About this quiz
50 questions covering every section of the note.
This Lok Sewa practice set has 50 multiple-choice questions (Subject: Economics and Planning · For: Kharidar, Nayab Subba, Section Officer · Level: Easy). Take the quiz above first; after that, use the study list below to revise every question with its correct answer and a short explanation.
Study list: all 50 questions with answers and explanations
Which article says no tax can be levied except by law?
- A) Article 115 ✔
- B) Article 116
- C) Article 119
- D) Article 59
Why: Article 115.
Who gave the canons of taxation?
- A) Adam Smith ✔
- B) Alfred Marshall
- C) Keynes
- D) Robbins
Why: Adam Smith gave them.
Which is NOT one of Adam Smith's canons of taxation?
- A) Equality
- B) Certainty
- C) Convenience
- D) Profitability ✔
Why: The canons are equality, certainty, convenience and economy.
Income tax is an example of a(n):
- A) Direct tax ✔
- B) Indirect tax
- C) Fee
- D) Fine
Why: It is a direct tax.
VAT is an example of a(n):
- A) Direct tax
- B) Indirect tax ✔
- C) Property tax
- D) Land revenue
Why: VAT is an indirect tax.
A tax whose rate rises as income rises is:
- A) Progressive ✔
- B) Proportional
- C) Regressive
- D) Flat
Why: This is progressive tax.
VAT was introduced in Nepal on:
- A) 1 Shrawan 2050 BS
- B) 1 Mangsir 2054 BS ✔
- C) 1 Baisakh 2058 BS
- D) 15 Jestha 2063 BS
Why: On 1 Mangsir 2054 BS.
The standard VAT rate in Nepal is:
- A) 10%
- B) 12%
- C) 13% ✔
- D) 15%
Why: It is 13%.
VAT in Nepal is governed by the:
- A) VAT Act 2052 ✔
- B) Income Tax Act 2058
- C) Customs Act
- D) Excise Act
Why: The VAT Act 2052.
The Income Tax Act currently in force is of:
- A) 2031 BS
- B) 2058 BS ✔
- C) 2063 BS
- D) 2074 BS
Why: The Income Tax Act 2058.
Which office collects VAT and income tax?
- A) Department of Customs
- B) Inland Revenue Department ✔
- C) Nepal Rastra Bank
- D) Office of the Auditor General
Why: IRD collects them.
Customs duty is collected by:
- A) Department of Customs ✔
- B) IRD
- C) Local levels
- D) Province governments
Why: The Department of Customs.
PAN stands for:
- A) Personal Account Number
- B) Permanent Account Number ✔
- C) Public Audit Number
- D) Primary Asset Number
Why: Permanent Account Number.
Tax on alcohol and tobacco is mainly:
- A) Excise duty ✔
- B) Property tax
- C) Income tax
- D) Land revenue
Why: Excise duty is levied on them.
Property tax is collected by:
- A) Federal government
- B) Local governments ✔
- C) Nepal Rastra Bank
- D) Provincial assemblies only
Why: Local governments collect property tax.
Customs duty is a tax power of:
- A) Federal government ✔
- B) Local level
- C) Province
- D) Ward office
Why: Customs is a federal tax.
The federal share of VAT and domestic excise revenue is:
- A) 50%
- B) 60%
- C) 70% ✔
- D) 85%
Why: Federal 70%, province 15%, local 15%.
The provincial share of VAT revenue is:
- A) 10%
- B) 15% ✔
- C) 25%
- D) 30%
Why: Provinces get 15%.
Which tax is usually the largest single source of revenue in Nepal?
- A) VAT ✔
- B) Land revenue
- C) Property tax
- D) Entertainment tax
Why: VAT is the largest source.
A tax that takes a larger share from low incomes is:
- A) Progressive
- B) Proportional
- C) Regressive ✔
- D) Direct
Why: This is a regressive tax.
A tax is best defined as:
- A) A voluntary donation to the government
- B) A compulsory payment to the government without a direct return service ✔
- C) A payment for a specific service received
- D) A loan given to the government
Why: Tax is compulsory and the taxpayer gets no direct service in return.
Which canon of taxation means people should pay according to their ability?
- A) Certainty
- B) Convenience
- C) Equality ✔
- D) Economy
Why: Equality means tax is paid according to the ability to pay.
The canon of economy means:
- A) The cost of collecting tax should be low ✔
- B) Tax should be paid at a convenient time
- C) Tax rates should rise with income
- D) Everyone pays the same tax
Why: Economy means collection costs should be kept low.
Which statement about direct tax is true?
- A) Its burden is shifted to consumers through prices
- B) It is paid by the person on whom it is imposed and cannot be shifted ✔
- C) VAT is a direct tax
- D) It is always regressive
Why: A direct tax is borne by the person on whom it is imposed.
Which of these is an indirect tax?
- A) Land revenue
- B) Property tax
- C) Customs duty ✔
- D) Income tax
Why: Customs duty is an indirect tax because its burden is passed on in prices.
Land revenue (मालपोत) is a:
- A) Direct tax ✔
- B) Indirect tax
- C) Non-tax revenue
- D) Foreign grant
Why: The note lists land revenue among direct taxes.
Why are indirect taxes often regressive?
- A) They are charged only on the rich
- B) The same rate applies to rich and poor, so the poor pay a larger share of income ✔
- C) They are refunded to the poor
- D) They rise with income
Why: A uniform rate on consumption takes a larger share of low incomes.
