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 of the following best describes tax avoidance?

Hiding income from tax authorities

Paying less tax than legally required

Using legal methods to reduce tax liability

Avoiding taxes by fraud

2. What is a regressive tax?

A tax that is the same for everyone

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

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

Flat tax

Progressive tax

Regressive tax

Proportional tax

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

Sales tax

Capital gains tax

Income tax

Property tax

5. What is an excise tax typically levied on?

The transfer of property

Business profits

Specific goods like alcohol and tobacco

Income from wages

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

Using tax credits

Concealing income from tax authorities

Legal methods to minimize taxes

Claiming tax deductions

7. What is tax compliance?

Hiding income to avoid taxes

Paying less tax than owed

The legal obligation to pay taxes

The process of avoiding tax payments

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

Estate tax

Proportional tax

Regressive tax

Progressive tax

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

Illegally reducing tax payment

Evading tax laws through fraudulent means

Avoiding payment by not reporting income

Legal reduction of tax liability

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

Property tax

Sales tax

Income tax

Corporate tax

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

Ability to pay

Distribution of wealth

Ensuring fairness only

Simplicity in tax evasion

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

Same tax rate applies to all taxpayers

Tax rate increases as income increases

Tax rate decreases as income increases

Tax rate remains constant regardless of income

13. What is a capital gains tax levied on?

Sales of goods

Corporate income

Profits from the sale of assets

Income from wages

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

To encourage tax evasion

To promote savings over income

To increase government revenue regardless of fairness

To ensure taxes are fairly distributed

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

Taxes should only be based on property

Taxes should be avoided

Taxes should be paid based on the taxpayer's income

Taxes should be equal for all taxpayers

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

Minimize government revenue

Avoid creating economic distortions

Impose high taxes to generate more revenue

Maximize taxes on businesses

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

Customs duty

Sales tax

Income tax

Excise duty

18. What is the primary purpose of tax planning?

To hide income from the tax authorities

To avoid paying taxes altogether

To reduce tax liability using legal strategies

To evade taxes

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

Corporate tax

Property tax

Inheritance tax

Sales tax

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

Sales tax

Estate tax

Income tax

Property tax

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

Flexibility

Simplicity

Neutrality

Efficiency

22. What is tax avoidance?

Evading taxes through fraud

Using legal methods to minimize tax liability

Illegally reducing tax liability

Hiding income from tax authorities

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

Sales tax

Income tax

Import duty

Excise duty

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

Avoiding taxes through legal means

Paying taxes early

Claiming tax deductions

Deliberately failing to pay taxes through fraudulent means

25. What does a flat tax system imply?

Same tax rate for everyone

Higher tax rates for higher earners

Tax rates based on property value

Tax rate decreases with income

Page 2 of 2

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

Tax based on consumption

Tax on property ownership

A flat rate tax system

Tax based on individual income and capacity to pay

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

Tax avoidance involves concealing income

Tax avoidance is legal, while tax evasion is illegal

Tax avoidance is illegal, while tax evasion is legal

Tax avoidance is unethical

28. What is a regressive tax system?

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

Tax rate remains the same for all

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

It is legal but unethical

It is encouraged by the government

It involves using legal methods to avoid taxes

It is illegal and involves fraudulent behavior

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

Capital gains tax

Wealth tax

Sales tax

Income tax

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

Ability to pay

Neutrality

Simplicity

Convenience

32. 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

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

Equity

Efficiency

Flexibility

Simplicity

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

Income tax

Sales tax

Inheritance tax

Estate tax

35. What does tax neutrality ensure?

Taxes are avoided

Taxes are low for all individuals

Taxes do not affect market decisions

Taxes only affect high-income earners

36. Tax avoidance is different from tax evasion because:

Tax avoidance reduces tax liabilities in legal ways

Tax avoidance is unethical

Tax avoidance involves concealing income

Tax avoidance is illegal

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

Efficiency

Simplicity

Equity

Neutrality

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

Be applied equally to all individuals

Focus on specific sectors

Not affect economic behavior

Encourage savings

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

Taxes are based on consumption

Higher income earners pay a higher tax rate

The more you earn, the less you pay in tax

Taxes are fixed for all individuals

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

Income tax

Estate tax

Sales tax

Capital gains tax

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

Taxes should be levied equally on everyone

Taxing individuals with wealth

Taxes should be proportional to income

Taxes should be voluntary

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

Income tax

Property tax

VAT

Estate tax

43. What is the significance of tax credits?

They reduce the amount of tax owed

They increase the total tax owed

They are used to hide income

They apply only to high-income earners

44. What is the primary function of tax laws?

To distribute wealth equally

To provide a fair and efficient way to collect government revenue

To provide an incentive for saving

To punish individuals who earn a lot

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

High tax rates for all individuals

Flexibility to adapt to changes in the economy

Frequent changes to tax laws

High complexity

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

Capital gains tax

Income tax

Sales tax

Property tax

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

Taxes should not distort economic decisions

Taxes should be high to raise revenue

Taxes should only apply to businesses

Taxes should be based on the industry

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

Regressive taxes are paid on property

Progressive taxes increase with income, regressive taxes decrease with income

Progressive taxes are only for businesses

Progressive taxes are the same for everyone

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

Estate tax

Income tax

Sales tax

Excise tax

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

Claiming deductions on medical expenses

Donating to charity for a tax deduction

Investing in tax-free government bonds

Underreporting income to reduce tax liability

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

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test Online

Basic Concepts of Taxation Test

Related Posts

Mustansar Khan

Leave a Reply Cancel reply