Chhattisgarh State Board Class 10 Social Science Chapter 19 Government Budget and Taxation Exercise Multiple Choice, Fill in the Blanks, Questions and Answers here.
Chhattisgarh State Class 10 Social Science Chapter 19 Solution
1.) Multiple choice questions
1.) B
2.) C
3.) D
4.) A
5.) B
6.) A
2.) Fill in the blanks.
1.) Public
2.) Food Safety and Standards Authority of India
3.) Budget
4.) Excise duty
5.) Entertainment tax
6.) Income
7.) Telephone and mobile phone services, and Goods and Services Tax
3.) Government plays various roles like protecting the country from external attacks, supplying electricity, ensuring food security etc. Government also runs programs like Mahatma Gandhi National Rural Employment Act (MGNREGA), Public distribution system etc for provisioning funds for all these activities government collects taxes and the annual provisioning of taxes collected and expenditure of money is known as budget. It is the government’s revenue and expenditure account. Budget is widely discussed in Parliament and public too because it affects the taxation pattern and schemes which directly impact the common people. For example, any change in income tax slabs is going to impact the disposable income of an individual, or any change in the MGNREGA wages pattern would impact the earnings of rural labourers.
4.) Income tax- Taxes levied by the government on the income of an individual is known as income tax. It must be paid on all the income sources of an individual.
Excise duty- It is a tax levied by the government on the production of goods in the industries. It is an indirect tax i.e., directly it is charged from the production house but indirectly its burden falls on the last consumer because the final price of the product rises simultaneously.
GST- It was launched in India in 2017. It is a comprehensive indirect tax regime which converges various taxes like excise duty, service tax etc into a single tax named Goods and Services Tax.
5.) GST- Tax on goods and services bought.
Custom’s duty- Tax on the goods imported from outside.
Income tax- Tax on the personal income.
Corporate tax- Tax on the profits earned.
6.) Production of goods like steel, matches, watches, apparel, iron ore etc is a multi-staged process because of which the cost of final product increases. For example, in production of steel, first the iron ore is extracted, then it is refined to usable iron form in industries. Then crude iron is mixed with various other elements to convert it into steel, which is then shaped into desired form of equipment. Then this equipment is sent to some other place through trader, wholesaler, and retailer. All this process involves different stages of taxation because of which the tax burden on the final product increases. The tax increase in crude oil impacts the cost of other items very quickly because it is required in production and transportation of goods from one place to another. If the price of crude oil increases the price of other commodities also increase.
7.) Products like food grains, dal, oil, cooking fuel, dairy products, eggs etc are primary products which are required by everyone to sustain a healthy life. When the tax is increased on these products it impacts the poorer sections of the society most because the disposable income of poor people is not able to sustain the increased cost of the daily use products. They are forced to reduce the consumption of goods which became costly which increase malnutrition, poverty, hunger deaths etc and impact their productivity also.
8.) Ideally when four friends take a house on rent, they must pay the monthly rent equally.
Like, if the monthly rent is Rs. 2000 every friend must pay the monthly rent of Rs. 500. But when we consider the monthly income of each of them then contributing a certain percentage of income as a house rent is more equitable way of sharing the house rent. Like two friends have a monthly income of Rs 3000 and two others have a monthly income of Rs 7000. So, all of them would pledge 10% of their income to pay the house rent i.e., two friends would pay Rs 300 and the other two would pay Rs 700 as the house rent. It is a more equitable way of dividing the rent as it considers the purchasing power parity of each of them.
9.) Tax on income effects the individuals of higher income the most because higher the income higher would be the income tax, which must be paid to the government. Even in India the income upto Rs 2,50,000 lakh annually is exempt from paying any tax, while it increases progressively with the increase in income. Whereas any increase in the tax of goods effects every individual equally i.e., the price of goods would remain the same either the rich or the poor. For example, if price of food items increased, poor would be impacted the most because they have a limited disposable income which would reduce to bear the increased expenses. Because of this any increase in taxes on goods impacts the poor most.
10.) Tax evasion is an illegal practice of understating one’s real income to abstain from paying the taxes. For example, people with multiple sources of income like salary and agriculture, do not state their agricultural income correctly to evade taxes. With the implementation of Goods and services tax in 2017 the cases of tax evasion would reduce because under this tax regime the bills and invoices are required at the next stage to get GST credit from the previous stage of production. This ensures transparency and authenticity in the production process. So, it reduces the cases of tax evasion effectively.
