answer: (C) Fines imposed by a local authority for local purposes

Explanation: Article 110 covers central taxation, borrowing and designated public-fund operations. It expressly excludes measures that merely impose local fees, fines or penalties from automatic Money Bill treatment. Such classification affects the Rajya Sabha’s limited role and the legislative process for the measure.

Q59. Which product among these was outside the GST levy at the time of the examination?

[CDS-I General Knowledge, 10 April 2022]

(A) Cosmetics

(B) Medical-grade oxygen

(D) Petrol

Answer: (D) Petrol

Explanation: Petrol remained outside operational GST coverage, with relevant excise and state sales taxes instead applying. Goods such as cosmetics, oxygen and jewellery may attract different GST rates or exemptions, but they are within the broader GST supply framework, unlike the listed petroleum motor fuel.

Q58. On which date did Goods and Services Tax become operational in India?

[SSC CGL Tier I, 6 December 2022, Shift 2]

(A) 1 July 2017

(B) 1 May 2016

(D) 1 April 2017

Answer: (A) 1 July 2017

Explanation: GST was launched nationally on 1 July 2017 after the 101st Constitutional Amendment and related legislation established the framework. It subsumed numerous central and state indirect taxes and provided for input-tax credits, although certain products and levies remained outside its scope.

Q57. What is a primary responsibility of a State Finance Commission?

[RRB Group D, 16 September 2022, Shift 2]

(A) Ensuring Parliament supervises the Union executive

(B) Advising the President on central legal cases

(D) Conducting local-government elections

Answer: (C) Recommending distribution of State taxes and fees between the State and local bodies

Explanation: State Finance Commissions review the fiscal position of Panchayats and Municipalities and recommend transfers and revenue assignments. Their constitutional mandates arise under Articles 243I and 243Y. State Election Commissions, not Finance Commissions, supervise elections to local self-government institutions.

Q56. Which Bill accompanies the Union Budget and provides details of proposed tax imposition, abolition or alteration?

[RRB Group D, 26 September 2022, Shift 1]

(A) Money Bill

(B) Ordinance Replacing Bill

(D) Finance Bill

Answer: (D) Finance Bill

Explanation: The Finance Bill gives legislative effect to tax measures announced with the Annual Financial Statement. Tax provisions may qualify it for Money Bill treatment under Article 110, but the asked document by name is the Finance Bill accompanying annual budget proposals.

Q55. In which year was India’s First Finance Commission constituted?

[RRB Group D, 7 October 2022, Shift 2]

(A) 1949

(B) 1951

(D) 1952

Answer: (B) 1951

Explanation: The First Finance Commission was constituted in 1951 with K. C. Neogy as its chairperson. Although its recommendations operated in subsequent years, its establishment preceded 1952. Article 280 created the constitutional mechanism for recurring review of Centre–State fiscal transfers.

Q54. What is a government receipt that creates no repayment claim or liability called?

[RRB Group D, 7 October 2022, Shift 1]

(A) Claimed receipt

(B) Revenue receipt

(D) Capital receipt

Answer: (B) Revenue receipt

Explanation: Revenue receipts include tax revenues and non-tax receipts such as service fees and dividends. They do not create a liability or reduce an existing asset. Borrowing receipts require future repayment, placing them instead in the capital account of the government budget.

Q53. Which budget statement evaluates growth prospects, central-government fiscal balance and the external sector?

[RRB Group D, 26 September 2022, Shift 3]

(A) Medium-Term Fiscal Policy Statement

(B) Revenue Expenditure Statement

(D) Fiscal Policy Strategy Statement

Answer: (C) Macroeconomic Framework Statement

Explanation: The Macroeconomic Framework Statement accompanies budget documents pursuant to the FRBM framework. It discusses macroeconomic assumptions and the outlook for output, prices, fiscal position and external balance. Other fiscal statements focus more narrowly on numerical targets or stated policy strategy.

Q52. Which receipt belongs to the revenue-receipts category under Indian budget classification?

[RRB Group D, 29 September 2022, Shift 3]

(A) Government borrowing

(B) Tax receipts

(D) Disinvestment proceeds

Answer: (B) Tax receipts

Explanation: Tax collections are revenue receipts because they do not create repayment liabilities or dispose of government financial assets. Recovering loans reduces assets, disinvestment sells financial holdings and fresh borrowing increases liabilities; these three transactions consequently fall under capital receipts.

Q51. Which event, holding other budget items unchanged, increases the gross fiscal deficit?

[RRB Group D, 22 September 2022, Shift 3]

(A) A decrease in revenue receipts

(B) An increase in revenue receipts

(D) A reduction in RBI borrowing alone

Answer: (A) A decrease in revenue receipts

Explanation: Gross fiscal deficit equals total spending less revenue receipts and non-debt capital receipts. If current receipts fall while expenditure and other receipts remain constant, the gap widens. Borrowing is how the gap is financed, not a direct term in this expenditure-minus-receipts identity.

Q50. Which is a typical example of revenue expenditure?

