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Direct Taxes & Corporate Taxation GK Questions & Answers

Direct taxation in India is administered under the statutory authority of the Income-tax Act, 1961, enacted pursuant to Entry 82 of List I (Union List) in the Seventh Schedule of the Constitution, which empowers the Union Parliament to levy taxes on income other than agricultural income. Administrative superintendence is exercised by the Central Board of Direct Taxes (CBDT), a statutory body constituted under the Central Boards of Revenue Act, 1963, operating within the Department of Revenue under the Ministry of Finance. Direct taxes comprise personal income tax, corporation tax, securities transaction tax (STT), and capital gains tax. A structural reform in corporate taxation occurred through the Taxation Laws (Amendment) Act of September 2019, which inserted Section 115BAA and Section 115BAB into the Income-tax Act, slashing base corporate tax rates from 30% to 22% for existing domestic companies and to 15% for new domestic manufacturing entities, conditioned upon waiving exemptions. Furthermore, Minimum Alternate Tax (MAT) under Section 115JB was lowered from 18.5% to 15%. The Finance Act of 2020 abolished the Dividend Distribution Tax (DDT) under Section 115-O, shifting dividend taxation directly to the hands of shareholders at applicable personal income tax slab rates to ensure vertical equity.

Essential Concepts & Key Facts

High-yield conceptual summaries for competitive exams and rapid revision.

  • Entry 82 of the Union List empowers the Parliament of India to levy taxes on income other than agricultural income.
  • Agricultural income taxation is exclusively assigned to State Legislatures under Entry 46 of List II (State List) in the Seventh Schedule.
  • The Income-tax Act of 1961 replaced the Indian Income-tax Act of 1922 and came into force on April 1, 1962.
  • The Central Board of Direct Taxes (CBDT) was established as a statutory authority under the Central Boards of Revenue Act of 1963.
  • The CBDT consists of a Chairman and up to six ex-officio members appointed from the Indian Revenue Service (Income Tax).
  • The Taxation Laws (Amendment) Act 2019 inserted Section 115BAA, cutting the base corporate tax rate for domestic firms from 30% to 22%.
  • Section 115BAB introduced an ultra-concessional base corporate tax rate of 15% for newly incorporated domestic manufacturing companies.
  • Effective corporate tax under Section 115BAA is 25.17% including a mandatory 10% surcharge and 4% Health and Education Cess.
  • Minimum Alternate Tax (MAT) was introduced under Section 115JB to tax zero-tax companies declaring substantial accounting profits.
  • The Taxation Laws (Amendment) Act 2019 reduced the statutory rate of Minimum Alternate Tax from 18.5% to 15% of book profits.
  • The Finance Act 2020 abolished the Dividend Distribution Tax (DDT) under Section 115-O, restoring the classical system of taxing dividends.
  • Securities Transaction Tax (STT) was introduced in the Union Budget 2004–05 under Finance Act (No. 2) 2004 to deter tax evasion in equities.
  • Long-Term Capital Gains (LTCG) tax exceeding 1 lakh rupees on listed equity shares was reintroduced at 10% under Section 112A in 2018.
  • Advance Tax must be paid in four statutory installments (15%, 45%, 75%, and 100%) by individual and corporate assessees under Section 208.
  • The Direct Tax Vivad se Vishwas Act 2020 was enacted to settle pending income tax litigation and unlock contested sovereign tax revenues.
Showing 10 Curated Questions44 Total in Bank
Practice in Studio
1ID: GK-ECON-00599
easyTaxation & GST
Which of the following is a Direct Tax levied directly on the income or profit of individuals and corporate entities in India?
Verified Explanation
Income Tax and Corporation Tax are Direct Taxes administered by the Central Board of Direct Taxes (CBDT), where the tax incidence and tax impact fall on the same legal entity.
2ID: GK-ECON-00488
easyTaxation & GST
Which direct tax levied on the net profits of domestic and foreign companies operating in India is a major source of Union revenue?
Verified Explanation
Corporation Tax is a direct tax imposed by the Central Government on the net taxable income earned by corporate entities.
3ID: GK-ECON-00211
easyTaxation & GST
Which direct tax in India is levied directly on the net income or profits of domestic and foreign corporations?
Verified Explanation
Corporate Tax (Corporation Tax) is a direct tax imposed by the Central Government on the net taxable income earned by incorporated companies.
4ID: GK-ECON-00311
easyTaxation & GST
Which of the following is classified as a direct tax in India?
Verified Explanation
Corporation Tax is a direct tax levied directly on the net profits of domestic and foreign companies operating in India.
5ID: GK-ECON-00361
easyTaxation & GST
Which of the following is categorized as a Direct Tax in the Indian taxation system?
Verified Explanation
Income Tax is a direct tax levied directly on the personal income or corporate profits of the taxpayer and cannot be shifted onto others.
6ID: GK-ECON-00424
easyTaxation & GST
Which of the following is a Direct Tax levied by the Central Government in India?
Verified Explanation
Corporation Tax is a direct tax levied directly on the net profits of corporations and business entities, collected by the Central Board of Direct Taxes (CBDT).
7ID: GK-ECON-00705
mediumTaxation & GST
The 'Direct Tax Vivad se Vishwas Act' enacted by Parliament in 2020 was primarily aimed at achieving which objective?
Verified Explanation
The Direct Tax Vivad se Vishwas Act, 2020 was introduced to resolve massive backlogs of pending direct tax litigation across Appellate Tribunals, High Courts, and the Supreme Court. Under the scheme, taxpayers who paid 100% of the disputed tax amount before specified deadlines received a complete waiver of interest, penalties, and immunity from prosecution. It unlocked substantial revenue locked in legal disputes.
8ID: GK-ECON-00903
hardTaxation & GST
What was the primary objective of the 'Direct Tax Vivad se Vishwas Act' enacted by the Parliament in 2020?
Verified Explanation
The Direct Tax Vivad se Vishwas Act 2020 was introduced to resolve massive pendency of disputed direct tax litigation across appellate forums (CIT(A), ITAT, High Courts, and Supreme Court). It offered taxpayers complete waiver of accrued interest, penalties, and immunity from prosecution upon payment of 100% of the disputed tax amount.
9ID: GK-ECON-00261
easyTaxation & GST
Which of the following taxes is an example of a direct tax in India?
Verified Explanation
Corporate Income Tax and Personal Income Tax are direct taxes levied directly on the income or profits of entities and individuals, whereas GST and Customs are indirect taxes.
10ID: GK-ECON-00104
mediumTaxation Gst
The "Base Erosion and Profit Shifting" (BEPS) action plan developed by the OECD and implemented in Indian direct tax laws aims to prevent what?
Verified Explanation
BEPS encompasses country-by-country reporting, equalization levies, and anti-avoidance measures (GAAR) to tax profits where economic activity occurs.

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