A tax charged at the same rate on all levels of income is:
- A) Progressive
- B) Proportional ✔
- C) Regressive
- D) Degressive slab
Why: A proportional tax applies the same rate to every income level.
Income tax slabs in which higher income attracts a higher rate are an example of:
- A) Regressive tax
- B) Proportional tax
- C) Progressive tax ✔
- D) Indirect tax
Why: Rates rising with income make the tax progressive.
Which tax is levied on the first slab of individual income?
- A) Social security tax ✔
- B) Entertainment tax
- C) House rent tax
- D) Advertisement tax
Why: Income tax includes social security tax on the first slab.
Income tax rates for individuals in Nepal are:
- A) Flat for everyone
- B) Progressive ✔
- C) Regressive
- D) Not charged
Why: The Income Tax Act 2058 has progressive rates for individuals.
Customs duty is charged on:
- A) Imports and some exports ✔
- B) Only house rent
- C) Only land
- D) Salaries of civil servants
Why: Customs duty is a tax on imports and some exports collected at customs points.
Excise duty is levied on goods such as:
- A) Rice and vegetables only
- B) Alcohol, tobacco and vehicles ✔
- C) Books and newspapers only
- D) Land and buildings
Why: Excise applies to alcohol, tobacco, vehicles and some industrial products.
The Inland Revenue Department was set up in:
- A) 2052 BS
- B) 2054 BS
- C) 2058 BS ✔
- D) 2074 BS
Why: IRD was established in 2058 BS.
Which taxes does the Inland Revenue Department collect?
- A) Customs duty only
- B) VAT, income tax and excise ✔
- C) Property tax and land revenue
- D) Vehicle tax only
Why: IRD collects VAT, income tax and excise.
Who issues PAN to taxpayers?
- A) Department of Customs
- B) Nepal Rastra Bank
- C) Inland Revenue Department ✔
- D) Local ward office
Why: PAN is issued by IRD to identify taxpayers.
A VAT-registered business must issue:
- A) A VAT bill ✔
- B) A citizenship certificate
- C) A ration card
- D) A land ownership certificate
Why: VAT-registered businesses issue VAT bills for their sales.
Under which ministry do IRD and the Department of Customs work?
- A) Ministry of Home Affairs
- B) Ministry of Finance ✔
- C) Ministry of Industry
- D) Ministry of Federal Affairs
Why: Both offices work under the Ministry of Finance.
Which of these is a federal tax power?
- A) Property tax
- B) House rent tax
- C) Corporate income tax ✔
- D) Land revenue
Why: Corporate and personal income tax are federal taxes.
Passport and visa fees are levied by the:
- A) Federal government ✔
- B) Provincial government
- C) Local level
- D) Ward committee
Why: The note lists passport and visa fees under federal powers.
Which of these is a provincial tax power?
- A) Customs duty
- B) House and land registration fee ✔
- C) VAT
- D) Passport fee
Why: House and land registration fee is a provincial power.
Agricultural income tax is listed under the powers of:
- A) The federal government only
- B) The provincial government ✔
- C) Nepal Rastra Bank
- D) The Department of Customs
Why: Agricultural income tax is listed among provincial taxes.
Which of these is a local level tax?
- A) Remuneration tax
- B) Excise duty
- C) House rent tax ✔
- D) Customs duty
Why: House rent tax is collected by local governments.
Business tax is levied by:
- A) Local levels ✔
- B) Federal government only
- C) Department of Customs
- D) Nepal Rastra Bank
Why: Business tax is a local level tax.
Which taxes are shared between province and local levels?
- A) Customs and VAT
- B) Vehicle tax, entertainment tax and advertisement tax ✔
- C) Corporate income tax and remuneration tax
- D) Passport and visa fees
Why: Vehicle, entertainment and advertisement taxes appear as shared between province and local levels.
What share of VAT revenue goes to local levels?
- A) 10%
- B) 15% ✔
- C) 25%
- D) 70%
Why: VAT and domestic excise are shared 70% federal, 15% province, 15% local.
Revenue sharing of VAT among the three levels is made under the:
- A) VAT Act 2052
- B) Income Tax Act 2058
- C) Intergovernmental Fiscal Arrangement Act 2074 ✔
- D) Local Government Operation Act
Why: The Intergovernmental Fiscal Arrangement Act 2074 sets the 70/15/15 sharing.
Which body recommends formulas for revenue sharing and grants?
- A) National Planning Commission
- B) National Natural Resources and Fiscal Commission ✔
- C) Public Service Commission
- D) Election Commission
Why: The National Natural Resources and Fiscal Commission recommends sharing and grant formulas.
Which statement is correct?
- A) VAT started in 2058 BS at 10%
- B) VAT started on 1 Mangsir 2054 BS at a standard rate of 13% ✔
- C) VAT is collected only by local levels
- D) VAT is a direct tax
Why: VAT began on 1 Mangsir 2054 BS under the VAT Act 2052 at 13%.
A shopkeeper adds VAT to the price and the customer pays it. This shows that VAT:
- A) Cannot be shifted
- B) Is a direct tax
- C) Is shifted to the consumer ✔
- D) Is a fine
Why: In an indirect tax like VAT, the burden is shifted to the consumer through prices.