[RRB Group D, 20 September 2022, Shift 1]

(A) Making a loan to another country

(B) Constructing a government hospital

(D) Paying government employees’ salaries

Answer: (D) Paying government employees’ salaries

Explanation: Employee salaries finance ongoing government operations and are ordinarily revenue expenditure. Construction of public buildings generates assets, while loan advances acquire assets and principal repayments reduce liabilities. Those alternatives generally fall within capital expenditure rather than the revenue account.

Q49. Which of the following are included in the Indian Union Budget?
I. Revised estimates for the current year.
II. Budget estimates for the following year.
III. Actuals for the preceding year.

[WBCS Mains 2021, Paper V (held May 2022)]

(A) I only

(B) II only

(D) All three

Answer: (D) All three

Explanation: Union Budget documents commonly provide previous-year actuals, current-year revised figures and next-year estimates. Comparing them helps legislators examine forecasting, implementation and proposed allocation changes. Consequently all three types of financial information are presented rather than estimates for only one year.

Q48. Which Article of the Constitution provides for the Finance Commission?

[WBCS Mains 2021, Paper V (held May 2022)]

(A) Article 245

(B) Article 260

(D) Article 280

Answer: (D) Article 280

Explanation: Article 280 creates the national Finance Commission and prescribes the periodicity of appointment. The body advises on distribution of tax proceeds and principles of grants-in-aid. The other Articles deal with different constitutional matters and do not establish this Commission.

Q47. Which is an indirect tax in India?

[SSC CGL 2021 Tier I, 11 April 2022, Shift 1]

(A) Goods and Services Tax

(B) Corporation tax

(D) Capital-gains tax

Answer: (A) Goods and Services Tax

Explanation: GST applies to taxable supplies of goods and services, with the tax burden generally passed on to consumers. Corporation tax, personal income tax and capital-gains tax fall directly on the income or gains of the assessee, making them direct taxes.

Q46. Which method of financing a budget deficit is likely to be most inflationary?

[UPSC CSE Prelims 2021]

(A) Repayment of government debt

(B) Borrowing from the public

(D) Creating new money

Answer: (D) Creating new money

Explanation: Monetisation of a deficit adds new purchasing power to the economy. If production cannot respond proportionately, excess aggregate demand may raise prices. Borrowing ordinarily redirects pre-existing savings rather than necessarily expanding the monetary base to the same extent.

Q45. Why is black money a major concern for government public finances?

[UPSC CSE Prelims 2021]

(A) Its use in luxury real estate

(B) Its use in gemstones

(D) Loss of tax receipts through evasion

Answer: (D) Loss of tax receipts through evasion

Explanation: Black money often represents income or assets concealed from tax authorities, undermining the public exchequer. Real estate purchases and other uses may follow, but the central fiscal damage is lost legitimate revenue and the inequity imposed on compliant taxpayers.

Q44. Which constitutional amendment enabled the introduction of the GST regime in India?

[UPPSC PCS Prelims, 24 October 2021]

(A) 101st Amendment

(B) 102nd Amendment

(D) 104th Amendment

Answer: (A) 101st Amendment

Explanation: The Constitution (One Hundred and First Amendment) Act, 2016 established the constitutional framework for GST, including Article 279A on the GST Council. Nationwide GST implementation followed in July 2017, replacing several central and state indirect taxes on most supplies.

Q43. Who serves as the Chairperson of the GST Council?

[UPPSC GIC Lecturer Economics 2021]

(A) Prime Minister

(B) Union Finance Minister

(D) Vice-President of India

Answer: (B) Union Finance Minister

Explanation: Under Article 279A the Union Finance Minister chairs the GST Council. Its membership includes the Union Minister of State responsible for finance or revenue and designated State ministers. This mechanism allows Centre and States to deliberate over shared indirect-tax policy.

Q42. Who chaired the Fifteenth Finance Commission?

[UPPSC GIC Lecturer Economics 2021]

(A) N. K. Singh

(B) S. S. Mundra

(D) Soumya Kanti Ghosh

Answer: (A) N. K. Singh

Explanation: N. K. Singh chaired the Fifteenth Finance Commission, which made recommendations on tax devolution and fiscal transfers for the relevant award period. This constitutional body is distinct from the GST Council and from the Planning Commission’s historical fiscal allocation role.

Q41. Which statement about constitutional subject lists is incorrect?

[CDS-II General Knowledge, 14 November 2021]

(A) Tax on agricultural income belongs to the State List

(B) Price control is in the Concurrent List

(D) Forests are in the Concurrent List

Answer: (C) Insurance is not a Union List subject

Explanation: Insurance falls within the Union List, so saying it is excluded from that list is incorrect. Taxes on agricultural income are assigned to States, while price control and forests are Concurrent List subjects. These allocations determine legislative competence and influence fiscal powers.

Q40. What does SGST stand for in India’s Goods and Services Tax framework?

[RRB NTPC CBT-I, 16 February 2021, Shift 2]

(A) Systemic Goods and Services Tax

(B) Special Goods and Services Tax

(D) Statutory Goods and Services Tax

Answer: (C) State Goods and Services Tax

Explanation: SGST means State Goods and Services Tax, ordinarily charged alongside CGST on intra-State taxable supplies. For inter-State supplies, IGST generally applies instead. This dual structure gives both Union and State governments taxing roles within the coordinated national GST system.

