MCQs on Taxation in India (Based on Budget 2025–26 & Economic Survey 2025–26)
For JKSSB, SSC, UPSC, UGC NET and Banking Exams
By Home Academy – With Explanation
Question 1
Which constitutional provision states that no tax shall be levied or collected except by authority of law?
A. Article 246
B. Article 265
C. Article 279A
D. Article 280
Answer: B
Explanation: Article 265 of the Constitution of India clearly states that no tax can be imposed or collected without the authority of law. This ensures that taxation powers are exercised legally and with parliamentary approval.
Question 2
Which authority administers direct taxes in India?
A. Central Board of Indirect Taxes and Customs
B. Reserve Bank of India
C. Central Board of Direct Taxes
D. Finance Commission
Answer: C
Explanation: Direct taxes such as income tax and corporate tax are administered by the **Central Board of Direct Taxes under the **Income Tax Act 1961.
Question 3
Which institution administers GST and customs duties in India?
A. SEBI
B. Central Board of Direct Taxes
C. Central Board of Indirect Taxes and Customs
D. RBI
Answer: C
Explanation: Indirect taxes including GST and customs duties are administered by the **Central Board of Indirect Taxes and Customs.
Question 4
Goods and Services Tax in India was implemented on:
A. 1 January 2016
B. 1 April 2017
C. 1 July 2017
D. 1 January 2018
Answer: C
Explanation: The **Goods and Services Tax came into force on 1 July 2017, replacing several indirect taxes like VAT, service tax and excise duty.
Question 5
The GST Council was established under which article of the Constitution?
A. Article 246
B. Article 279A
C. Article 280
D. Article 270
Answer: B
Explanation: Article 279A of the Constitution provides for the creation of the **GST Council, which determines GST rates and policies.
Question 6
Which type of tax cannot be shifted to another person?
A. Indirect tax
B. Direct tax
C. GST
D. Customs duty
Answer: B
Explanation: In direct taxes the burden is borne by the same person who pays the tax. Income tax is a typical example of direct tax.
Question 7
Which of the following is an example of indirect tax?
A. Income tax
B. Corporate tax
C. GST
D. Capital gains tax
Answer: C
Explanation: GST is an indirect tax because the burden of tax is transferred to the final consumer through the price of goods and services.
Question 8
Under the new tax regime announced in Budget 2025–26, income up to what amount is effectively tax-free due to rebate?
A. ₹7 lakh
B. ₹9 lakh
C. ₹10 lakh
D. ₹12 lakh
Answer: D
Explanation: Due to rebate under Section 87A, individuals earning up to ₹12 lakh annually do not have to pay income tax.
Question 9
Which article of the Constitution deals with the distribution of taxation powers between the Union and the States?
A. Article 246
B. Article 265
C. Article 279A
D. Article 280
Answer: A
Explanation: Article 246 provides the framework for division of legislative powers, including taxation powers, between the Union and State governments.
Question 10
Which tax replaced VAT and service tax in India?
A. Income tax
B. Corporate tax
C. GST
D. Securities transaction tax
Answer: C
Explanation: GST replaced several indirect taxes such as VAT, service tax, excise duty and central sales tax.
Question 11
The Income Tax Act governing income taxation in India was enacted in:
A. 1956
B. 1961
C. 1971
D. 1985
Answer: B
Explanation: The **Income Tax Act 1961 provides the legal framework for income tax in India.
Question 12
Which institution recommends the distribution of tax revenue between the Union and the States?
A. RBI
B. Finance Commission
C. SEBI
D. Planning Commission
Answer: B
Explanation: The **Finance Commission of India recommends how tax revenues should be shared between the central and state governments.
Question 13
Which GST component is collected by the central government on interstate trade?
A. CGST
B. SGST
C. IGST
D. UTGST
Answer: C
Explanation: Integrated GST (IGST) is imposed on interstate supply of goods and services.
Question 14
GST is known as which type of tax system?
A. Origin-based tax
B. Destination-based tax
C. Production tax
D. Wealth tax
Answer: B
Explanation: GST is a destination-based tax, meaning tax revenue goes to the state where goods or services are consumed.
Question 15
Which ministry prepares the Union Budget in India?
A. Ministry of Commerce
B. Ministry of Finance
C. Ministry of Planning
D. Ministry of Corporate Affairs
Answer: B
Explanation: The Union Budget is prepared and presented by the **Ministry of Finance.
Question 16
The fiscal deficit target for FY 2025–26 is approximately:
A. 3 percent of GDP
B. 4.4 percent of GDP
C. 5.5 percent of GDP
D. 6 percent of GDP
Answer: B
Explanation: The Union Budget 2025–26 aims to reduce the fiscal deficit to about 4.4 percent of GDP.
Question 17
Which tax is imposed on profits earned by companies?
A. Income tax
B. Corporate tax
C. GST
D. Customs duty
Answer: B
Explanation: Corporate tax is levied on the net profits of companies operating in India.
Question 18
Which GST rate is generally applied to luxury goods?
A. 5 percent
B. 12 percent
C. 18 percent
D. 28 percent
Answer: D
Explanation: Luxury goods and certain sin goods fall under the highest GST slab of 28 percent.
Question 19
Which article of the Constitution provides for the Finance Commission?
