Conceptual Foundation [Model Questions and Answers] | Unit-1 | TAXATION | BBS 3rd Years | NOTES

conceptual foundation model questions and answers unit-1 taxation bbs third year notes
DR Gurung

Collections Of Old Model Questions | Notes | Conceptual Foundation | Chapter-1 | BBS 3rd Year | 4 Years Program | TU

Question No. 1: Define tax. Describe it's types of tax. [Old Model Question]
Answer: Tax is that amount which should be paid to the government by individual or institutions according to the law of nation. According to the law of nation, he/she is punished by law of nation if not paid tax to the government. Tax is used in operational and development activities conducted by the nation. On the basis of shift of burden of Tax are classified on two ways.

Also Check:

Fundamental of Taxation and Auditing (Mgt.218) | BBS Third Year | 4 Years Program | Model Question | With SOLUTION

  • I. Direct Tax: Those persons liable to pay the tax imposed by government is known as direct tax. It is not transferable tax. This types of tax is bearable and paid by the same person. Income tax, assets tax, interest tax, vehicle tax are the examples of Direct Tax.
  • II. Indirect Tax: Those types of tax which is partial burden by one person and another amount is transferred to other person is known as indirect tax. In other word, the burden transferred to one person to another person is known as Indirect Tax. These types of tax are collected through final users of product. Value added tax (VAT), excise duty and custom duty are the examples of indirect tax.

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Complete Syllabus Of Foundation Of Taxation and Auditing | MGT-218 | BBS-3rd-Year

Notes | Question Answers Of Taxation Of Income In Nepal | Unit-2 | TAXATION | BBS 3rd Years

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Question No. 2: State the meaning of cannon of convenience with appropriate example. [Old Model Question]
Answer: The easy way for collecting the tax through individual or institutions by government is known as cannon of convenience. Taxpaying time, procedures and places should be appropriate so that it is easier to the tax payer. Remuneration tax is collected when remuneration received by the individual, installment system should provide who paid huge amount of tax.

Question No. 3: Define direct tax and state any two merits of direct tax. [Model Question, 2072]
Answer: Those persons liable to pay the tax imposed by government is known as direct tax. It is not transferable tax from one person to another person. These types of tax should be bear and paid by same person.
The main two merits of direct tax are as follows:
  • I. Equality: That person who earn more income should pay higher amount of tax and vice versa. Tax is paid to the government proportionate income level. So, it provides equality.
  • II. Flexibility: Amount of Tax is changed when income also changed. So it has also flexibility.
Question No. 4: Give the conceptual cannon of equality with suitable example. [2061, c]
Answer: Any person or organization should be paid amount of tax according to their level of income. If level of income increased, amount of tax also increased and vice-versa. There is no any difference amount of tax any cast, gender earned same level of income.

Question No. 5: Write the objective of tax in short. [2061,F,Q-1]
Answer: Government should operate daily administrative and development activities for the upliftment of the nation through collection of revenue and tax. The main objectives of tax are as follows:
  • a. To reduce unemployment problem.
  • b. To regulate the economy.
  • c. To redistribute wealth.
  • d. To uplift the economy.
  • e. To remove regional imbalance.
Question No. 6: Explain any two cannons of taxation with appropriate example. [2061,F,Q-2]
Answer: The two cannons of taxation are as follows:
  • I. Cannon Of Equality: Amount of tax is imposed by government according to earning capacity. So, government should change the tax according to the level of income.
  • II. Cannon of Elasticity: According to this cannon rate of tax is changed in difference of economic situation. Government should imposed high rate of tax at boom economy situation than recession economy situation.
Question No. 7: Define 'Indirect tax' and give three examples of indirect tax. [2062,C,Q-1]
Answer: An indirect tax is imposes on one person but paid partly or wholly by another. It is also known as transferable tax. Tax burden person and tax paid person are different. Value added taxes, excise duty and custom fee are the examples of indirect tax.