Q39. Which legal requirement explains why the Macro-Economic Framework Statement accompanies the Union Budget?

[UPSC CSE Prelims 2020]

(A) Longstanding convention only

(B) Articles 112 and 110 exclusively

(D) Fiscal Responsibility and Budget Management Act, 2003

Answer: (D) Fiscal Responsibility and Budget Management Act, 2003

Explanation: The Fiscal Responsibility and Budget Management Act requires specified policy statements to accompany the annual financial statement. The Macro-Economic Framework Statement reviews economic growth and fiscal circumstances. Article 112 mandates the Budget itself but not this separate FRBM document.

[CDS General Knowledge, 8 November 2020]

(A) I, II, III, IV

(B) I, III, II, IV

(D) II, IV, III, I

Answer: (B) I, III, II, IV

Explanation: The examined Budget Estimates placed corporation tax ahead of GST, income tax and Union excise duty in the stated comparison. Relative tax shares can vary with growth and legislation, so these figures should be understood as fiscal-year-specific rather than timeless rankings.

Q37. Who advises the Governor about distributing State-collected taxes and fees between the State and Panchayats?

[CGPSC Civil Services Prelims 2019, Paper I]

(A) Chief Minister

(B) State Finance Minister

(D) Zilla Parishad

Answer: (C) State Finance Commission

Explanation: Under Article 243I a State Finance Commission reviews the finances of Panchayats and recommends principles for allocating specified state taxes, fees and grants. The Governor constitutes the body. It is separate from the Union Finance Commission established under Article 280.

Q36. Which constitutional amendment enabled the Goods and Services Tax in India?

[CGPSC Civil Services Prelims 2019, Paper I]

(A) 98th Amendment Act

(B) 99th Amendment Act

(D) 101st Amendment Act

Answer: (D) 101st Amendment Act

Explanation: The Constitution (101st Amendment) Act, 2016 established the framework for the dual GST model. It inserted provisions such as Article 279A creating the GST Council. The GST system began on 1 July 2017 after complementary Union and State legislation.

Q35. Which tax was NOT subsumed into India’s Goods and Services Tax?

[CGPSC Civil Services Prelims 2019, Paper I]

(A) Excise duty

(B) Customs duty

(D) Service tax

Answer: (B) Customs duty

Explanation: Basic customs duty on imported goods continues separately from GST. The GST rollout subsumed numerous domestic central and state indirect taxes, including service tax and much of the former excise and VAT systems. Imports may attract both basic customs duty and applicable integrated GST.

Q34. If the government supplies a commodity free to consumers, how is its opportunity cost best described?

[UPSC CSE Prelims 2018]

(A) It becomes zero

(B) It is simply ignored

(D) It disappears into the government

Answer: (C) It shifts from users to taxpayers

Explanation: A zero user price does not eliminate the scarce labour and resources used to provide a service. Taxpayers finance the budget that meets its cost. Therefore the economic burden is shifted rather than removed, and alternative uses are forgone.

Q33. Which items were exempt from GST under the rules relevant to this examination?
I. Hulled cereal grains.
II. Cooked chicken eggs.
III. Processed canned fish.
IV. Advertising-bearing newspapers.

[UPSC CSE Prelims 2018]

(A) I only

(B) II and III only

(D) I, II, III and IV

Answer: (C) I, II and IV only

Explanation: The examined exemption schedule covered the specified staple grains, cooked eggs and newspapers even when they carried advertising. Processed canned fish was not exempt. Tax classification should always be read with the rules prevailing during the paper year.

Q32. The Economic Survey of India is issued under which institution?

[CGPSC Civil Services Prelims 2018, Paper I]

(A) Planning Commission

(B) Reserve Bank of India

(D) Finance Commission

Answer: (C) Ministry of Finance

Explanation: The Economic Survey is prepared through the Ministry of Finance, historically by the Economic Division in the Department of Economic Affairs under the Chief Economic Adviser. Presented before the Budget, it reviews economic developments rather than being a legal appropriation of money.

Q31. Regarding tax incidence, assess:
I. Tax may be shifted forward when demand is more inelastic than supply.
II. Tax may be shifted backward when supply is more inelastic than demand.

[CDS General Knowledge, 4 February 2018]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (C) Both I and II

Explanation: The economically less elastic side of a market generally bears more of a tax burden because it adjusts quantity less when prices change. Relatively inelastic demand places a larger burden on buyers; relatively inelastic supply leaves more of the burden with sellers.

Q30. What is the Aaykar Setu initiative associated with?

[CDS General Knowledge, 18 November 2018]

(A) Quality certification for GST service delivery

(B) Mobile-assisted income-tax information and online tax services

(D) Electronic customs import declarations

Answer: (B) Mobile-assisted income-tax information and online tax services

Explanation: Aaykar Setu was a CBDT digital outreach and taxpayer-service initiative launched in 2017, with features supporting income-tax information and access to online facilities. It was not a customs declaration platform or an enforcement-only database, distinguishing its purpose from those alternatives.

