INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
State led Industrial development is the principal feature of Independent India. Which of the following factors necessitated it?
- Private sector lacked the huge capital required for setting up of heavy industries.
- Maximization of profit compelled state intervention.
- Private players had less incentive to invest in industrialization due to the low demand for industrial goods.
Select the correct answer code:
Correct
Solution: c)
Maximization of profit was not a motive behind state intervention.
Incorrect
Solution: c)
Maximization of profit was not a motive behind state intervention.
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Question 2 of 5
2. Question
Which of the following statement about ‘White Label ATMs’ is correct?
Correct
Solution: a)
White Label ATMs – ATMs set up, owned and operated by non-bank entities are called “White Label ATMs” (WLAs).
Brown Label ATMs – ATMs where hardware and the lease of the ATM machine is owned by a service provider, but cash management and connectivity to banking networks is provided by a sponsor bank whose brand is used on the ATM.
Incorrect
Solution: a)
White Label ATMs – ATMs set up, owned and operated by non-bank entities are called “White Label ATMs” (WLAs).
Brown Label ATMs – ATMs where hardware and the lease of the ATM machine is owned by a service provider, but cash management and connectivity to banking networks is provided by a sponsor bank whose brand is used on the ATM.
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Question 3 of 5
3. Question
Minimum Alternate Tax (MAT), often in news is
Correct
Solution: a)
Income tax is paid as per the provisions of the Income Tax Act (IT Act) but companies calculate their profit (through profit and loss account) as per the provisions of the Companies Act.
The IT Act allows several kinds of exemptions and other incentives from total income together with deductions on the gross income.
As a result of these exemptions, deductions and other incentives under IT Act, companies show their taxable income either ‘nil’ or ‘negative’, and this way, the ‘zero tax’ companies emerge and pay no taxes even though they may be paying huge dividends (under the Companies Act) to their shareholders.
To bring such companies under the income tax, MAT was imposed accordingly.
Incorrect
Solution: a)
Income tax is paid as per the provisions of the Income Tax Act (IT Act) but companies calculate their profit (through profit and loss account) as per the provisions of the Companies Act.
The IT Act allows several kinds of exemptions and other incentives from total income together with deductions on the gross income.
As a result of these exemptions, deductions and other incentives under IT Act, companies show their taxable income either ‘nil’ or ‘negative’, and this way, the ‘zero tax’ companies emerge and pay no taxes even though they may be paying huge dividends (under the Companies Act) to their shareholders.
To bring such companies under the income tax, MAT was imposed accordingly.
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Question 4 of 5
4. Question
In taxation, horizontal equity implies
Correct
Solution: a)
Taxation is based on the idea of Fairness. Though fairness (i.e., the first criteria of a good tax system) is not always easy to define, economists suggested inclusion of two elements in the tax system to make it fair namely, horizontal equity and vertical equity.
Individuals in identical or similar situations paying identical or similar taxes is known as horizontal equity. When ‘better off people pay more taxes it is known as vertical equity.
Incorrect
Solution: a)
Taxation is based on the idea of Fairness. Though fairness (i.e., the first criteria of a good tax system) is not always easy to define, economists suggested inclusion of two elements in the tax system to make it fair namely, horizontal equity and vertical equity.
Individuals in identical or similar situations paying identical or similar taxes is known as horizontal equity. When ‘better off people pay more taxes it is known as vertical equity.
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Question 5 of 5
5. Question
A tax is buoyant when
Correct
Solution: d)
Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue mobilization in response to growth in the Gross domestic product or National income.
A tax is said to be buoyant if the tax revenues increase more than proportionately in response to a rise in national income or output.
A tax is buoyant when revenues increase by more than, say, 1 per cent for a 1 per cent increase in GDP.
Incorrect
Solution: d)
Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue mobilization in response to growth in the Gross domestic product or National income.
A tax is said to be buoyant if the tax revenues increase more than proportionately in response to a rise in national income or output.
A tax is buoyant when revenues increase by more than, say, 1 per cent for a 1 per cent increase in GDP.
