Samacheer Kalvi 7th Social Science Economics Solutions Term 3 Chapter 1 Tax and its Importance

Students can Download Social Science Economics Chapter 1 Tax and its Importance Questions and Answers, Notes Pdf, Samacheer Kalvi 7th Social Science Book Solutions Guide Pdf helps you to revise the complete Tamilnadu State Board New Syllabus and score more marks in your examinations

Tamilnadu Samacheer Kalvi 7th Social Science Economics Solutions Term 3 Chapter 1 Tax and its Importance

Samacheer Kalvi 7th Social Science Tax and its Importance Textual Evaluation

I. Choose the correct answer:

Question 1.
Taxes are ______ payment.
(a) Voluntary
(b) Compulsory
(c) a & b
(d) None of the above
Answer:
(b) Compulsory

Question 2.
Minimum possible amount should be spent in the collection of taxes is
(a) canon of equality
(b) canon of certainity
(c) canon of economy
(d) canon of convenience
Answer:
(c) canon of economy

Question 3.
This taxation is a very opposite of progressive taxation.
(a) degressive
(b) proportional
(c) regressive
(d) none
Answer:
(c) regressive

Question 4.
Income tax is a
(a) direct tax
(b) indirect tax
(c) a &b
(d) degressive tax
Answer:
(a) direct tax

Question 5.
Which tax is raised on provision of service.
(a) wealth
(b) corporate
(c) wealth
(d) service
Answer:
(d) service

II. Fill in the blanks

1. _______ is a term for when a taxing authority usually a government levies or imposes a tax.
2. _______ is the method, where the rate of tax is same regardless size of the income
3. _______ is paid to the Government by the recipient of gift depending on value of gift.
4. _______ tax burden cannot be shifted by tax payers.
5. Indirect tax is ______ elastic.

Answer:

1. Taxation
2. Proportional Taxation
3. Gift tax
4. Direct
5. more

III. Match the following

Principle of taxation	_	Direct Tax
Estate tax	–	Goods and Service Tax
Excise Tax	_	Adam Smith
01.07.2017	–	Less elastic
Direct Tax	–	Indirect Tax

Answer:

Principle of taxation	–	Adam Smith
Estate tax	–	Direct Tax
Excise Tax	–	Indirect Tax
01.07.2017	–	Goods and Service Tax
Direct Tax	–	Less elastic

IV. Odd one out:

Question 1.
Which one of the following is not a indirect tax?
(a) Service tax
(b) Value Added Tax(VAT)
(c) Estate duty
(d) Excise duty
Answer:
(c) Estate duty

V. Correct one out:

Question 1.
Which one of the following tax is a direct tax?
(a) Service tax
(b) Wealth tax
(c) Sales tax
(d) Progressive tax
Answer:
(b) Wealth tax

VI. Give short answer

Question 1.
Define tax.
Answer:
Taxes are defined as a compulsory contribution from a person to the government to defray the expenses incurred in the common interest of all without reference to special benefits conferred.

Question 2.
Why taxes are imposed?
Answer:
Everybody is obliged by law to pay taxes. Total Tax money goes to the government exchequer. The appointed government decides how are taxes being spent and how the budget is organized.

Question 3.
Write the name of taxation types and draw its diagram.
Answer:
Taxation Types: There are four types of Taxation:

1. Proportional Tax
2. Progressive Tax
3. Regressive Tax and
4. Degressive Tax

Question 4.
Write any three importance of tax.
Answer:

1. Health
2. Education
3. Governance

Question 5.
What are the types of tax? and explain it.
Answer:
In modern times taxes are classified into two types. There are:
Direct Tax: A Direct tax is a tax whose burden is directly borne’ by the person on whom it is imposed, (i.e), its burden cannot be shifted to others.

Indirect Tax: When the liability to pay a tax is on one person and the burden of that tax shifts on some other person, this type of tax is called an indirect tax.

Question 6.
Write a short note on Gift Tax and Service Tax.
Answer:
Gift Tax: The gift tax is paid to the Government by the recipient of the gift depending on the value of the gift.

Service Tax: Service tax is raised on the provision of Service. This tax is collected from the service recipients and paid to the Central Government.

Question 7.
What is Goods and Service Tax?
Answer:

• Goods and Services Tax is a kind of tax imposed on the sale, manufacturing, and usage of goods and services.
• This tax is applied to services and goods at a national level with the purpose of achieving overall economic growth.