Q29. What are the most likely advantages of introducing GST?
I. Replacement of multiple indirect taxes and creation of a single market.
II. Drastic reduction of current-account deficit.
III. Immediate overtaking of China in GDP.

[UPSC CSE Prelims 2017]

(A) I only

(B) II and III only

(D) I, II and III

Answer: (A) I only

Explanation: GST harmonises multiple consumption levies and promotes a more integrated domestic market with input credits. It does not guarantee a dramatic external-account improvement or any specific international GDP ranking. Consequently, only the first proposed advantage is sound.

Q28. The task force that proposed a Goods and Services Tax was headed by whom?

[MPPSC General Studies 2017, Official Paper]

(A) Vijay Kelkar

(B) Montek Singh Ahluwalia

(D) M. Narasimham

Answer: (A) Vijay Kelkar

Explanation: The Vijay Kelkar Task Force on indirect taxation advocated a comprehensive GST as part of wider reform. A unified value-added system was intended to reduce cascading and fragmentation between indirect levies. The full national GST framework was implemented considerably later, in 2017.

Q27. Which actions can help reduce a recurring fiscal deficit?
I. Reduce revenue spending.
II. Introduce new unfunded welfare schemes.
III. Rationalise subsidies.
IV. Lower import duties.

[UPSC CSE Prelims 2016]

(A) I only

(B) II and III only

(D) All four

Answer: (C) I and III only

Explanation: Controlling recurring expenditure and directing subsidies more efficiently can narrow the expenditure–receipt gap. New unfunded programmes raise spending, while lowering customs rates may initially reduce revenue. Thus the first and third actions are the credible deficit-reducing measures.

Q26. Which are part of India’s capital budget?
I. Acquisition of roads and buildings.
II. Loans received from foreign governments.
III. Loans granted to States and Union Territories.

[UPSC CSE Prelims 2016]

(A) I only

(B) II and III only

(D) I, II and III

Answer: (D) I, II and III

Explanation: Capital expenditure covers asset acquisition and loans advanced by the government. Borrowings from foreign governments are capital receipts because they create liabilities. The capital budget includes both sides, so all listed examples fall within its scope.

Q25. About the Financial Stability and Development Council:
I. It is a branch of NITI Aayog.
II. Finance Minister chairs it.
III. It monitors macroprudential financial stability.

Which are correct?

[UPSC CSE Prelims 2016]

(A) I and II only

(B) III only

(D) All three

Answer: (C) II and III only

Explanation: The Financial Stability and Development Council was established independently of NITI Aayog and is chaired by the Union Finance Minister. It addresses coordination among financial regulators, financial stability and macroprudential oversight. Therefore only the second and third statements hold.

Q24. Which statements about taxation are correct?
I. Ability to pay links taxes to income or wealth.
II. The benefit principle links tax to benefits received.
III. Progressive taxes burden poor people proportionately more.
IV. Indirect taxes can be relatively convenient to collect.

[CDS General Knowledge, 14 February 2016]

(A) I and III only

(B) II and IV only

(D) I, II, III and IV

Answer: (C) I, II and IV only

Explanation: The ability-to-pay and benefit principles offer different rationales for allocating tax burdens. Progressive taxation imposes higher average burdens on those with greater taxable capacity, not on lower-income groups. Indirect taxes are often collected through sellers, which can simplify administration.

[UPSC CSE Prelims 2015]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (A) I only

Explanation: The Fourteenth Finance Commission significantly increased States’ vertical share of divisible central taxes to 42 percent. Unlike some earlier commissions, it did not recommend sector-specific grants in the manner described by the question. The distinction concerns tax devolution versus earmarked transfer mechanisms.

Q22. Concerning Union government accounts:
I. Department of Revenue prepares the Budget.
II. Consolidated Fund withdrawals require parliamentary authorization.
III. Public Account disbursements always require parliamentary authorization.

Which is correct?

[UPSC CSE Prelims 2015]

(A) I and II only

(B) II and III only

(D) I, II and III

Answer: (C) II only

Explanation: The Department of Economic Affairs, not Revenue, coordinates Union Budget preparation. Expenditure from the Consolidated Fund requires legislative appropriation under constitutional procedure. Money in the Public Account is held in a custodial capacity, and its withdrawals generally do not require a separate parliamentary vote.

Q21. A decline in a country’s tax-to-GDP ratio was associated by the examination with which outcome?
I. Slower economic growth.
II. Less equitable income distribution.

[UPSC CSE Prelims 2015]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (A) I only

Explanation: The ratio compares tax receipts with national output. A falling ratio may be associated with slowing activity and weaker taxable bases, although many causes are possible. It does not, by itself, establish how equally national income is distributed among households.

Q20. Who proposed merging the Finance Commission and Planning Commission?

[MPPSC General Studies 2015, Official Paper]

(A) D. D. Basu

(B) Bhalchandra Goswami

(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

(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

(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

(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

(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

(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

(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.

[UPSC CSE Prelims 2010]

(A) Service tax

(B) Personal income tax

(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

(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.

Q11. About IGNOAPS old-age assistance, consider:
I. Every rural BPL person aged at least 60 was eligible.
II. Central assistance was ₹300 per month with States urged to match it.