A. Article 270
B. Article 279A
C. Article 280
D. Article 246
Answer: C
Explanation: Article 280 establishes the Finance Commission responsible for recommending tax revenue distribution.
Question 20
Which report reviews India’s economic performance before the Union Budget?
A. Finance Commission Report
B. Economic Survey
C. RBI Monetary Policy Report
D. GST Annual Report
Answer: B
Explanation: The Economic Survey is presented before the budget and provides an overview of economic performance and policy trends.
Question 21
Which tax is imposed on income earned by individuals in India?
A. Corporate tax
B. Income tax
C. Customs duty
D. GST
Answer: B
Explanation: Income tax is a direct tax imposed on the income of individuals and is governed by the **Income Tax Act 1961.
Question 22
Which institution decides GST tax rates in India?
A. RBI
B. SEBI
C. GST Council
D. Finance Commission
Answer: C
Explanation: GST rates and policies are decided by the **GST Council, which includes representatives from the central and state governments.
Question 23
GST is levied on which of the following?
A. Production of goods only
B. Sale of goods only
C. Supply of goods and services
D. Import of goods only
Answer: C
Explanation: GST is levied on the supply of goods and services rather than production or sale.
Question 24
Which GST component is collected by the state government?
A. CGST
B. SGST
C. IGST
D. UTGST
Answer: B
Explanation: State GST (SGST) is collected by the state government on intra-state supply of goods and services.
Question 25
Which tax is levied on imported goods entering India?
A. GST
B. Customs duty
C. Corporate tax
D. Income tax
Answer: B
Explanation: Customs duty is imposed on goods imported into India and is administered by the **Central Board of Indirect Taxes and Customs.
Question 26
Which constitutional article provides for distribution of GST revenue between the Union and the States?
A. Article 265
B. Article 270
C. Article 279A
D. Article 280
Answer: B
Explanation: Article 270 of the **Constitution of India deals with the distribution of taxes including GST between the Centre and States.
Question 27
GST in India follows which model?
A. Single GST model
B. Dual GST model
C. Triple GST model
D. Federal tax model
Answer: B
Explanation: India follows a dual GST model where both the central and state governments levy GST simultaneously.
Question 28
Which GST component is applied on interstate supply of goods?
A. CGST
B. SGST
C. IGST
D. UTGST
Answer: C
Explanation: Integrated GST (IGST) is applied on interstate supply of goods and services.
Question 29
Which tax was abolished in India in 2015?
A. Wealth tax
B. Income tax
C. Corporate tax
D. Service tax
Answer: A
Explanation: Wealth tax was abolished in 2015 and replaced with an additional surcharge on high-income taxpayers.
Question 30
Which tax is imposed on profit from sale of assets such as land and shares?
A. Corporate tax
B. Capital gains tax
C. GST
D. Customs duty
Answer: B
Explanation: Capital gains tax is levied on profit arising from the sale of capital assets.
Question 31
Which institution prepares the Economic Survey in India?
A. Reserve Bank of India
B. Ministry of Finance
C. NITI Aayog
D. SEBI
Answer: B
Explanation: The Economic Survey is prepared by the Economic Division of the **Ministry of Finance.
Question 32
GST is an example of which type of tax?
A. Direct tax
B. Indirect tax
C. Corporate tax
D. Wealth tax
Answer: B
Explanation: GST is an indirect tax because the tax burden is ultimately borne by the consumer.
Question 33
Which of the following taxes is paid by companies on their profits?
A. Income tax
B. Corporate tax
C. Capital gains tax
D. GST
Answer: B
Explanation: Corporate tax is imposed on profits earned by companies.
Question 34
Which GST slab generally applies to most goods and services in India?
A. 5 percent
B. 12 percent
C. 18 percent
D. 28 percent
Answer: C
Explanation: The 18 percent GST slab covers the majority of goods and services.
Question 35
Which article of the Constitution provides for taxes levied by the Union but collected by the states?
A. Article 268
B. Article 269
C. Article 270
D. Article 279A
Answer: A
Explanation: Article 268 states that certain duties are levied by the Union but collected by the states.
Question 36
The Union Budget in India is presented in which house of Parliament?
A. Rajya Sabha
B. Lok Sabha
C. Both Houses together
D. Supreme Court
Answer: B
Explanation: The Union Budget is introduced in the Lok Sabha by the Finance Minister.
Question 37
Which tax is levied on securities transactions in stock markets?
A. Income tax
B. Securities Transaction Tax
C. GST
D. Corporate tax
Answer: B
Explanation: Securities Transaction Tax (STT) is levied on transactions of securities traded on stock exchanges.
Question 38
Which authority regulates the securities market in India?
A. RBI
B. SEBI
C. NABARD
D. SIDBI
Answer: B
Explanation: The **Securities and Exchange Board of India regulates the securities market and protects investors.
Question 39
Which tax system ensures that higher income groups pay higher taxes?
A. Proportional tax system
B. Progressive tax system
C. Regressive tax system
D. Flat tax system
Answer: B
Explanation: India follows a progressive taxation system where tax rates increase with income levels.
Question 40
Which financial indicator shows the difference between government expenditure and revenue?
A. Fiscal deficit
B. Trade deficit
C. Revenue surplus
D. Inflation rate
Answer: A
Explanation: Fiscal deficit represents the gap between total government expenditure and total revenue receipts.