About this quiz
Revenue administration, tax, customs, excise and deposit system.
This Lok Sewa practice set has 50 multiple-choice questions (Subject: Public Management · For: Nayab Subba, Section Officer, Kharidar · Level: Medium). 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
According to Article 115 of the Constitution, a tax can be imposed and collected:
- A) By an order of a minister
- B) Only in accordance with law ✔
- C) By any government office
- D) Only by the Nepal Rastra Bank
Why: Article 115 says no tax may be levied or collected except in accordance with law.
Into which fund does federal revenue go?
- A) Contingency Fund
- B) Consolidated Fund ✔
- C) Deposit account
- D) Pension fund
Why: All federal revenue is credited to the Consolidated Fund (Article 116).
Which body administers income tax, VAT and excise duty?
- A) Department of Customs
- B) Inland Revenue Department ✔
- C) Nepal Rastra Bank
- D) Auditor General
Why: IRD administers the three inland taxes through its offices.
What is the standard VAT rate in Nepal?
- A) 10%
- B) 12%
- C) 13% ✔
- D) 15%
Why: The VAT Act sets the standard rate at 13%.
Which of these is an indirect tax?
- A) Income tax
- B) VAT ✔
- C) Tax on salary
- D) House rent tax paid by owner
Why: VAT's burden is passed on to consumers, so it is an indirect tax.
Which of these is non-tax revenue?
- A) Customs duty
- B) Excise duty
- C) Royalty ✔
- D) VAT
Why: Royalties, fees, fines and dividends are non-tax revenue.
Which law is passed every year with the budget to fix tax rates?
- A) Finance Act ✔
- B) Income Tax Act
- C) Civil Service Act
- D) Audit Act
Why: The annual Finance Act sets the rates and changes for that fiscal year.
Under the Intergovernmental Fiscal Arrangement Act 2074, VAT and domestic excise are shared as:
- A) 50/25/25
- B) 60/20/20
- C) 70/15/15 ✔
- D) 80/10/10
Why: 70% federal, 15% province and 15% local.
Royalty from natural resources is shared as:
- A) 50% federal, 25% province, 25% local ✔
- B) 70/15/15
- C) 100% federal
- D) 40/30/30
Why: Royalty is shared 50/25/25 among the three levels.
Which system is used by Nepal Customs for clearing goods?
- A) ASYCUDA ✔
- B) LMBIS
- C) PIS
- D) e-Attendance
Why: Customs uses ASYCUDA World, together with the National Single Window.
A bid security kept by an office is an example of:
- A) Revenue
- B) Deposit (dharauti) ✔
- C) Grant
- D) Loan
Why: Bid security is money held temporarily as a deposit, not income.
When a depositor breaches the condition, the deposit is:
- A) Returned with interest
- B) Forfeited to revenue (सदरस्याहा) ✔
- C) Given to the employee
- D) Kept forever without record
Why: Forfeiture transfers the deposit into government revenue.
The canon of 'certainty' in taxation means:
- A) Everyone pays the same amount
- B) Amount, time and method of payment are clear ✔
- C) Tax is collected at low cost
- D) Tax can be changed every day
Why: Certainty means the taxpayer knows what, when and how to pay.
Which office keeps the central account of government revenue?
- A) FCGO ✔
- B) Department of Customs
- C) Public Service Commission
- D) Election Commission
Why: The Financial Comptroller General Office keeps the central revenue account using RMIS.
Which of these is a reform to reduce tax evasion?
- A) Removing PAN
- B) Electronic billing and online filing ✔
- C) Cash-only payment
- D) Closing tax offices
Why: E-billing and online filing make transactions traceable.
Revenue administration (राजस्व प्रशासन) means:
- A) Spending government money on projects
- B) Assessing, collecting, accounting and controlling government income according to law ✔
- C) Preparing only the annual budget
- D) Giving loans to public enterprises
Why: Revenue administration covers assessment, collection, accounting and control of government income under law.
Which of these is a direct tax?
- A) VAT
- B) Customs duty
- C) Income tax ✔
- D) Excise duty
Why: In a direct tax the burden falls on the person who pays it, as with income tax.
