Government and Taxes Book Back Questions 10th Social Science Lesson 26
10th Social Science Lesson 26
26] Government and Taxes
Book Back Questions with Answer and Do You Know Box Content
Do You Know?
Tax System: Every type of tax has some advantages and some disadvantages. So we have tax system, that is, a collection of variety of taxes. From Adam Smith, many economists have given lists of canons of taxation. It is important to recall those common among them for discussion here.
1. Canon of equity: Since tax is a compulsory payment, all economists agree that equity is the cardinal principle in designing the tax system. The rich should pay more tax revenue to government than the poor, because rich has more ability than the poor to pay the tax.
2. Canon of Certainty: Government should announce in advance the tax system so that every tax payer will be able to calculate how much tax amount one may have to pay during a year to the government.
3. Canons of Economy and Convenience: If the tax is simple, then the coast of collecting taxes (tax payer cost + tax collector cost) will be very low. Further, tax should be collected from a person at the time he gets enough money to pay the tax. This is called canon of convenience. A convenient tax reduces the cost of collecting tax.
4. Canons of Productivity and Elasticity: Government should choose the taxes that can get enough tax revenue to it. It should choose a few taxes that can fetch more tax revenue, instead of lots of taxes. This is canon of productivity. Tax is paid by the people out their incomes. Therefore, the tax system should be designed in such a way that the people automatically pay more tax revenue if their incomes grow. This is called canon of elasticity.
Taxation in India has its roots from the period of Manu Smriti and Arthasastra. The present Indian tax system is based on this ancient tax system.
In India taxes are collected by all the three tiers of government. There are taxes that can be easily collected by the Union government. In India almost all the direct taxes are collected by the Union governments. Taxes on goods and services are collected by both Union and State governments. The taxes on properties are collected by local governments. In India we collect more tax revenue through indirect taxes than through direct taxes. The major indirect taxes in India are customs duty and GST.
In India, Income Tax was introduced for the first time in 1860 by Sir James Wilson in order to meet the losses sustained by the Government on account of the Mutiny of 1857.
France was the first country to implement GST in 1954.
Structure of Goods and Service Tax (GST): State Goods and Service Tax (SGST): Intra state (within the state) VAT/sales tax, purchase tax, entertainment tax, luxury tax, lottery tax and state surcharge and cesses.
Central Goods and Service Tax (CGST): Intra state (within the state): Central Excise Duty, Service tax, countervailing duty, additional duty of customs, surcharges, education and secondary/higher secondary cess.
Integrated Goods and Service Tax (IGST) Inter state (integrated GST): There are four major GST rate: (5%, 12%, 18% and 28%) Almost all the necessities of life like vegetables and food grains are excempted from this tax.
Choose the best answers:
1. The three levels of government in India are
(a) Union, State and local
(b) Central, State and village
(c) Union, municipality and panchayat
(d) None of the above
2. In India, taxes are including
(a) Direct taxes
(b) Indirect taxes
(c) Both (a) and (b)
(d) None of these
3. Which is the role of government and development policies?
(a) Defence
(b) Foreign policy
(c) Regulate the economy
(d) All of above
4. The most common and important tax levied on an individual in India is
(a) Service tax
(b) Excise duty
(c) Income tax
(d) Central sales tax
5. Under which tax one nation, one uniform tax is ensured
(a) Value added tax (VAT)
(b) Income tax
(c) Goods and service tax
(d) Sales tax
6. Income tax was introduced in India for the first time in the year _____________
(a) 1860
(b) 1870
(c) 1880
(d) 1850
7. ______________ tax is charged on the benefits derived from property ownership.
(a) Income tax
(b) Wealth tax
(c) Corporate tax
(d) Excise duty
8. What are identified as causes of black money?
(a) Shortage of goods
(b) High tax rate
(c) Smuggling
(d) All of above
Fill in the blanks:
1. _____________ is levied by government for the development of the state’s economy.
2. The origin of the word “tax” is from the word _____________
3. The Goods and Service Tax act came into effect on _______________
4. The unaccounted money that is concealed from the tax administrator is called _____________
Consider the following the statements and tick the appropriate answer:
1. Which of the following statement is correct about GST?
i) GST is the “one point tax”.
ii) This aims to replace all direct taxes levied on goods and services by the Central and State Governments.
iii) It will be implemented from 1 July 2017 throughout the country.
iv) It will have unified the tax structure in India.
(a) i and ii are correct
(b) ii, iii and iv are correct
(c) i, iii and iv are correct
(d) All are correct
Match the following:
1. Income tax – Value added tax
2. Excise duty – 1 July 2017
3. VAT – Smuggling
4. GST – Direct tax
5. Black money – Indirect tax
Answers:
Choose the best answers:
1. Union, state and local 2. Both (a) and (b) 3. all of above 4. Income tax 5. Goods and service tax 6.1860 7. Wealth tax
8. All of above
Fill in the blanks:
1. Tax 2. Taxation 3. Direct 4. 1st July 2017 5. Black Money
Consider the statements given below and choose the correct option:
1. (i) , (iii) and (iv) are correct
Match the following:
1. Income Tax – Direct tax
2. Excise duty – Indirect tax
3. VAT – Value added tax
4. GST – 1st July 2017
5. Black money – Smuggling