The 'Goods and Services Tax' on penal interest on loans is: MCQ with Answer and Explanation

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The 'Goods and Services Tax' on penal interest on loans is:

A. exempt

B. 18%

C. 12%

D. 0%

Answer: Option A

Solution (By JKSSB Mock Tests)

Penal interest on loans is exempt from GST.

This question belongs to: Economy GK Economy Set 1

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Question #1

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Which of the following is the correct classification of loans under the Pradhan Mantri Mudra Yojana?

A. Shishu, Kishor, Tarun

B. Small, Medium, Large

C. Primary, Secondary, Tertiary

D. Start-up, Growth, Mature

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Correct Answer: Option A

Explanation:
MUDRA loans are classified as Shishu, Kishor and Tarun.

This question belongs to: Economy GK Economy Set 1

Question #2

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The 'Central Goods and Services Tax' is levied by:

A. local bodies

B. central government

C. state governments

D. GST Council

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Correct Answer: Option B

Explanation:
CGST is levied by the central government on intra-state supply.

This question belongs to: Economy GK Economy Set 1

Question #3

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In the context of public finance, the concept of 'Ricardian Equivalence' suggests that:

A. Deficit financing always increases private consumption

B. Tax-financed and debt-financed government spending have the same effect on the economy

C. Public debt has no intergenerational implications

D. Government borrowing is always expansionary

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Correct Answer: Option B

Explanation:
Ricardian Equivalence, proposed by David Ricardo and revived by Robert Barro, argues that rational agents anticipate future taxes to repay debt, so government borrowing does not stimulate demand.

This question belongs to: Economy GK Economy Set 1

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