In an indirect tax, the burden of tax:
- A) Always stays with the government
- B) Can be passed on to consumers ✔
- C) Falls only on foreign companies
- D) Is paid only by civil servants
Why: Indirect taxes like VAT, customs and excise are passed on to consumers through prices.
Foreign grants received by the government are classified as:
- A) Tax revenue
- B) Loans
- C) Grants ✔
- D) Deposits
Why: The note lists foreign grants (not loans) as a separate source called grants.
Which of these is NOT non-tax revenue?
- A) Fines
- B) Dividends from public enterprises
- C) Fees
- D) Income tax ✔
Why: Income tax is tax revenue; fees, fines and dividends are non-tax revenue.
Dividend received by the government from a public enterprise is:
- A) Tax revenue
- B) Non-tax revenue ✔
- C) A deposit
- D) A foreign grant
Why: Dividends from public enterprises are listed as non-tax revenue.
Which body makes revenue policy in Nepal?
- A) Inland Revenue Department
- B) Ministry of Finance ✔
- C) Department of Customs
- D) Auditor General
Why: The Ministry of Finance makes revenue policy and the Finance Act sets tax rates.
Customs duty is collected by:
- A) Inland Revenue Office
- B) Department of Customs (भन्सार विभाग) ✔
- C) Local ward offices
- D) FCGO
Why: The Department of Customs collects customs duty at customs offices.
On imported goods, VAT and excise are collected at:
- A) Inland Revenue Offices only
- B) Customs offices ✔
- C) Commercial banks only
- D) District Administration Offices
Why: The Department of Customs collects customs duty along with VAT and excise on imported goods.
Which body investigates revenue leakage and tax evasion?
- A) Department of Revenue Investigation ✔
- B) Public Service Commission
- C) Nepal Rastra Bank
- D) Department of Customs only
Why: The Department of Revenue Investigation investigates revenue leakage and evasion.
The Value Added Tax Act was issued in:
- A) 2052 ✔
- B) 2058
- C) 2074
- D) 2049
Why: The note names the Value Added Tax Act, 2052.
Which Act imposes duty on goods such as alcohol and tobacco?
- A) Value Added Tax Act
- B) Excise Duty Act, 2058 ✔
- C) Income Tax Act
- D) Audit Act
Why: The Excise Duty Act, 2058 covers excise on goods like alcohol, tobacco and some industrial goods.
Which law governs revenue sharing between the federation, provinces and local levels?
- A) Finance Act
- B) Income Tax Act, 2058
- C) Intergovernmental Fiscal Arrangement Act, 2074 ✔
- D) Customs law
Why: The Intergovernmental Fiscal Arrangement Act, 2074 sets revenue sharing among the three levels.
Tax on the income of persons and entities is governed by:
- A) Income Tax Act, 2058 ✔
- B) Excise Duty Act, 2058
- C) Value Added Tax Act, 2052
- D) Civil Service Act, 2049
Why: The Income Tax Act, 2058 taxes income of persons and entities.
The canon of 'equity' in taxation means:
- A) Tax is collected at low cost
- B) People pay according to their ability ✔
- C) Tax time is convenient
- D) Tax rates never change
Why: Equity means each person pays according to their ability to pay.
The canon of 'economy' means:
- A) Tax should bring maximum revenue regardless of cost
- B) The cost of collecting tax should be low ✔
- C) Taxpayers should know the amount clearly
- D) Tax should be paid in instalments
Why: Economy means the cost of collection should be low.
Paying tax at a time and in a way that is easy for the taxpayer reflects which canon?
- A) Certainty
- B) Equity
- C) Convenience ✔
- D) Productivity
Why: Convenience means an easy time and way to pay.
Which of these is a modern addition to the canons of taxation?
- A) Simplicity ✔
- B) Secrecy
- C) Uniform poll tax
- D) Arbitrariness
Why: Productivity, simplicity and flexibility are modern additions to the classic canons.
