Finance & Taxation — Practice MCQs

With reference to the Fiscal Responsibility and Budget Management (FRBM) Act, consider the following statements:

1. The 2018 amendment to the FRBM Act introduced a debt-to-GDP anchor of 60% for the General Government, with 40% for the Centre and 20% for the States.
2. The FRBM Act sets statutory ceilings on State borrowings; States need no further constitutional approval to borrow.
3. Off-budget borrowings by State PSUs do not violate the letter of the FRBM ceilings even when they fund revenue expenditure.

Which of the statements given above is/are correct?

Match the following deficits with their definitions:

Choose the correct match:

With reference to the Income-tax Act, 2025, consider the following statements:

1. It replaces the Income-tax Act, 1961 and comes into force from 1 April 2026.
2. It introduces a single concept of 'Tax Year', replacing the earlier 'Previous Year' and 'Assessment Year'.
3. The new Act prescribes new income tax slab rates, doing away with the rate-fixing role of the annual Finance Act.

Which of the statements given above are correct?

With reference to Safe Harbour Rules and Advance Pricing Agreements (APAs), consider the following statements:

1. Safe Harbour Rules specify pre-decided margins for cross-border related-party transactions which, if met by the taxpayer, are accepted by the tax authority without further scrutiny of the transfer price.
2. An APA can cover up to five future tax years and four rollback years.
3. Both Safe Harbour Rules and APAs are administered by the Securities and Exchange Board of India.

Which of the statements given above is/are correct?

Consider the following statements regarding the Securities Transaction Tax (STT):

1. STT is levied on transactions in equity, equity derivatives and equity mutual fund units traded on a recognised stock exchange in India.
2. STT is a direct tax administered by the CBDT.
3. STT is levied on off-market transfer of listed shares.

Which of the statements given above is/are correct?

With reference to the GST Council and the recent GST 2.0 reforms, consider the following statements:

1. The GST Council is a constitutional body established under Article 279A of the Constitution.
2. GST 2.0 replaces the four-slab structure (5%, 12%, 18%, 28% + cess) with a two-slab core structure of 5% and 18%, plus a 40% rate on sin and luxury goods.
3. GST is a destination-based consumption tax, with revenue accruing to the State of consumption.

Which of the statements given above are correct?

Regarding the Goods and Services Tax Appellate Tribunal (GSTAT), consider the following statements:

1. GSTAT is constituted under the Central Goods and Services Tax Act, 2017.
2. Its Principal Bench is located in Mumbai.
3. Appeals against orders of GSTAT lie directly with the High Court on questions of law.

Which of the statements given above is/are correct?

With reference to anti-dumping duty and safeguard duty in India, consider the following statements:

1. Anti-dumping duty is country-specific and product-specific, while safeguard duty is non-discriminatory and applies to imports from all sources.
2. Both duties are levied under the Customs Tariff Act, 1975 and investigated by the Directorate General of Trade Remedies.
3. Anti-dumping duty is imposed only when imports come from non-WTO members.

Which of the statements given above are correct?

Examine the following Assertion (A) and Reason (R):

Assertion (A): The CAG has repeatedly flagged off-budget borrowings by State governments as a violation of the spirit of the FRBM Act.

Reason (R): Off-budget borrowings raised through State PSUs and SPVs are excluded from the State's fiscal deficit calculation but the repayment burden falls on the State exchequer.