Which was correct in 2008?

[UPSC CSE Prelims 2008]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (D) Neither I nor II

Explanation: In the period tested, the scheme’s age and assistance conditions did not match either assertion. The rural-only qualifier was also misleading because social assistance was not limited solely to rural households. Subsequent changes in eligibility ages and pension rates should not be projected backwards.

Q10. The Fiscal Responsibility and Budget Management Act addresses which category of deficit?

[UPSC CSE Prelims 2006]

(A) Fiscal deficit only

(B) Revenue deficit only

(D) Neither fiscal nor revenue deficits

Answer: (C) Both fiscal and revenue deficits

Explanation: The FRBM Act of 2003 set out a framework for fiscal discipline, reporting and targets involving fiscal and revenue deficits. Fiscal deficit measures the broader borrowing requirement; revenue deficit shows the gap between recurring expenditure and recurring receipts. The legislation’s detailed targets have changed over time.

Q9. Which was NOT a recommendation of the Vijay Kelkar Task Force on Direct Taxes (2002)?

[UPSC CSE Prelims 2004]

(A) Abolition of wealth tax

(B) A special ₹1.20 lakh income-tax exemption limit for widows

(D) Exemption from tax on specified listed-equity dividends and gains

Answer: (B) A special ₹1.20 lakh income-tax exemption limit for widows

Explanation: The Kelkar task force argued for reforming personal and corporate income taxes by simplifying rates, exemptions and compliance. The special exemption limit for widows stated in the option was not among the committee’s recommended measures. The question concerns its historical 2002 proposals.

Q8. Regarding stamp duties on financial transactions in India:
I. State governments levy and collect them.
II. Their proceeds belong to the Union.

Which statement was accepted?

[UPSC CSE Prelims 2003]

(A) I only

(B) II only

(D) Neither I nor II

Answer: (A) I only

Explanation: The relevant stamp duties in the question are administered and collected by States, which retain the proceeds rather than their becoming Union revenue. Constitutional allocations of stamp-duty powers vary by type of transaction, so the precise nature of the document remains important.

Q7. About Indian public finance at the time:
I. External budget liabilities used historical exchange rates.
II. High borrowing kept real interest rates elevated.
III. Rising fiscal deficit harmed private investment.
IV. Interest payments led non-plan revenue spending.

Which were correct?

[UPSC CSE Prelims 2002]

(A) I, II and III only

(B) I and IV only

(D) I, II, III and IV

Answer: (D) I, II, III and IV

Explanation: The paper assessed the government’s historical debt valuation, the crowding-out implications of persistent borrowing, and the importance of interest costs. All four statements were accepted for the specified period. The older plan versus non-plan spending distinction was abandoned in Union Budgets from 2017–18.

Q6. Which taxes were indirect?
I. Corporation tax.
II. Customs duty.
III. Wealth tax.
IV. Excise duty.

[UPSC CSE Prelims 2001]

(A) I only

(B) II and IV only

(D) II and III only

Answer: (B) II and IV only

Explanation: Customs and excise were indirect levies on cross-border goods and manufacturing, often passed on through prices. Corporation and wealth taxes were imposed directly on specified income or holdings. Although the tax structure has since changed, the classification holds for the listed historical levies.

Q5. Match fiscal terms:
A. Fiscal deficit;
B. Budget deficit;
C. Revenue deficit;
D. Primary deficit.

With definitions:
1. Total spending less total receipts;
2. Revenue expenditure less revenue receipts;
3. Spending less non-borrowed receipts;
4. Fiscal deficit less interest payments.

[UPSC CSE Prelims 2001]

(A) A-3, B-1, C-2, D-4

(B) A-4, B-3, C-2, D-1

(D) A-3, B-1, C-4, D-2

Answer: (A) A-3, B-1, C-2, D-4

Explanation: The fiscal deficit excludes debt receipts from available financing; the older budget-deficit definition compares expenditure and total receipts. Revenue deficit isolates current-account shortfall, while primary deficit removes interest costs from fiscal deficit. These distinct indicators reveal different aspects of public borrowing and sustainability.

Q4. Who levies, collects and shares the proceeds of income tax under India’s constitutional fiscal arrangements?

[UPSC CSE Prelims 1999]

(A) The Union levies and collects it and shares the divisible portion with States

(B) The Union keeps every rupee exclusively

(D) Only income-tax surcharge is shared with States

Answer: (A) The Union levies and collects it and shares the divisible portion with States

Explanation: Income tax on non-agricultural income is a Union tax, but its divisible proceeds are shared with States through constitutional arrangements informed by Finance Commission recommendations. Surcharges are generally excluded from the divisible pool; the distribution rule therefore differs from exclusive Union retention.

Q3. Assertion: Fiscal deficit is greater than the earlier budgetary-deficit measure.

Reason: Fiscal deficit includes RBI borrowing plus other liabilities used to finance expenditure.

Which was the accepted answer?

