Home/FBR/Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test Online

Mustansar KhanLast Updated: July 8, 2025

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test

Total Questions:	50
Time Allowed:	25 Minutes
Total Marks:	50
How to Attempt Test:	Please choose the right Option in MCQ-type question.
Test Helpful For:	FBR Sub Inspector Test Customs Inspector Test FBR Interviews FBR Sepoy Test Preparation for Customs and Tax Related Questions

Please wait...

Page 1 of 2

1. Which type of tax is generally levied on goods purchased?

Sales tax

Estate tax

Income tax

Inheritance tax

2. Which type of tax affects all income levels equally?

Progressive tax

Estate tax

Regressive tax

Proportional tax

3. Which of the following taxes is an example of an indirect tax?

Property tax

Capital gains tax

Sales tax

Income tax

4. Which principle of taxation ensures fairness in the distribution of tax burdens?

Efficiency

Equity

Neutrality

Simplicity

5. What is the general goal of a good tax system?

To ensure taxes are fairly distributed

To promote savings over income

To increase government revenue regardless of fairness

To encourage tax evasion

6. What is the primary purpose of tax planning?

To hide income from the tax authorities

To reduce tax liability using legal strategies

To evade taxes

To avoid paying taxes altogether

7. What is the core principle of a progressive tax system?

Taxes are fixed for all individuals

Higher income earners pay a higher tax rate

Taxes are based on consumption

The more you earn, the less you pay in tax

8. What is an excise tax typically levied on?

Specific goods like alcohol and tobacco

Income from wages

The transfer of property

Business profits

9. What is the primary function of tax laws?

To punish individuals who earn a lot

To provide an incentive for saving

To provide a fair and efficient way to collect government revenue

To distribute wealth equally

10. The principle of 'tax neutrality' means that taxes should:

Not affect economic behavior

Encourage savings

Be applied equally to all individuals

Focus on specific sectors

11. Which type of tax is typically based on consumption?

Property tax

Income tax

Corporate tax

Sales tax

12. Which of the following is an example of a direct tax?

Sales tax

Customs duty

Excise duty

Income tax

13. Which of the following best describes tax avoidance?

Avoiding taxes by fraud

Using legal methods to reduce tax liability

Hiding income from tax authorities

Paying less tax than legally required

14. Which tax principle is focused on ease of paying and compliance?

Simplicity

Convenience

Neutrality

Ability to pay

15. Which of the following is considered a characteristic of a good tax system?

Frequent changes to tax laws

High complexity

High tax rates for all individuals

Flexibility to adapt to changes in the economy

16. Which of the following taxes is based on consumption?

Property tax

Income tax

Estate tax

VAT

17. What does a flat tax system imply?

Tax rate decreases with income

Higher tax rates for higher earners

Tax rates based on property value

Same tax rate for everyone

18. Which of the following taxes is typically an example of a direct tax?

Income tax

Excise duty

Sales tax

Import duty

19. Which of the following is a key principle of taxation?

Ability to pay

Distribution of wealth

Simplicity in tax evasion

Ensuring fairness only

20. What does the term "tax evasion" refer to?

Avoiding taxes through legal means

Deliberately failing to pay taxes through fraudulent means

Paying taxes early

Claiming tax deductions

21. What is the basis of taxation under the principle of ability to pay?

Tax based on consumption

Tax based on individual income and capacity to pay

A flat rate tax system

Tax on property ownership

22. Which of the following is an example of a wealth tax?

Capital gains tax

Income tax

Property tax

Sales tax

23. Which of the following is a characteristic of progressive taxation?

Same tax rate applies to all taxpayers

Tax rate remains constant regardless of income

Tax rate increases as income increases

Tax rate decreases as income increases

24. Tax avoidance is different from tax evasion because:

Tax avoidance involves concealing income

Tax avoidance reduces tax liabilities in legal ways

Tax avoidance is unethical

Tax avoidance is illegal

25. Which of the following is NOT an example of a direct tax?

Income tax

Capital gains tax

Sales tax

Wealth tax

Page 2 of 2

26. Which tax principle involves levying taxes in such a way that the tax system does not interfere with an individual's economic choices?