According to Article 116, federal revenue is credited to:
- A) The Contingency Fund
- B) The Consolidated Fund (संचित कोष) ✔
- C) The Deposit Account
- D) The Provident Fund
Why: Article 116 provides that all federal revenue goes into the Consolidated Fund.
Revenue is recorded in accounts under:
- A) Budget sub-heads of expenditure
- B) Revenue heads (राजस्व शीर्षक) ✔
- C) Deposit ledgers
- D) Personal files
Why: Revenue deposited in the bank is recorded by revenue heads.
What does RMIS stand for?
- A) Revenue Management Information System ✔
- B) Regional Monitoring and Inspection System
- C) Revenue Monitoring and Investigation Section
- D) Record Management and Inventory System
Why: FCGO keeps the central revenue account using the Revenue Management Information System.
Matching the office's revenue records with the bank's statement is called:
- A) Forfeiture
- B) Bank reconciliation ✔
- C) Royalty sharing
- D) Valuation
Why: Revenue is reconciled with the bank through bank reconciliation.
Who audits revenue and deposit accounts?
- A) Inland Revenue Department
- B) Auditor General ✔
- C) Ministry of Home Affairs
- D) Department of Customs
Why: Revenue accounts and deposit accounts are audited by the Auditor General.
Under the fiscal arrangement, the federal share of VAT is:
- A) 50%
- B) 60%
- C) 70% ✔
- D) 85%
Why: VAT and domestic excise are shared 70% federal, 15% province and 15% local.
What is the local level's share of royalty from natural resources?
- A) 15%
- B) 25% ✔
- C) 50%
- D) 0%
Why: Royalty is shared 50% federal, 25% province and 25% local.
Which of these is NOT an example of a deposit (धरौटी)?
- A) Bid security
- B) Performance security
- C) Bail amount
- D) Income tax paid by a company ✔
Why: Income tax is revenue; bid security, performance security and bail are deposits held temporarily.
Deposit money is kept in:
- A) The revenue account
- B) A separate deposit account ✔
- C) The expenditure account
- D) The employee's personal account
Why: Deposits are kept in a separate deposit account, not as income.
Deposit ledgers are maintained as:
- A) Only a summary ledger
- B) Personal (per depositor) and summary ledgers ✔
- C) Only a cash book
- D) No ledger is required
Why: The deposit ledger is kept both per depositor and as a summary.
A contractor completes the work as per the agreement. What happens to the performance security?
- A) It is forfeited to revenue
- B) It is returned to the contractor ✔
- C) It is transferred to the Contingency Fund
- D) It is kept permanently by the office
Why: A deposit is returned when the depositor meets the condition.
A depositor does not claim the deposit within the legal time limit. The deposit is:
- A) Returned automatically with interest
- B) Forfeited to revenue (सदरस्याहा) ✔
- C) Given to the office chief
- D) Converted into a loan
Why: Unclaimed deposits within the legal time are forfeited to revenue.
Which is a major problem in Nepal's revenue administration?
- A) Too wide a tax base
- B) Smuggling across the open border ✔
- C) Lack of any tax laws
- D) No revenue offices
Why: The note lists smuggling across the open border as a key problem.
Showing a lower value of goods on the invoice to pay less tax is called:
- A) Over-budgeting
- B) Under-invoicing ✔
- C) Forfeiture
- D) Reconciliation
Why: Under-invoicing understates value to evade tax and is listed as a problem.
A large informal economy leads to:
- A) A wider tax base
- B) A narrow tax base ✔
- C) Higher taxpayer awareness
- D) Lower smuggling
Why: Informal activity stays outside the tax net, keeping the tax base narrow.
Selecting taxpayers for audit based on the level of risk is known as:
- A) Random audit
- B) Risk-based audit ✔
- C) Final audit
- D) Internal audit only
Why: Risk-based audit is listed among reforms to fight tax evasion.
Which of these is NOT listed as a reform in revenue administration?
- A) Online filing and PAN
- B) Single window
- C) Taxpayer education
- D) Abolishing the Finance Act ✔
Why: Reforms include online filing, PAN, e-billing, single window and taxpayer education, not abolishing the Finance Act.