GAAR applies to arrangements declared as Impermissible Avoidance Agreements (IAA) by taxpayers.
GAAR's applicability overrides other provisions, emphasizing its broad scope.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
GAAR applies to any arrangement that is considered an Impermissible Avoidance Arrangement (IAA). Furthermore, under its provisions, certain transactions are deemed to lack commercial substance. GAAR is not merely restricted to cross-border transactions, but also applies to domestic arrangements.
Clause 178(1) employs a non-obstante clause, making it clear that GAAR provisions will prevail over any other provision of the Act. This is critical because tax statutes often have specific anti-avoidance rules (SAARs) and other provisions that could potentially conflict with a general anti-avoidance regime.
Ques:
42
Which one of the following is not a source of Public revenue?
Correct Answer:
(D)
Subsidy
Income tax, public borrowings and VAT (Value Added Tax) are the sources of public revenue, while subsidy is a part of public expenditure.
Ques:
43
Which among the following are the sources of income in current account of the Central Government?
Corporation Tax
Profit from Public Enterprises
Sale of National Savings Certificates
Loans received from the World Bank
Excise duties
Select the correct answer from the codes given below:
Codes:
Correct Answer:
(D)
1, 2 and 5
The current or revenue account of the government includes all the revenue receipts (also known as current receipts) of the government income which cannot be reclaimed back from the government. The tax and non-tax revenue receipts consist of corporation tax, taxes on income, customs, GST Union excise duties, dividends and profits from public enter- prises etc. All those receipts of the government which either creates liability or reduces financial asset are capital receipts. Sale of National Saving Certificates and loans received from the World Bank are included in capital receipts and hence, they are the part of Capital account of the budget.
Ques:
44
Which of the following is an example of non-tax revenue?
Correct Answer:
(C)
Dividends from public sector enterprises
Non-tax revenue refers to government income from sources other than taxes. Dividends from public sector undertakings are a type of non-tax revenue as it's income earned from the government's investment in these companies.
Ques:
45
Consider the following statements regarding Non-tax revenue:
It is the form of fees/ charges paid by people for utilising the government’s services.
It includes fines imposed by the government on people/ entities for not following rules.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
Non-tax revenue is in the form of fees or charges paid by people for utilising the government's services. It also includes fines imposed by the government on people and entities for not following rules. People and companies are under a legal obligation to pay income tax and corporate tax, respectively.
Ques:
46
Consider the following statements:
Non-Tax Revenue is the recurring income that is earned from sources other than taxes by the government.
They are the revenue receipts that are not generated by taxing the public.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
Non-tax revenue refers to the income that the government earns from sources other than direct or indirect taxes. It includes revenue from fees, fines, dividends, profits, and services provided by the government.
Ques:
47
Which of the following statements best describes tax buoyancy?
Correct Answer:
(B)
The responsiveness of tax revenue to changes in GDP, reflecting how much tax revenue increases with economic growth.
(a) Incorrect: This describes the tax-to-GDP ratio, not tax buoyancy.
(b) Correct: Tax buoyancy specifically refers to how much tax revenue increases relative to changes in GDP. A higher buoyancy indicates that tax revenue is more responsive to economic growth.
(c) Incorrect: This describes tax collection efficiency, not tax buoyancy.
(d) Incorrect: This describes tax rate changes, not tax buoyancy.
Ques:
48
Which of the following statements correctly describes the term ‘High tax buoyancy’?
Correct Answer:
(A)
High tax collection without changing the tax rate
Tax buoyancy refers to the responsiveness of tax revenue growth to changes in GDP. When a tax is buoyant, its revenue increases without increasing the tax rate.
Ques:
49
Consider the following statements regarding Tax buoyancy and Tax Elasticity:
Tax elasticity refers to the responsiveness of tax revenue growth to changes in GDP.
Tax buoyancy refers to changes in tax revenue in response to changes in tax rate.
Which of the statements given above is/are correct?
Correct Answer:
(D)
Neither 1 Nor 2
Tax elasticity refers to the responsiveness of tax revenue to changes in tax rates, not GDP. Tax buoyancy, however, measures the responsiveness of tax revenue to changes in GDP. In other words, tax elasticity is about how much tax revenue changes when tax rates change, while tax buoyancy is about how much tax revenue changes when the economy grows.
Ques:
50
Consider the following statements regarding the benefits of Tax Buoyancy:
The government may not borrow highly to finance the budget.
If the GDP growth rate registers high, direct income tax collection will accelerate.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
Benefits of Tax Buoyancy:
Government being the beneficiary: The government can feel relieved and happy if the economy achieves higher growth. The biggest beneficiary of a higher GDP growth rate is the government itself.
No need to borrow: The government may not borrow highly to finance the budget
Welfare measures: New schemes and programmes can be lavished because of high revenue growth.
GDP growth: If the GDP growth rate registers high, direct income tax collection will accelerate. Generally, direct taxes are more sensitive to GDP growth rate.