Question No. 8: Write in short, the objective of taxation. [2063, Q-1]
Answer: Government should operate daily administrative and development activities for the upliftment of the nation through collection of revenue and tax. The main objective of taxation are as follows:
  • a. To reduce unemployment problem.
  • b. To regulate the economy.
  • c. To redistribute wealth.
  • d. To uplift the economy.
  • e. To remove regional imbalance.
Question No. 9: What are the different types of tax? Briefly explain with examples. [2064,Q-1]
Answer: Tax is that amount which should be paid to the government by individual or institutions according to the law of nation. According to the law of nation, he/she is punished by law of nation if not paid tax to the government. Tax is used in operational and development activities conducted by the nation. On the basis of shift of burden, Tax are of two types and they are as follow:
  • I. Direct Tax: Those persons liable to pay the tax imposed by government is known as direct tax. It is not transferable tax. This types of tax is bearable and paid by the same person. Income tax, assets tax, interest tax, vehicle tax are the examples of Direct Tax.
  • II. Indirect Tax: Those types of tax which is partial burden by one person and another amount is transferred to other person is known as indirect tax. In other word, the burden transferred to one person to another person is known as Indirect Tax. These types of tax are collected through final users of product. Value added tax (VAT), excise duty and custom duty are the examples of indirect tax.
Question No. 10: What do you mean by cannon of economy? Write in brief with suitable example.
Answer: The whole purpose of collecting taxes is to generate revenue for the company. This revenue, in turn, is spent on public welfare projects. The canon of economy – keeping in view the above-mentioned purpose – states that the cost of collecting taxes should be as minimum as possible. There should not be any leakage in the way. In this way, a large amount of the collections will go directly to the treasury, and therefore, will be spent in the government projects for the welfare of the economy, country and the people. On the other hand, if the canon of economy isn’t applied and the overall cost of collecting taxes is unreasonably high, the collected amount will not be sufficient in the end.

According to this cannon, assume that tax collection procedure should be less costly than collected amount of tax. Suppose Government collect Rs. 1000 tax by spending Rs. 50 but today Government should collect Rs. 1000 by spending Rs. 70 is not economy.

Question No. 11: Define indirect tax. Give three example of indirect tax.
Answer: Please see answers - [TU 2062 C, Q-1] [Question No. 7]

Question No. 12: Describe in short the objective of taxation.
Answer: Please see answers - [TU 2061 F, Q-1] [Question No. 5]

Question No. 13: Describe in short, the cannon of equality and elasticity in taxation.
Answer: Please see answers - [2061,F,Q-2] [Question No. 6]

Question No. 14: Define the term of Tax. Explain it's types with suitable examples.
Answer: Please see answers - [Question No. 1]

Question No. 15: Explain in short the cannons of economy and neutrality in taxation.
Answer: Canon of economy : Please see answers - [Question No. 10]
Canon of neutrality: It is assumed that Government should impose tax without any bias, any community and society. Due to tax, any production and service sector should not affect badly.

Question No. 16: Describe in brief the cannon of diversity with appropriate example.
Answer: This cannon states that the burden of tax should be scattered among different kinds of people, burden of paying tax should not centralized on one group of people but it should be different way and ensure smoothly collection of tax.

Question No. 17: Describe briefly the important of tax to the government. Also state the types of tax with suitable example.
Answer: Please see answers - [2061,F,Q-1] [Question No. 1]

Question No. 18: Explain with suitable example of Cannon of equality.
Answer: The word equality here does not mean that everyone should pay the exact, equal amount of tax. What equality really means here is that the rich people should pay more taxes and the poor pay less. This is because the amount of tax should be in proportion to the abilities of the taxpayer. It is one of the fundamental concepts to bring social equality in the country.

The canon of equality states that there should be justice, in the form of equality, when it comes to paying taxes. Not only does it bring social justice, it is also one of the primary means for reaching the equal distribution of wealth in an economy.

Or Please see - [2061, c] [Question No. 4]

Question No. 19: Define 'Tax'. Given three objective of taxation.
Answer: Meaning of 'Tax' - See [Question No. 1]
Objective of Tax - See [2063, Q-1] [Question No. 8]

Question No. 20: Write in short about the cannons of taxation.
Answer: The cannons of taxation refers to build good tax system. Which helps in effective collection method  of tax. According to Adam Smith, the basic cannon of tax are as follows:
  • I. Cannon of equality.
  • II. Cannon of certainty.
  • III. Cannon of convenience.
  • IV. Cannon of economy.
According to the Modern economist, they added some cannon of taxation:
  • V. Cannon of productivity.
  • VI. Cannon of simplicity.
  • VII. Cannon of neutrality.
  • VIII. Cannon of diversity.
  • IX. Cannon of Co-ordination.
Question No. 21: 'Indirect tax, there is exist an agent between tax payer and government'. Discuss this statement with suitable example.
Answer: An indirect tax is a form of tax imposed one person but partly or wholly paid by another. In other words, tax burden and payer are different. It is also known as transferable tax, VAT, excise duty and import, export duty are the example of indirect tax.
For an example, customer purchase goods with VAT bill from retailer. Amount of VAT is not paid by consumer but retailer paid to the government collection through consumer.

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DR Gurung
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