MCQ on Income Tax Law and Accounts Unit 1
20 Questions
11 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following is not a characteristic of a regressive tax system?

  • It places a greater burden on lower-income individuals
  • Lower-income individuals pay a higher proportion of their income in taxes
  • Higher-income individuals pay a higher proportion of their income in taxes (correct)
  • The tax rate decreases as the amount subject to taxation increases
  • What is the main purpose of a consumption tax?

  • To encourage savings and investment (correct)
  • To generate revenue for the government
  • To distribute the tax burden equally among all income levels
  • To discourage spending and boost the economy
  • Which of the following is an example of a 'toll tax'?

  • Gasoline tax used to maintain roads and bridges (correct)
  • Sales tax on luxury goods
  • Corporate income tax on business profits
  • Property tax levied on homeowners
  • What is the impact of 'bracket creep' on taxpayers?

    <p>It pushes taxpayers into higher tax brackets as their income increases</p> Signup and view all the answers

    Who introduced the first modern Income Tax in India?

    <p>James Wilson</p> Signup and view all the answers

    When was the Income Tax Act enacted in India?

    <p>1961</p> Signup and view all the answers

    What is the main focus of the Income Tax Act 1961?

    <p>Governing taxation in the country</p> Signup and view all the answers

    What are the different sources of income mentioned in the Income Tax Act 1961?

    <p>Income from house property, capital gains, and profit from business</p> Signup and view all the answers

    What is the main objective of taxation?

    <p>Raising revenue</p> Signup and view all the answers

    Which of the following is not an objective of taxation mentioned in the text?

    <p>Environmental conservation objectives</p> Signup and view all the answers

    What is the primary objective of taxation?

    <p>Raising revenue</p> Signup and view all the answers

    How can the state discourage consumption of harmful goods?

    <p>By levying prohibitive rates of tax</p> Signup and view all the answers

    What is a common way to regulate production through taxation?

    <p>By increasing tax on capital goods</p> Signup and view all the answers

    How is economic development measured?

    <p>By GNP (Gross National Product)</p> Signup and view all the answers

    What is the Indian household savings rate?

    <p>Around 26%</p> Signup and view all the answers

    What is the definition of 'Assessment' in the context of income tax?

    <p>Determination of income by the assessing officer</p> Signup and view all the answers

    Who is considered an 'Assessee' under the income tax act?

    <p>'Person' in respect of whom any proceedings are taken</p> Signup and view all the answers

    What is the definition of 'Income' according to the Sec.2 (24)?

    <p>'Income' includes all things declared by interpretation and its natural import</p> Signup and view all the answers

    When is the taxpayer's income assessed for tax purposes?

    <p>'Taxpayer income' year after it was earned, at rates prescribed in the financial act</p> Signup and view all the answers

    Who is considered a 'Person' according to Sec.2 (7)?

    <p>'Person' refers to a natural person or human being</p> Signup and view all the answers

    Study Notes

    Taxation Characteristics

    • A regressive tax system is not characterized by a proportionate tax rate that increases with income.

    Consumption Tax

    • The main purpose of a consumption tax is to tax goods and services at the point of sale.

    Toll Tax

    • A toll tax is exemplified by a tax on the use of roads or bridges.

    Bracket Creep

    • Bracket creep occurs when taxpayers are pushed into higher tax brackets due to inflation, increasing their tax liability.

    Income Tax History

    • The first modern Income Tax in India was introduced by James Wilson in 1860.
    • The Income Tax Act was enacted in India in 1961.

    Income Tax Act 1961

    • The main focus of the Income Tax Act 1961 is to consolidate and amend the laws related to income tax.
    • The Act mentions five heads of income: Salaries, Income from House Property, Profits and Gains of Business or Profession, Capital Gains, and Income from Other Sources.

    Objectives of Taxation

    • The primary objective of taxation is to raise revenue for the government.
    • One objective of taxation is to discourage consumption of harmful goods by imposing higher taxes.
    • A common way to regulate production through taxation is by imposing higher taxes on undesirable goods.
    • Economic development can be measured through indicators such as GDP per capita.

    Indian Economy

    • The Indian household savings rate is relatively high.

    Income Tax Definitions

    • Assessment in the context of income tax refers to the process of determining the tax liability of a taxpayer.
    • An Assessee is any person or entity whose tax liability is being assessed.
    • Income, according to Sec.2 (24), includes dividends, capital gains, and profits from business or profession.
    • A taxpayer's income is assessed for tax purposes at the end of the financial year.
    • A Person, according to Sec.2 (7), includes an individual, Hindu Undivided Family, firm, local authority, company, or trust.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge of income tax law and accounts unit 1 with this multiple-choice quiz. Answer questions about regressive tax system, consumption tax, toll tax, and bracket creep.

    More Like This

    Income Tax Law and Practice Quiz
    3 questions
    Income Tax Law and Practice
    3 questions
    Income Tax Law in Oman
    40 questions

    Income Tax Law in Oman

    SimplerManganese2597 avatar
    SimplerManganese2597
    Use Quizgecko on...
    Browser
    Browser