Directions: Read the following passage carefully and answer the questions given below it. Certain words/phrases are printed in bold to help you to locate them while answering some of the questions.

The genesis of service tax emanates from the ongoing structural transformation of the Indian economy, whereby presently more than one-half of GDP originates from the services sector. Despite the growing presence of the services sector in the Indian economy, it remained out of the tax net prior to 1994-95, leading to a steady deterioration in tax-GDP ratio. The service tax was introduced in 1994-95 on a select category of services at a low rate of five per cent. While the service tax rate and the coverage of services being taxed have increased ever since, the combined tax-GDP ratio of the Centre and States, nevertheless, deteriorated from 16.4 per cent in 1985-86 to 14.1 per cent in 1999-2000. It may be noted that between 1990-91 and 1998-99, the share of industrial sector in GDP dropped by 6.4 percentage points whereas almost 64 per cent of the tax revenue was generated by indirect taxes for which industrial sector continues-to be the principal tax base. On the other hand, during the same period, the share of services sector in GDP has increased by 10 percentage points and this sector has still remained poorly taxed.
The rationale for service tax, therefore lies riot only in arresting the falling tax-GDP ratio but also in ipso facto improving a locative efficiency in the economy as well as promoting equity. Against this back-drop, the service tax needs to be designed taking into account the fact that (i) the share of services in GDP is expanding; (ii) failure to tax services distorts consumer choices and encourages spending on services at the expense of goods; (iii) untaxed service traders are unable to claim value added tax (VAT) on service inputs, which encourages businesses to develop in-house services, creating further distortions; and (iv) most’ services that are likely to become taxable are positively correlated with expenditure of high income households and, therefore, service tax improves equity.
In the Indian context taxation of services assumes importance in the wake of the need for improving the revenue system, ensuring a measure of neutrality in taxation between goods and services and eventually helping to evolve: an efficient system of domestic trade taxes, both at the Central and the State levels.
The coverage of services under tax net has been progressively widened over the years. With effect of the Finance Act, 2004, 71 service are presently contributing to the service tax collections. The services tax is applicable to ll parts ofIndia except the State of Jammu and Kashmir and is leviable on the gross amount charged by the service provider from the client. The rate of service tax was increased from 5 per cent since September 10,2004. With the increase in tax rate and base of service tax, the collections from the service tax have shown a steady rise from Rs. 410 crores in 1994-95 tc. Rs. 8,300 crores in 2003-04; however, they accounted for only 4.4 per cent of the total tax receipts of the Centre (0.3 percent of GDP) in 2003-04. Service’ tax is envisaged as the tax of the future. The inclusion of all value added services in the tax net would yield a larger amount of revenue and make the existing tax structure more elastic. Once the service sector is adequately covered under tax net, the buoyant services sector will enable the reversal of declining trend in tax buoyancy. Besides raising the revenue buoyancy, appropriate taxation of services sector would also provide equity, efficiency and consistency in the tax administration as well as neutrality for various economic activities. Integration of services sector to the tax net would be the prelude to the introduction of a full-fledged VAT system.

Directions: Choose the word/group of words which is most nearly the SAME in meaning as the word given in bold as given in the passage.

1. NET

(a) Actual amount
(b) Amount after tax
(c) Governance
(d) Coverage
(e) Mesh

2. ENVISAGE

(a) Implement
(b) Unreliable
(c) Endure
(d) Untenable
(e) Expect

Directions: Choose the word/ group of words which is most OPPOSITE in meaning of the word given in bold as given in the passage.

3. PROGRESSIVELY

(a) Gradually
(b) Abruptly
(c) Occasionally
(d) Narrowly
(e) Ineffectively

4. ELASTIC

(a) Flexible
(b) Unreliable
(c) Faulty
(d) Untenable
(e) Rigid

Directions: Which of the phrases (a), (b), (c) and (d) given below should replace the phrase given in bold in the following sentence to make the sentence grammatically meaningful and correct. If the sentence is correct as it is and no correction is required, mark (e) as the answer.

5. Take into account the suggestions of the panel, a revised draft report is being placed in the public domain.

(a) Taken into account
(b) Taking an account
(c) Taking into account
(d) Accounting for
(e) No correction required
 

SBI Clerk Exam (Preliminary) Printed Study Notes

ANSWER:
1. (d) 2. (b) 3. (a) 4. (e) 5. (c)