CAPF AC 2020 Q34: Indian Economy – Taxation
Which one of the following has the largest contribution to the Gross Tax Revenue of Government of India in 2019-20 (BE)?
- (a) Goods and Services Tax
- (b) Corporation Tax
- (c) Customs
- (d) Union Excise Duties
Answer: (b) Corporation Tax
Explanation
Gross Tax Revenue, 2019-20 (Budget Estimates)
How to think: note the year in the question.
The order of taxes changes over time, so use the figures of 2019-20 (BE).
| Tax | 2019-20 Budget Estimate | Rank |
|---|---|---|
| Corporation Tax | About ₹7.66 lakh crore | 1 |
| Goods and Services Tax | About ₹6.63 lakh crore | 2 |
| Income Tax | About ₹5.69 lakh crore | 3 |
| Union Excise Duties | About ₹3.0 lakh crore | 4 |
| Customs | About ₹1.56 lakh crore | 5 |
Gross Tax Revenue for the year was budgeted at about ₹24.61 lakh crore.
Terms to know:
| Term | Meaning |
|---|---|
| Gross Tax Revenue | All central taxes before giving the States their share |
| Net Tax Revenue | What is left with the Centre after devolution to States |
| BE | Budget Estimates |
Answer: (b) Corporation Tax.
Why each option is right or wrong
- (a) Incorrect. GST was second, at about ₹6.63 lakh crore in 2019-20 (BE).
- (b) CORRECT. Corporation Tax was the largest, at about ₹7.66 lakh crore in 2019-20 (BE).
- (c) Incorrect. Customs was the smallest of the four, at about ₹1.56 lakh crore.
- (d) Incorrect. Union Excise Duties were about ₹3.0 lakh crore, well below corporation tax.
Key point
2019-20 (BE) order: Corporation Tax (₹7.66 lakh crore), GST (₹6.63), Income Tax (₹5.69), Excise (₹3.0), Customs (₹1.56). Gross Tax Revenue about ₹24.61 lakh crore.
Remember
2019-20 (BE): Corporation Tax was the largest central tax.
Common mistakes
- Choosing GST because it is the tax most in the news.
- Using the order of a later year; the ranking has changed since 2019-20.
- Mixing up gross tax revenue with the Centre's net tax revenue.
Exam tip
Direct taxes first: in 2019-20, corporation tax led, then GST, then income tax.
Sources
- Union Budget 2019-20 — Receipt Budget (Abstract of Receipts)
- PRS Legislative Research — Union Budget 2019-20 Analysis