Simplicity

Efficiency

Flexibility

Neutrality

27. What is tax avoidance?

Using legal methods to minimize tax liability

Evading taxes through fraud

Illegally reducing tax liability

Hiding income from tax authorities

28. What is the difference between progressive and regressive taxes?

Progressive taxes are the same for everyone

Progressive taxes are only for businesses

Progressive taxes increase with income, regressive taxes decrease with income

Regressive taxes are paid on property

29. What is a capital gains tax levied on?

Income from wages

Corporate income

Sales of goods

Profits from the sale of assets

30. Which of the following is true about tax evasion?

It involves using legal methods to avoid taxes

It is encouraged by the government

It is legal but unethical

It is illegal and involves fraudulent behavior

31. What does tax neutrality ensure?

Taxes are low for all individuals

Taxes only affect high-income earners

Taxes are avoided

Taxes do not affect market decisions

32. What does 'economic efficiency' mean in tax theory?

Taxes should not distort economic decisions

Taxes should only apply to businesses

Taxes should be based on the industry

Taxes should be high to raise revenue

33. Which of the following is a characteristic of tax evasion?

Legal methods to minimize taxes

Claiming tax deductions

Concealing income from tax authorities

Using tax credits

34. What is the significance of tax credits?

They apply only to high-income earners

They are used to hide income

They increase the total tax owed

They reduce the amount of tax owed

35. What is the primary characteristic of an indirect tax?

Paid by consumers to suppliers and then to the government

Taxed on property

Levied on income or profits

Paid by the individual directly to the government

36. What is the main difference between tax avoidance and tax evasion?

Tax avoidance is illegal, while tax evasion is legal

Tax avoidance is legal, while tax evasion is illegal

Tax avoidance involves concealing income

Tax avoidance is unethical

37. Which of the following taxes is typically an example of an indirect tax?

Sales tax

Property tax

Estate tax

Income tax

38. What is a regressive tax?

A tax that imposes a higher rate on low-income earners

A tax that benefits the government only

A tax that benefits high-income earners

A tax that is the same for everyone

39. What is the 'ability to pay' principle in taxation?

Taxing individuals with wealth

Taxes should be proportional to income

Taxes should be levied equally on everyone

Taxes should be voluntary

40. Which of the following taxes is based on consumption?

Corporate tax

Sales tax

Property tax

Inheritance tax

41. Which tax is imposed on goods at the point of sale?

Excise tax

Sales tax

Estate tax

Income tax

42. What is tax compliance?

The legal obligation to pay taxes

Paying less tax than owed

The process of avoiding tax payments

Hiding income to avoid taxes

43. What does ‘ability to pay’ principle mean in taxation?

Taxes should be equal for all taxpayers

Taxes should be paid based on the taxpayer's income

Taxes should be avoided

Taxes should only be based on property

44. What is the goal of a tax system based on the principle of efficiency?

Minimize government revenue

Impose high taxes to generate more revenue

Avoid creating economic distortions

Maximize taxes on businesses

45. Which of the following is an example of tax evasion?

Underreporting income to reduce tax liability

Donating to charity for a tax deduction

Investing in tax-free government bonds

Claiming deductions on medical expenses

46. Which of the following taxes is levied on the transfer of property?

Sales tax

Capital gains tax

Income tax

Estate tax

47. What is a regressive tax system?

Tax rate remains the same for all

Tax rate decreases as income increases

Higher-income earners pay a higher rate of tax

Lower-income earners pay a higher percentage of their income

48. Which tax system charges the same tax rate on all income levels?

Progressive tax

Proportional tax

Regressive tax

Flat tax

49. What principle of taxation ensures taxes should be easy to understand and comply with?

Simplicity

Efficiency

Flexibility

Equity

50. What does the term 'tax avoidance' refer to?

Illegally reducing tax payment

Legal reduction of tax liability

Evading tax laws through fraudulent means

Avoiding payment by not reporting income

You Can Learn and Gain more Knowledge through our Online Quiz and Testing system Just Search your desired Preparation subject at Gotest.

Federal Board of Revenue (FBR) Function and Role Test Online
Pakistan Customs Role, Functions and Laws Test Online
Sales Tax and Federal Excise Duty Basic Concept Test Online
Key Economic Terms Test Online (Basic Economic Indicators)
Fiscal Policy of Pakistan Test Online
Tax Administration and Reforms in Pakistan Test Online
Sales Tax Act 1990 Pakistan Test Online
Federal Excise Act 2005 Pakistan Test Online
Income Tax Ordinance 2001 Pakistan Test Online
Basic Concepts of Auditing and Accounting Test Online

Mustansar KhanLast Updated: July 8, 2025

Facebook Twitter Reddit WhatsApp Share via Email Print

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test

You Might Also Like

Mustansar Khan

Leave a Reply Cancel reply

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test

You Might Also Like

Mustansar Khan

Your Related

Federal Excise Act 2005 Pakistan Test Online

Pakistan Customs Role, Functions and Laws Test Online

Sales Tax Act 1990 Pakistan Test Online

Fiscal Policy of Pakistan Test Online

Tax Administration and Reforms in Pakistan Test Online

Sales Tax and Federal Excise Duty Basic Concept Test Online

Leave a Reply Cancel reply