NABARD PY – 2016 Question Paper
[ Duration: 3 Hours ]
Instructions.- (1) All questions are compulsory.
(2) Figures to the right indicate full marks to each question.
(3) Each question should be answered on a new page.
(4) All parts of a question should be answered together,without other answers intervening.
(5) Marks will be deducted if an answer is longer or shorter than the limit, or is irrelevant, or if illegible.
(6) Answers must be written only in English.
1. Write an essay of about 500 words on any one of following:-
2. (a) Make a précis of the following reducing it to about 180 words, and give it a suitable title. Use the précis sheet provided for it :-
“ The centre needs to follow through with pending legislation for the goods and services tax (GST)”. As the recent Arvind subramanian expert committee points out, the lack of reforms in the indirect tax regime leads to high costs and inefficiencies in myriad ways. For instance, blocked input taxes or distorting tax-on-tax and cascading rates could add up to as much as three-fourths of investment in plant and machinery.
Hence the pressing need to change over from the dual value-added tax (VAT) system in the center and the states to an integrated GST, with tax levied only on the value added and input tax credits seamlessly available across the value chain. It would shore up transparency and boost tax efficiency.
For starters, the government needs to respond to the three main points raised by the congress: one, that a standard GST rate of no more than 18% be part of the constitutional amendment; two, an independent dispute-settlement mechanism be in place; three, that the additional 1% interstate tax be dropped. It is notable that the Subramanian panel does make a strong case for doing away with the 1% tax only as a small footnote in very find print.
The panel estimates the revenue-neutral rate for GST to be 15-15.5%,with “a strong preference for the lower end of the range”. and even that the methodology of estimating the standard GST rate can be prone to error. The panel has called for a standard rate and a lower rate for merit goods of mass consumption, plus a still-lower rate, for precious commodities like gold.
In addition, it has called for higher taxes of upto 40% on luxury cars and petroleum products, and similar ‘sin taxes ‘ on tobacco and potable alcohol. It is also notable that committee backs tax on hitherto exempt heads like education and health.
The report is also explicit in recommending that exemption on excise duty and the like be done away with. Such exemptions amount to negative protection against import competition , as input tax credit cannot be claimed. It makes perfect sense to widen the indirect cannot by including most goods and services, and to keep the rates low. Indirect taxes are by definition regressive, paid by all and sundry. We need to keep them moderate to encourage compliance and raise tax buoyancy going forward.
The report mentions that no input tax credits are allowed for the union excise duties on capital equipment acquired for use in such vital sectors such as transportation, infrastructure or construction. And the reason for the glaring anomaly is that these sectors are perceived to be outside the scope of manufacturing. The report adds that in 2014-15, of the total investment in plant and equipment by the non-government, non-household sector of about 7.4 lakh crore,” blocked taxes could amount to as must as 75% of total investment”.
The fact of matter is that we still have a high-cost tax structure thanks to cascading rates and tax-on-tax. The way ahead is to reform the indirect tax regime with GST”.
Extracted from the Economic times dated January 8, 2016
(b) Answer the following questions based on the passage, briefly and to the point, All questions carry equal marks :- 20
3. Answer the question chosen in about 250 words :- 20
a) As the manager of a rural bank look into the application for a loan of Rs.15 lakhs for buying a tractor. Grant the loan while listing the rules.
b) The Head office has sent a reqaesi for a list of outstanding dues of a Rural Bank’s Farmer loans. Sent the report with information upto the current year