Additional questions & Answers
Mcq
1.) What is the full form of MNREGA
a.) Mahatma Gandhi Rurban Employment Guarantee Act
b.) Mahatma Gandhi Rural Employment Generation Act
c.) Mahatma Gandhi Rural Employment Guarantee Act
d.) Mahatma Gandhi Rural Enterprise Guarantee Act
Answer: C
2.) What are the minimum days of assured employment under MNREGA?
a.) 100
b.) 120
c.) 130
d.) 150
Answer: D
3.) What is the full form of FSSAI?
a.) Food Safety and Security Authority of India.
b.) Food Safety and Standards Authority of India.
c.) Food Sterilisation and Security Authority of India.
d.) Food Safety and Security Academy of India.
Answer: B
4.) Packaged food materials contains stamp of
a.) IRDAI
b.) FSSAI
c.) Ministry of health and family welfare
d.) Ministry of agriculture
Answer: B
5.) Which one of the following is not a function of FSSAI
a.) Monitoring the foodstuffs under various laws
b.) Formulating standards for the preservatives used in various processed foods.
c.) Producing agricultural items
d.) Conducting periodical tests of foodstuffs
Answer: C
6.) Which one of the following is not mentioned in budget-
a.) Tax revenues of government
b.) Expenditure plans of the government
c.) Different taxes to be levied by the government.
d.) All of the above are mentioned in budget.
Answer: D
7.) GST was launched in India in
a.) 2015
b.) 2016
c.) 2017
d.) 2018
Answer: C
8.) GST is a
a.) Direct tax
b.) Indirect tax
c.) Both of the above
d.) None of the above
Answer: B
9.) Tax evasion is
a.) Understating one’s income
b.) Black money
c.) Hawala transactions
d.) All of the above
Answer: D
10.) Corporate tax is levied upon
a.) Personal income
b.) Companies
c.) Commercial firms
d.) Both b and c
Answer: D
Very short
1.) What is tax evasion?
The illegal practice of understating one’s real income to evade taxes is known as tax evasion.
2.) What is equitable taxation system?
The practice of taxing the rich people more compared to the poor individuals is known as equitable taxation system.
3.) What is the objective of equitable taxation system?
To reduce economic inequalities.
4.) What is income tax?
It is a direct tax levied on the personal income of an individual.
5.) What is corporate tax?
It is a direct tax levied upon the profits earned by companies and commercial firms.
6.) GST encompasses which type of taxes?
It includes both production and sale of goods and services.
7.) What is budget?
Budget is the annual financial statement of the government in which it outlines its tax revenues and annual proposed expenditures.
8.) What is the role of FSSAI?
It enacts laws and regulates the trade of packed food materials.
9.) Who regulates the functioning of all commercial banks in India?
Reserve Bank of India
10.) What is MNREGA?
It is a rural employment guarantee programme which aims to provide assured employment of 150 days to every family in a year who demands for it.
Short
1.) What is the main objective behind the MNREGA program?
The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is aimed at providing the right to work to the rural people. Under this scheme, work is provided in the place where the people live, and the capital loss and labor wages are borne by the government.
2.) What is the role of the government in the industrialization of the country?
Industrial expansion was the aim of the second five-year plan. Under this government established heavy industries such as heavy engineering, electricity generation, steel production and petroleum refineries.
3.) Explain the regulatory role of government with an example.
Government performs various regulatory functions like through FSSAI government sets the safety standards for the food items. It is answerable for public health security and monitors all foodstuffs under various laws and regulations to ensure it is safe for human consumption.
4.) What is a government budget?
The account of government’s revenue and expenditure account is known as government budget. It contains the estimated revenue of the government through various sources and the estimated expenditure on various policies and programs by the government.
5.) Why is parliamentary control necessary in the formulation and passage of the budget?
Parliament shows the will of the people as it has the elected representatives of the people. It ensures that the government is responsible to the people and any bill passed show the willingness of the representatives elected by the people of India.
6.) Why was GST introduced in India?