Question 8.
The distinction between direct and indirect tax.
Answer:

	Direct Tax	Indirect Tax
1.	Burden cannot be shifted by taxpayers	Easily be shifted to another person
2.	Tax is imposed on personal income and corporate income	Taxes imposed on various goods and services
3.	Direct tax has no inflation pressure	This tax has inflation pressure
4.	The impact and incidence are the same in case of direct tax	The impact and incidence are different in case of indirect tax
5.	Direct tax is less elastic	Indirect tax is more elastic

VII. Give a brief answer

Question 1.
Write briefly about the principles of taxation.
Answer:

1. Canon of Equality: The government should impose taxes in such a way that people have to pay according to their ability does not mean an equal amount of tax but it means that the burden of a tax must be fair and just.
2. Canon of Certainty: Certainty creates confidence in the taxpayer’s cost of collection of taxes and increases economic welfare because it tends to avoid all economic waste
3. Canon of Convenience: Taxes should be levied and collected in such a manner that provides a maximum of convenience to the taxpayers should always keep in view that the taxpayers suffer the least inconvenience in payment of the tax.
4. Canon of Economy: Minimum possible money should be spent on the collection of taxes. The collected amount should be deposited in the Government treasury.

Question 2.
Explain the taxation types.
Answer:
Taxation Types:
There are four types of Taxation:

1. Proportional Tax
2. Progressive Tax
3. Regressive Tax and
4. Degressive Tax

(i) Proportional Taxation is a method, where the rate of tax is the same regardless size of the income. The tax amount realized will vary in the same proportion as that of income. If the tax rate is 5% on income, Mr. X getting an income of Rs.1000 will pay. Rs.50, Mr. B will be getting an income of Rs.5,000 will pay a tax of Rs.50. In short, the proportional tax leaves the relative financial status of taxed persons unchanged.

(ii) Progressive Taxation is a method by which the rate of tax will also increase with the increase of income of the person a case of progressive taxation if a person with Rs.1000 income per annum pay a tax of 10% (i.e) Rs.100, a person with an income of Rs. 10,000 per annum pays a tax of 25% (i.e) Rs.2,500 and a person with an income of 1 lakh per annum pays the tax of 50% that is Rs.50,000.

(iii) Regressive taxation: it implies that hire the rate of tax furrow income groups than in the case of higher-income groups it is a very opposite to progressive taxation.

(iv) Digressive Taxes which are too mildly progressive, hence not very steep, so that high-income earners do not make a due sacrifice on the basis of equity, are called digressive. In digressive taxation, a tax may be progressive up to a certain limit; after that, it may be charged at a flat rate.

Question 3.
Explain the importance of tax.
Answer:
Importance of Tax: Taxes are crucial because governments collect this money and use it to finance the following social projects.

1. Health

• Without taxes, government contributions to the health sector would be impossible.
• Taxes got of funding health services such as social health care, medical research, social security, etc.

2. Education

• Education could be one of the most deserving recipients of tax money.
• Governments put a lot of importance on the development of human capital and education is central in this development.

3. Governance

• Governance is a crucial component in the smooth running of country affairs.
• Poor governance would have far-reaching ramifications on the entire country with a heavy toll on its economic growth.
• Good governance ensures that the money collected is utilized in a manner that benefits citizens of the country.

4. Other important sectors are infrastructure development, transport, housing, etc.

• Apart from social projects, governments also use money collected from taxes to fund sector that are ‘
  crucial for the well being of their citizens such as security, scientific research, environmental protection,
  etc..
• Some of the money is also channeled to fund projects such as pensions, unemployment benefits,
  childcare, etc. Taxes can affect the state of economic growth of a country.
• Taxes generally contribute to the gross domestic product (GDP) of a country.

Question 4.
Explain the direct and indirect tax with examples.
Answer:
Direct Tax:

1. A Direct tax is a tax whose burden is directly borne by the person on whom it is imposed, i.e., its burden cannot be shifted to others.
2. It is deducted at source from the income of a person who is taxed.
3. Income tax is a direct tax because the person, whose income is taxed, is liable to pay the
   tax directly to the Government and bear the burden of the tax himself. Eg. Corporation tax, wealth tax gift tax estate dirty.

Indirect Tax:

1. On the other hand, when the liability to pay a tax is on one person and the burden of that tax shifts on some other person, this type of tax is called an indirect tax.
2. Indirect Tax is a tax whose burden can be shifted to others.
3. For example Service tax, Sales tax, Excise duty, Entertainment tax.

