Funds Transfer from Union to State MCQ Practice Questions
Ques: 1
The total revenue collected by the government from all types of taxes, including direct taxes (like income tax, corporate tax) and indirect taxes (like GST, excise duty, customs duty), is called?
Correct Answer:
(B) Gross Tax Revenue
Gross tax revenue refers to the total amount of money a government collects from taxes before any deductions, refunds, or other adjustments are made. It's essentially the raw, unadjusted amount of tax money collected.
In other words, the total revenue collected by the government from all types of taxes, including direct taxes (like income tax, corporate tax) and indirect taxes (like GST, excise duty, customs duty).
Ques: 2
The revenue that remains with the central government after accounting for the portion that is shared with the states, is called?
Correct Answer:
(A) Net Tax Revenue
Net tax revenue refers to the income a government collects from taxes, minus any portion of that revenue shared with state governments. Essentially, it's the government's total tax income after taking into account revenue transfers.
In other words, the revenue that remains with the central government after accounting for the portion that is shared with the states.
Ques: 3
The net tax revenue is arrived at after deducting the revenue collections under:
Correct Answer:
(D) All of the above
The net tax revenue is calculated by subtracting revenue collections from cesses and surcharges, revenue from Union Territories, and tax administration expenditure from the gross tax revenue. This process determines the amount of tax revenue that is available for sharing with states and the Union government.
Ques: 4
The Union government has two routes of direct financial transfers to States:
Correct Answer:
(B) Centrally Sponsored Schemes, Central Sector Schemes
The Union government utilizes two main channels for direct financial transfers to States: Centrally Sponsored Schemes (CSS) and Central Sector Schemes (CSec Schemes). CSSs are schemes where both the Union and State governments share funding and implementation, while CSec Schemes are entirely funded and implemented by the Union government.
Ques: 5
The Constitution divides the taxing powers between the Centre and the States. Consider the following statements in this context:
1. Parliament has exclusive power to levy taxes on the subjects enumerated in Concurrent List.
2. The state legislature has exclusive power to levy taxes on subjects enumerated in the State List.
Which of the statements given above is/are correct?
Correct Answer:
(B) 2 only
Seventh Schedule of the Constitution divides the taxing powers between the Centre and the States as follows:
The Parliament has exclusive power to levy taxes on subjects enumerated in the Union List,
The state legislature has exclusive power to levy taxes on subjects enumerated in the State List,
Both can levy taxes on the subjects enumerated in Concurrent List whereas residuary power of taxation lies with Parliament only.