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Questions and Answers
Which of the following is not a characteristic of a regressive tax system?
Which of the following is not a characteristic of a regressive tax system?
What is the main purpose of a consumption tax?
What is the main purpose of a consumption tax?
Which of the following is an example of a 'toll tax'?
Which of the following is an example of a 'toll tax'?
What is the impact of 'bracket creep' on taxpayers?
What is the impact of 'bracket creep' on taxpayers?
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Who introduced the first modern Income Tax in India?
Who introduced the first modern Income Tax in India?
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When was the Income Tax Act enacted in India?
When was the Income Tax Act enacted in India?
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What is the main focus of the Income Tax Act 1961?
What is the main focus of the Income Tax Act 1961?
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What are the different sources of income mentioned in the Income Tax Act 1961?
What are the different sources of income mentioned in the Income Tax Act 1961?
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What is the main objective of taxation?
What is the main objective of taxation?
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Which of the following is not an objective of taxation mentioned in the text?
Which of the following is not an objective of taxation mentioned in the text?
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What is the primary objective of taxation?
What is the primary objective of taxation?
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How can the state discourage consumption of harmful goods?
How can the state discourage consumption of harmful goods?
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What is a common way to regulate production through taxation?
What is a common way to regulate production through taxation?
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How is economic development measured?
How is economic development measured?
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What is the Indian household savings rate?
What is the Indian household savings rate?
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What is the definition of 'Assessment' in the context of income tax?
What is the definition of 'Assessment' in the context of income tax?
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Who is considered an 'Assessee' under the income tax act?
Who is considered an 'Assessee' under the income tax act?
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What is the definition of 'Income' according to the Sec.2 (24)?
What is the definition of 'Income' according to the Sec.2 (24)?
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When is the taxpayer's income assessed for tax purposes?
When is the taxpayer's income assessed for tax purposes?
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Who is considered a 'Person' according to Sec.2 (7)?
Who is considered a 'Person' according to Sec.2 (7)?
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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.
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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.