GST is also known as Goods and Services Tax. It was launched in India in 2017 and it replaced various indirect taxes to make the taxation process in India simpler and more transparent. It includes both production and sale of goods and services.
7.) What is the benefit of direct tax above indirect tax?
The final cost of taxation falls on the consumer in the case of indirect taxes while in direct tax the direct tax burden falls on the taxed individual. Direct taxation keeps the concentration of wealth under check, while an increase in indirect taxation increases the inflation in the economy.
8.) What are the methods of equitable taxation?
The Equitable taxation principle states that the higher income individual should be taxed more in comparison to the individual with the lower income. Other methods for reducing economic inequalities in society are providing essential commodities free of cost, and taxes should be levied on luxury items.
9.) What is tax evasion? How does it pose a major macroeconomic threat?
Understating one’s original income to avoid paying taxes to the government is known as tax evasion. It is a major macroeconomic threat because it decreases the revenue of the government and increases the flow of black money and various illegal activities in the economy.
10.) How do indirect taxes increase the tax burden on the common people?
In indirect taxation the direct tax burden falls on the common people. For example, when the price of a raw material increases, the company using that raw material to process it also increases its prices which further increases the market price of the product. Thus, the final tax burden falls on the last consumer.
Long
1.) What are direct taxes? Explain two types of direct taxes.
The taxes which are directly levied on the individual or companies or on the income of business firms are known as direct taxes. There are two direct taxes income tax and corporate tax.
Corporate tax- The tax which is paid by the companies or commercial firms is known as corporate tax. It is a tax upon the profits earned by any company after deducting all the expenses.
Income tax- It is levied on the personal income of individuals. It is a tax upon the personal income of an individual. The higher the income, the higher would be the income tax on an individual’s income.
2.) Which type of taxation pattern is desirable in India, uniform taxation system or equitable taxation system? Explain your answer with an example.
Taxes are the important source of revenue of the government, which it aligns with the expenses of the national importance. India is a country with great economic divide so equitable taxation system is more desirable than the uniform taxation system. In uniform taxation every individual, whether rich or poor, is taxed equally irrespective of their income levels. Whereas in equitable taxation system the rate of taxation increases with the income levels of the individuals. In India, in direct taxation, equitable taxation system is followed i.e., higher the income of the individual higher would be the tax. This system favors the poor section of the society are they are not under the tax bracket. It helps to reduce the economic inequalities in society. In indirect taxes, we follow uniform taxation principles i.e., if any individual needs to buy a goods or services he must pay the same price whether he is rich or poor.
3.) Compare the effectiveness of India’s taxation system with the taxation system of other countries.
India is the second most populous country in the world. But its total tax collection is much lower than the other countries. The main reason behind this shortfall is many tax concessions announced by the government and tax evasion. It reduces the ability of the government to announce the social welfare programs. According to the economic survey 2015-16 the total tax collection in India was 16.6% of GDP, while its total expenditure was 26.6%. Because of this shortfall the government was only able to spend 5.1% on human capital. On the other hand, a small country like Vietnam has a total tax collection of 22.2% of the GDP, while it spends 28% and 8.8% on human capital. This shortfall in tax collection is because of many reasons like poverty, tax evasions, low per capita income, etc.
4.) Why was GST introduced? Why it is better than other indirect taxes?
Goods and Services Tax was introduced in India in 2017. It has replaced many indirect taxes like service tax, excise duty, entertainment tax etc. With the introduction of GST many indirect taxes were culminated into one and it encompasses both production and sales of goods and services. Modern production process is a multi-step process. So, it becomes difficult to keep track on the income and taxation at different taxes. With the introduction of GST, with the help of invoices these steps are tracked efficiently and taxed at each level. This makes the taxation process more transparent and accountable.
5.) What is the role of FSSAI? Name some regulatory bodies in India.
FSSAI is also known as the Food Safety and Standards Authority of India. It is the body which regulates the laws and trade regulations regarding the packaged food items. It is answerable for public health security, and it monitors all the health and safety standards of packaged food items. In frames laws and sets the standards of permissible preservatives which can be used in food items. It conducts periodical testing of foodstuffs sold in the market for adherence to the guidelines. Some other regulatory bodies of India are Reserve Bank of India, Competition Commission of India, Securities and Exchange Board of India etc.