[UPSC CSE Prelims 1999]

(A) Both are true and the reason explains the assertion

(B) Both are true but the reason does not explain it

(D) Assertion false; reason true

Answer: (A) Both are true and the reason explains the assertion

Explanation: In the 1999 UPSC key, both statements were correct and the reason explained the assertion. The broader fiscal deficit includes borrowing from the RBI and other liabilities, while the historical budgetary-deficit measure was narrower. This distinction reflects how deficits were reported then.

Q2. In which Union Budget was Minimum Alternate Tax (MAT) introduced?

[UPSC CSE Prelims 1997]

(A) 1991–92

(B) 1992–93

(D) 1996–97

Answer: (D) 1996–97

Explanation: Minimum Alternate Tax was introduced in the 1996–97 Union Budget to ensure that companies reporting substantial book profits would make a minimum tax contribution despite exemptions and deductions. The applicable statutory sections and rates have evolved, but the introduction year is historical.

Q1. Which were classified as non-plan expenditure in the 1997 Union Budget context?
I. Defence.
II. Subsidies.
III. Expenditure carried from earlier plans.
IV. Interest.

[UPSC CSE Prelims 1997]

(A) I and II only

(B) I and III only

(D) I, II, III and IV

Answer: (D) I, II, III and IV

Explanation: All four items could appear within the older non-plan expenditure framework because they represented ongoing obligations or commitments not directly allocated as current plan spending. The Union Budget later eliminated the plan/non-plan classification; present-day budgets instead distinguish revenue and capital expenditure.

Q180. In fiscal policy, what does the crowding-out effect principally mean?

Q179. What fiscal-deficit target, as a share of GDP, did Union Budget 2026–27 announce?

Q178. What share of the divisible pool of central taxes did the Sixteenth Finance Commission recommend for States during 2026–31?

Q177. Consider the Finance Commission: I. It is quasi-judicial. II. It is associated with Article 280. III. The President constitutes it. IV. It is formed after every six years. Which statements are correct?

Q176. What is a principal objective of fiscal policy in India?

Q175. What was the primary purpose of introducing state-level VAT in India before GST?

Q174. Which colonial legislation first permitted discussion of the budget in Indian legislative councils?

Q173. Under the Union Budget 2025–26 announcement, what ordinary-income threshold attracted no tax after rebate under the new income-tax regime?

Q172. Before the insurance-premium GST exemption proposal discussed in 2025, what GST rate applied to health insurance premiums?

Q171. Which Union Budget 2025–26 initiative aimed to monetise public assets worth ₹10 lakh crore by 2030?

Q170. Which initiative announced in Union Budget 2026–27 aimed to transform the sports ecosystem over the next decade?

Q169. Which small-business support measure with an outlay of ₹10,000 crore was announced in Union Budget 2026?

Q168. Which constitutional Article establishes the Finance Commission?

Q167. Which policy tool directly influences aggregate demand through government spending?

Q166. What is fiscal policy primarily related to?

Q165. Which fiscal-policy statements are correct? I. It is formulated by the Central Government. II. It deals with government revenue and expenditure. III. It is implemented by the RBI.

Q164. Who appoints the Chairperson of the Finance Commission of India?

Q163. What total expenditure was estimated in the Union Budget 2025–26?

Q162. Under which framework were State governments urged in December 2025 to keep their borrowing within prescribed fiscal limits?

Q161. Which of these statements about capital receipts are true? I. They create a liability or reduce government assets. II. Borrowing and disinvestment are capital receipts. III. Interest received on government loans creates a government liability.

Q160. If revenue expenditure is ₹80,000 crore, revenue receipts ₹60,000 crore, borrowing ₹10,000 crore and interest payments ₹6,000 crore, which are true? I. Revenue deficit ₹20,000 crore. II. Fiscal deficit ₹10,000 crore. III. Primary deficit ₹4,000 crore.

Q159. A government has fiscal deficit ₹50,000 crore and interest liabilities ₹1,500 crore. Non-debt capital receipts are ₹10,000 crore. What is the gross primary deficit?

Q158. Regarding the Fifteenth Finance Commission, which are correct? I. ₹4,800 crore education grants. II. 45% central-tax devolution. III. ₹45,000 crore agricultural-reform incentive. IV. Restoration of tax-effort criterion.

Q157. Which comparison about agricultural income and rural land under the Income-tax Act, 1961 is accurate? I. Rural poultry and wool income is always tax-exempt. II. Rural agricultural land is excluded from the definition of capital asset.

Q155. Consider: I. Income tax and dividends received from public-sector companies are revenue receipts. II. Disinvestment proceeds from PSU shares are revenue receipts. Which statement is correct?

Q154. Why is a revenue deficit considered economically concerning?

Q153. Which is an example of a government capital receipt?

Q152. What is another term for the revenue account of the government budget?

Q151. How is the revenue deficit calculated?

Q150. On capital expenditure, assess: I. It never creates physical or financial assets. II. Buying machinery is capital expenditure. Which is correct?

Q149. What is the common name of the annual financial statement placed before Parliament?

Q148. In the cited examination, which term was used as another name for a budgetary deficit?

Q147. What is a benefit of the input-tax-credit mechanism under GST?