Question 5.
Why the need for a tax on people’s welfare? And explain it.
Answer:

• The levying of taxes aims to raise revenue to fund governing.
• It helps alter prices in order to balance the effect of demand.
• Some of these include expenditures on economic infrastructure like transportation, sanitation, public safety, education, health-care systems, military, scientific research, culture, and the arts, public works, public insurance, etc.,
• A government’s ability to raise taxes is called its fiscal capacity.
• When expenditures exceed tax revenue, a government accumulates debt.
• A portion of taxes may be used to service past debts.
• Governments also use taxes to fund welfare and public services.
• These services can include education systems pensions for the elderly, unemployment benefits, and public transportation. Energy, water, and waste management systems are also common public utilities.
• The purpose of taxation is to maintain the stability of the currency, express public policy regarding the distribution of wealth, subsidizing certain industries or population groups or isolating the costs of certain benefits, such as high ways or social security.

Samacheer Kalvi 7th Social Science Tax and its Importance Additional Questions

I. Choose the correct answer:

Question 1.
_______ is a method by which the rate of tax will also increase with the increase of income.
(a) Proportional Taxation
(b) Progressive Taxation
(c) Regressive taxation
(d) Digressive Taxes
Answer:
(b) Progressive Taxation

Question 2.
Wealth tax is an example of ______
(a) direct tax
(b) Indirect tax
(c) a and b
(d) none
Answer:
(a) direct tax

Question 3.
______ is charged from the successor of inherited property
(a) Wealth Tax
(b) Gift Tax
(c) Estate Duty
(d) Service Tax
Answer:
(c) Estate Duty

Question 4.
________ is paid by the producer of goods who recovers it from wholesalers and retailers.
(a) Wealth Tax
(b) Gift Tax
(c) Estate Duty
(d) Excise Duty
Answer:
(d) Excise Duty

Question 5.
Swachh Bharat Cess was started from _________
(a) 15 November 2015
(b) 20 November 2015
(c) 10 November 2016
(d) 10 November 2017
Answer:
(a) 15 November 2015

II. Fill in the blanks:

1. ________ principles or cannons of taxation still form the basis of the tax structure of a modern state
2. ________ could be one of the most deserving recipients of tax money
3. ________ is a crucial component in the smooth running of country affairs.
4. Taxes generally contribute to the________ of a country.
5. ________ constituted under the Central Board of Revenue Act, 1963.
6. ________ is particularly designed to replace the indirect taxes imposed on goods and services by the Central and State.

Answer:

1. Adam Smith’s
2. Education
3. Governance
4. gross domestic product
5. Central Board of Direct Taxes
6. GST

III. Match the following

Proportional Taxation	–	a) Transparent tax
Entertainment	–	b) Roads and bridges
GST	–	c) Royalties
Toll tax	–	d) Size of the income
Corporation tax	–	e) Movie tickets

Answer:

1. d
2. e
3. a
4. b
5. c

IV. Find the odd one out

Question 1
Movie tickets, sale of goods, game arcades, amusement parks
Answer:
sale of goods

V. Give Short Answers

Question 1.
Write a short note on corporation tax.
Answer:
Corporation tax is levied on the profit of corporations and companies. It is charged on royalties, interest, gains from the sale of capital assets located in India, fees for technical services, and dividends.

Question 2.
What is the wealth tax?
Answer:
Wealth tax is imposed on the property of individuals depending upon the value of a property. The same property will be taxed every year on its current market value.

Question 3.
Give an account of Tool tax and Road Tax.
Answer:
Toll tax is a tax you often pay to use any form of infrastructure developed by the government, for example roads and bridges. The tax amount levied is rather negligible which is used for maintenance and basic upkeep of a particular project.

VI. Answer in Detail

Question 1.
Explain the following
(a) Sales Tax or VAT
(b) Excise duty
(c) Entertainment tax.
Answer:
(a) Sales Tax or VAT: Sales tax is an indirect tax on the sale of goods because the liability to collect tax is that of the shopkeeper but the burden of that tax falls on the customer. The shopkeeper realizes the tax amount from the customer by including it in the price of the commodity that he sells.

(b) Excise Duty: Excise duty is paid by the producer of goods, who recovers it from wholesalers and retailers. This tax in India is levied by the Central Government.

(c) Entertainment Tax: The state governments charge such tax on every transaction related to entertainment. Some examples are movie tickets, video game arcades, stage shows, exhibitions, amusement parks, and sports-related activities.