Direct Taxes, Indirect Taxes and GST Framework

Attempt the quiz above first, then review every question with its correct answer and a short explanation below.

1. Q1.Income tax is an example of a:

   • A.indirect tax
   • B.cess on goods
   • C.customs duty
   • D.direct tax✓ Correct Answer

   Explanation: A direct tax is paid by the person on whom it is levied and cannot be shifted to others.

2. Q2.The Goods and Services Tax (GST) came into effect in India on:

   • A.1 April 2016
   • B.1 July 2017✓ Correct Answer
   • C.1 January 2018
   • D.26 January 2017

   Explanation: GST was rolled out at midnight on 30 June-1 July 2017.

3. Q3.The GST Council is chaired by the:

   • A.Prime Minister
   • B.RBI Governor
   • C.Union Finance Minister✓ Correct Answer
   • D.Chief Economic Adviser

   Explanation: The Union Finance Minister chairs the Council; State finance ministers are members.

4. Q4.Customs duty is an example of a:

   • A.direct tax
   • B.wealth tax
   • C.indirect tax✓ Correct Answer
   • D.property tax

   Explanation: Customs duty is levied on imports and exports, and its burden passes to consumers, so it is indirect.

5. Q5.PAN, required for income tax purposes, stands for:

   • A.Personal Asset Number
   • B.Public Account Number
   • C.Primary Assessment Number
   • D.Permanent Account Number✓ Correct Answer

   Explanation: PAN is a ten-character alphanumeric number issued by the Income Tax Department.

6. Q6.A tax levied on the manufacture or production of goods is called:

   • A.excise duty✓ Correct Answer
   • B.customs duty
   • C.stamp duty
   • D.entertainment tax

   Explanation: Excise duty is charged on goods produced within the country.

7. Q7.GST was introduced through which Constitutional Amendment Act?

   • A.42nd Amendment Act, 1976
   • B.101st Amendment Act, 2016✓ Correct Answer
   • C.73rd Amendment Act, 1992
   • D.103rd Amendment Act, 2019

   Explanation: The 101st Amendment inserted Articles 246A and 279A and created the GST framework.

8. Q8.GST is described as a:

   • A.destination-based consumption tax✓ Correct Answer
   • B.origin-based production tax
   • C.tax on income only
   • D.tax on property only

   Explanation: GST revenue goes to the State where the goods or services are finally consumed.

9. Q9.On an inter-State supply of goods, which component of GST is levied?

   • A.CGST only
   • B.IGST✓ Correct Answer
   • C.SGST only
   • D.CGST and SGST together

   Explanation: IGST (Integrated GST) applies to inter-State supply; CGST and SGST apply to intra-State supply.

10. Q10.Which of the following has been kept outside the GST regime?

    • A.packaged food
    • B.alcohol for human consumption✓ Correct Answer
    • C.mobile phones
    • D.cement

    Explanation: Alcohol for human consumption remains with the States as a source of revenue.

11. Q11.Tax on agricultural income in India is levied by:

    • A.the Central Government
    • B.the Reserve Bank of India
    • C.State governments✓ Correct Answer
    • D.the GST Council

    Explanation: Agricultural income tax is a State subject; agricultural income is exempt from central income tax.

12. Q12.The wealth tax in India was abolished from the Budget of:

    • A.1991-92
    • B.2005-06
    • C.2019-20
    • D.2015-16✓ Correct Answer

    Explanation: The 2015 Budget abolished wealth tax and replaced it with a surcharge on the super-rich.

13. Q13.Service tax was first introduced in India in:

    • A.1986
    • B.1994✓ Correct Answer
    • C.2005
    • D.2012

    Explanation: Service tax began in 1994 on three services and was later extended to many more before being subsumed in GST.

14. Q14.Value Added Tax (VAT) was introduced in India in:

    • A.2005✓ Correct Answer
    • B.1991
    • C.1999
    • D.2010

    Explanation: VAT replaced the sales tax from 1 April 2005 and was itself replaced by GST.

15. Q15.In a progressive tax system, the tax rate:

    • A.decreases as income increases
    • B.remains the same for all
    • C.depends on the age of the taxpayer
    • D.increases as income increases✓ Correct Answer

    Explanation: Income tax slabs are progressive: higher incomes are taxed at higher rates.

16. Q16.Corporation tax is levied on the:

    • A.wages of workers
    • B.sales of retail shops
    • C.profits of companies✓ Correct Answer
    • D.agricultural land

    Explanation: Corporation tax is a direct tax on the income of companies.

17. Q17.The GST Council is constituted under which Article of the Constitution?

    • A.Article 246A
    • B.Article 265
    • C.Article 279A✓ Correct Answer
    • D.Article 280

    Explanation: Article 279A provides for the GST Council to make recommendations on GST.

18. Q18.Which Article empowers Parliament and State Legislatures to make laws on GST?

    • A.Article 279A
    • B.Article 266
    • C.Article 112
    • D.Article 246A✓ Correct Answer

    Explanation: Article 246A gives concurrent power to the Centre and States to levy GST.

19. Q19.Which State was the first to ratify the GST Constitution Amendment Bill in 2016?

    • A.Assam✓ Correct Answer
    • B.Bihar
    • C.Gujarat
    • D.Maharashtra

    Explanation: Assam was the first State to ratify the amendment in August 2016.

20. Q20.Decisions in the GST Council need the support of how much of the weighted votes of members present and voting?

    • A.three-fourths✓ Correct Answer
    • B.one-half
    • C.two-thirds
    • D.one-third

    Explanation: The Centre has one-third of the votes and the States together two-thirds; decisions need a three-fourths majority.