Indian Economy Textbook Questions – Sources of Revenue · Fiscal Policy · Goods and Services Tax (Part 1)
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110 Money Bill, 114 Appropriation Bill, 116 Vote on account, 267 Contingency Fund.
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Indian Economy Textbook Questions – Sources of Revenue · Fiscal Policy · Goods and Services Tax (Part 1) – 20 questions, subject: Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.
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1.
Which of the following is a capital receipt?
Correct Answer: B [Recovery of loans]
Explanation:
Recovery of loans reduces government assets; interest and dividends are non-tax revenue.
2.
The Sangam-age term “Ulku” refers to:
Correct Answer: C [Customs duty]
Explanation:
Irai = land tax; Thandam = fine; Iravu = extra demand.
3.
Which of the following is a direct tax?
Correct Answer: D [Corporation tax]
Explanation:
The burden of corporation tax cannot be shifted to others.
4.
A progressive tax is one in which:
Correct Answer: A [The rate rises as income rises]
Explanation:
Same rate = proportional; falling rate = regressive.
5.
What is the maximum maturity of a Treasury bill?
Correct Answer: C [364 days]
Explanation:
91, 182, 364 days: within one year, hence a money market instrument.
6.
What was the earlier name of DIPAM?
Correct Answer: D [Department of Disinvestment]
Explanation:
Renamed in 2016.
7.
Which Article deals with the Annual Financial Statement of the Union?
Correct Answer: B [112]
Explanation:
202 = Annual Financial Statement of a State.
8.
Who presented the first budget of independent India (26.11.1947)?
Correct Answer: A [R.K. Shanmukham Chetty]
Explanation:
John Mathai = first budget of the Republic (28.2.1950).
9.
Primary deficit is:
Correct Answer: D [Fiscal deficit − interest payments]
Explanation:
F − I = P.
10.
In India, fiscal policy is formulated by:
Correct Answer: C [Union Government (Ministry of Finance)]
Explanation:
Monetary policy = Reserve Bank of India.
11.
On which date did GST come into force in India?
Correct Answer: B [1.7.2017]
Explanation:
22.9.2025 = GST 2.0 rate change.
12.
Who chairs the GST Council?
Correct Answer: D [Union Finance Minister]
Explanation:
The Vice-Chairperson is one of the State Finance Ministers.
13.
IGST is levied on:
Correct Answer: A [Inter-state supply and imports]
Explanation:
Within a State = CGST + SGST.
14.
Which of the following statements are correct?
- A fee is paid for a direct service rendered by the government.
- A taxpayer gets an equivalent direct benefit in return.
- Dividends from public sector enterprises are non-tax revenue.
Correct Answer: C [1, 3 only]
Explanation:
A tax has no direct benefit in return (quid pro quo), so statement 2 is wrong.
15.
Match the following:
| a. Tax | 1. Capital receipt |
| b. Fee | 2. Penalty for breaking the law |
| c. Fine | 3. Price of a direct service |
| d. Recovery of loans | 4. Compulsory payment; no direct benefit |
Correct Answer: B [4 3 2 1]
Explanation:
Tax 4, Fee 3, Fine 2, Recovery of loans 1.
16.
Which is NOT one of Adam Smith's canons of taxation?
Correct Answer: D [Simplicity]
Explanation:
Smith's four: equality, certainty, convenience, economy.
17.
Which statements about cess and surcharge are correct?
- A cess is levied for a specific purpose.
- A surcharge is shared with the States under Finance Commission devolution.
- The Union surcharge is provided in Article 271.
Correct Answer: B [1, 3 only]
Explanation:
Article 270(1): cess and surcharge are not part of the pool shared with the States.
18.
Wagner's law states that:
Correct Answer: C [With industrialisation, public expenditure grows faster than national income]
Explanation:
Step-wise rise = Peacock–Wiseman; certainty = Smith; supply law = Say.
19.
Which of the following is revenue expenditure?
Correct Answer: D [Salaries of government employees]
Explanation:
Expenditure that does not create assets = revenue expenditure.
20.
Match the Articles:
| a. Article 110 | 1. Contingency Fund |
| b. Article 114 | 2. Vote on account |
| c. Article 116 | 3. Appropriation Bill |
| d. Article 267 | 4. Money Bill |
Correct Answer: A [4 3 2 1]
Explanation:
110 Money Bill, 114 Appropriation Bill, 116 Vote on account, 267 Contingency Fund.
? Full lessons and explanations – Indian Economy PDF textbook (₹299): www.shanmugamiasacademy.in/study-materials/tnpsc-gs-unit-5-indian-economy
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