Q146. About Rajasthan’s fiscal deficit, examine: A. It was 3.76% of GSDP in 2022–23. B. This was below the relevant FRBM limit. C. It exceeded the 2021–22 fiscal deficit. Which combination did the official examination key mark correct?

Q145. Article 243J of the Constitution concerns which aspect of Panchayat finances?

Q144. Which of these does NOT characterise expansionary fiscal policy?

Q143. Assertion: Revenue receipts create no repayment obligation for the government. Reason: Such receipts are normally taxes or recurring non-tax inflows that do not have to be returned. Which statement is accurate?

Q142. Arrange these GST milestones chronologically: I. GST Council constituted. II. Constitution (101st Amendment) Act enacted. III. Nationwide GST launched.

Q141. The recommendations of the Chellaiah Committee led to reform efforts in which field?

Q140. Match the Finance Commissions with their Chairpersons: A. Eleventh; B. Twelfth; C. Thirteenth; D. Fourteenth. Names: 1. C. Rangarajan; 2. Y. V. Reddy; 3. A. M. Khusro; 4. Vijay Kelkar.

Q139. What percentage of Madhya Pradesh’s total expenditure budget for 2023–24 was allocated to education?

Q138. In which year was India’s Fiscal Responsibility and Budget Management Act enacted?

Q137. What is the primary objective of government fiscal policy?

Q136. Statutory grants under Article 275 to States are primarily recommended by which institution?

Q135. As of 1 May 2025, which of these persons was NOT a full-time member of India’s Sixteenth Finance Commission?

Q134. According to the Union Budget presented on 1 February 2025, ordinary income up to what level could qualify for nil income tax under the new regime through rebate?

Q133. Which was NOT an intended feature of the Income-tax Bill introduced in Parliament in February 2025?

Q132. According to the Finance Ministry figure cited in this exam, what percentage of India’s population filed income-tax returns in FY 2023–24?

Q131. Under the original FRBM framework, to what percentage of GDP was the Union fiscal deficit targeted to be reduced by 2008–09?

Q130. In which financial year was the concept of Effective Revenue Deficit introduced in government budgeting?

Q129. Which legislation was enacted in 2003 to institutionalise fiscal discipline and address deficits?

Q128. Which of these is NOT a direct tax?

Q127. For how many additional years did Budget 2025–26 extend the startup-incorporation deadline for claiming specified income-tax benefits?

Q126. Which tax was introduced in India in July 2017 to replace several central and state indirect taxes?

Q125. Which direct-tax collection had increased according to the February 2023 budget comparison cited in the question?

Q124. Which is a non-tax revenue source for the government?

Q123. Which Constitutional Amendment established the framework for a Goods and Services Tax Council?

Q122. When is a government budget described as a deficit budget?

Q121. From which Union Budget year was the separate practice of showing a budget deficit discontinued?

Q120. Assess the Uttar Pradesh Budget 2023–24 claims: I. Total size ₹7,60,000 crore. II. Fiscal deficit ₹84,883.16 crore. Which is correct?

Q119. About the Union Budget: I. The Finance Minister lays the Annual Financial Statement for the government headed by the Prime Minister. II. No demand for a grant can be made without the President’s recommendation. Which answer was accepted in the UPSC key?

Q118. Consider two claims about US Treasury debt: I. In a default, bondholders cannot obtain due payments. II. Treasury debt is backed by government credit rather than pledged hard assets. Which answer did UPSC accept?

Q117. Who was appointed Chairman of India’s Sixteenth Finance Commission?

Q116. What does a budget deficit show?

Q115. Which of the following constitutes a capital receipt in the government budget?

Q114. Select the historical order of these Indian levies: I. Land revenue. II. Sales tax. III. MODVAT. IV. Service tax.

Q113. Why were wealth tax and gift tax sometimes described as paper taxes in India?

Q112. If a tax rate rises as the taxable base rises, what type of tax is it?

Q111. Which levy is excluded from the divisible pool of central taxes shared with States?

Q110. What constitutes a revenue deficit in a government budget?

Q109. What is a principal objective of the Fiscal Responsibility and Budget Management Act, 2003?

Q108. Which Article of the Constitution deals with the Finance Commission of India?

Q107. The Finance Commission of India consists of a chairperson and how many other members?

Q106. What is a principal purpose of the government budget in the economy?

Q105. The government statement showing expected receipts and expenditure for the upcoming financial year is called what?

Q104. In a government budget, what does fiscal deficit represent?

Q103. How many priorities were identified under the Saptarishi framework of Union Budget 2023–24?

Q102. What is the standard financial year for government budgeting in India?

Q101. About revenue receipts, consider: A. They do not create a repayment claim against government. B. They comprise tax and non-tax receipts. Which is correct?

Q100. In economic accounting, a fiscal deficit is regarded as which kind of variable?

Q177. Consider the Finance Commission:
I. It is quasi-judicial.
II. It is associated with Article 280.
III. The President constitutes it.
IV. It is formed after every six years.

Which statements are correct?

Q165. Which fiscal-policy statements are correct?
I. It is formulated by the Central Government.
II. It deals with government revenue and expenditure.
III. It is implemented by the RBI.

Q161. Which of these statements about capital receipts are true?
I. They create a liability or reduce government assets.
II. Borrowing and disinvestment are capital receipts.
III. Interest received on government loans creates a government liability.

Q160. If revenue expenditure is ₹80,000 crore, revenue receipts ₹60,000 crore, borrowing ₹10,000 crore and interest payments ₹6,000 crore, which are true?
I. Revenue deficit ₹20,000 crore.
II. Fiscal deficit ₹10,000 crore.
III. Primary deficit ₹4,000 crore.

Q158. Regarding the Fifteenth Finance Commission, which are correct?
I. ₹4,800 crore education grants.
II. 45% central-tax devolution.
III. ₹45,000 crore agricultural-reform incentive.
IV. Restoration of tax-effort criterion.

Q157. Which comparison about agricultural income and rural land under the Income-tax Act, 1961 is accurate?
I. Rural poultry and wool income is always tax-exempt.
II. Rural agricultural land is excluded from the definition of capital asset.

Q155. Consider:
I. Income tax and dividends received from public-sector companies are revenue receipts.
II. Disinvestment proceeds from PSU shares are revenue receipts.

Which statement is correct?

Q150. On capital expenditure, assess:
I. It never creates physical or financial assets.
II. Buying machinery is capital expenditure.

Which is correct?

Q146. About Rajasthan’s fiscal deficit, examine:
A. It was 3.76% of GSDP in 2022–23.
B. This was below the relevant FRBM limit.
C. It exceeded the 2021–22 fiscal deficit.
Which combination did the official examination key mark correct?

Q143. Assertion: Revenue receipts create no repayment obligation for the government.
Reason: Such receipts are normally taxes or recurring non-tax inflows that do not have to be returned.

Which statement is accurate?

Q142. Arrange these GST milestones chronologically:
I. GST Council constituted.
II. Constitution (101st Amendment) Act enacted.
III. Nationwide GST launched.

Q140. Match the Finance Commissions with their Chairpersons:

A. Eleventh; B. Twelfth; C. Thirteenth; D. Fourteenth.

Names: 1. C. Rangarajan; 2. Y. V. Reddy; 3. A. M. Khusro; 4. Vijay Kelkar.

Q120. Assess the Uttar Pradesh Budget 2023–24 claims:
I. Total size ₹7,60,000 crore.
II. Fiscal deficit ₹84,883.16 crore.

Which is correct?

Q119. About the Union Budget:
I. The Finance Minister lays the Annual Financial Statement for the government headed by the Prime Minister.
II. No demand for a grant can be made without the President’s recommendation.

Which answer was accepted in the UPSC key?

Q118. Consider two claims about US Treasury debt:
I. In a default, bondholders cannot obtain due payments.
II. Treasury debt is backed by government credit rather than pledged hard assets.

Which answer did UPSC accept?

Q114. Select the historical order of these Indian levies:
I. Land revenue.
II. Sales tax.
III. MODVAT.
IV. Service tax.

Q101. About revenue receipts, consider:
A. They do not create a repayment claim against government.
B. They comprise tax and non-tax receipts.

Which is correct?

Q99. Which statements about India’s Union Budget are correct?
A. It reflects government priorities.
B. It reports financial performance.
C. It gives ministry-wise expenditure details.

Q91. Regarding the EU Stability and Growth Pact, how many are true?
I. It constrains public budget deficits.
II. It requires sharing infrastructure.
III. It requires sharing technologies.

Q90. On Infrastructure Investment Trusts:
I. Interest distributions to investors are exempt while dividends are taxable.
II. InvITs are recognised as borrowers under SARFAESI legislation.

Which is correct?

Q75. Which statements describe direct taxation?
I. It is levied on taxable income of persons and companies.
II. Gift tax is a form of direct tax.

Q73. Which statements are true?
A. Fiscal deficit is financed by borrowing.
B. Recovery of earlier government loans is revenue receipt.

Q66. Regarding an organisation’s spending:
I. Buying new technology is capital expenditure.
II. Debt financing is capital expenditure, whereas equity financing is revenue expenditure.

Which is correct?

Q65. Regarding government debt:
I. Some household financial savings fund government borrowing.
II. Auctioned dated securities form a large component of internal public debt.

Which is correct?

Q64. Which advantages apply to Inflation-Indexed Bonds?
I. They can permit lower real coupons.
II. They protect investors against unexpected inflation.
III. Interest and capital gains are exempt from tax.

Q62. About the Finance Commission:
I. It has five members.
II. At least one must already be a judge.
III. Its Chairman cannot be reappointed. IV. K. Santhanam was the first Chairman.

Which statements are true?

Q49. Which of the following are included in the Indian Union Budget?
I. Revised estimates for the current year.
II. Budget estimates for the following year.
III. Actuals for the preceding year.

Q38. In Union Budget Estimates 2019–20, arrange these receipts by descending GDP share:
I. Corporation tax;
II. Personal income tax;
III. GST; IV. Union excise duty.

Q33. Which items were exempt from GST under the rules relevant to this examination?
I. Hulled cereal grains.
II. Cooked chicken eggs.
III. Processed canned fish.
IV. Advertising-bearing newspapers.