1. The power to levy taxes and fees by Panchayats is provided under —
A) Article 243H of the Constitution
B) Article 40
C) Article 243B
D) Article 356
Answer: A
Explanation: Article 243H empowers State Legislatures to authorize Panchayats to levy, collect and appropriate taxes, duties, tolls and fees.
2. The main source of revenue for Panchayats is —
A) Taxes and fees levied locally
B) Police fines
C) Donations
D) Borrowings from banks
Answer: A
Explanation: Panchayats depend mainly on locally levied taxes and government grants.
3. Under the Karnataka Panchayat Raj Act, Panchayats can levy —
A) House tax, profession tax, and water rate
B) Customs duty
C) Income tax
D) GST
Answer: A
Explanation: These are typical local taxes approved under State law.
4. Which Panchayat level primarily levies house tax
A) Gram Panchayat
B) Taluk Panchayat
C) Zilla Panchayat
D) Urban Municipality
Answer: A
Explanation: Gram Panchayats are authorized to levy house/property tax on buildings within their jurisdiction.
5. Taxation powers of Panchayats come under which list in the Constitution?
A) State List
B) Union List
C) Concurrent List
D) Schedule IX
Answer: A
Explanation: Local taxes fall under the State List of the Seventh Schedule.
6. The State Government provides Panchayats grants-in-aid under —
A) Article 243H(b)
B) Article 280
C) Article 275
D) Article 356
Answer: A
Explanation: Article 243H(b) allows for grants and assignments to Panchayats from State revenues.
7. Which body recommends distribution of taxes between State and Panchayats?
A) State Finance Commission
B) Election Commission
C) Planning Commission
D) Lokayukta
Answer: A
Explanation: The State Finance Commission (Article 243-I) suggests financial devolution to Panchayats.
8. The House Tax in Panchayat areas is levied on —
A) Buildings and lands not exempted by law
B) Agricultural produce
C) Forest land
D) Industrial exports
Answer: A
Explanation: Gram Panchayats collect tax on property as a local source of revenue.
9. The maximum and minimum rates of taxes are prescribed by —
A) State Government
B) Zilla Panchayat
C) Gram Sabha
D) Chief Minister
Answer: A
Explanation: The State notifies standard limits for uniformity across Panchayats.
10. Water supply tax is collected for —
A) Maintenance of rural water sources
B) Urban sewage
C) Private borewells
D) Industrial effluents
Answer: A
Explanation: It is used for upkeep and expansion of drinking water facilities.
11. Profession tax is imposed on —
A) Individuals engaged in any profession, trade, or employment
B) Farmers
C) Government departments
D) Non-profit groups
Answer: A
Explanation: The Gram Panchayat collects it from persons earning income through occupations.
12. Lighting tax is used for —
A) Street lighting and maintenance
B) Court buildings
C) Urban complexes
D) Office electricity
Answer: A
Explanation: The tax supports rural infrastructure and public lighting systems.
13. Panchayat fees differ from taxes because —
A) Fees are charged for specific services
B) Fees are compulsory without service
C) Fees are collected yearly
D) Fees are similar to donations
Answer: A
Explanation: A fee corresponds to a service (e.g., market fee, license fee).
14. Gram Panchayats levy market fees on —
A) Vendors and traders using public markets
B) Urban shops
C) Educational institutions
D) Banks
Answer: A
Explanation: It’s a user fee for using Panchayat-owned facilities.
15. Building license fee is charged when —
A) A person constructs or alters a building
B) A person purchases land
C) A person applies for ration card
D) A person sells crops
Answer: A
Explanation: It ensures safe and regulated construction.
16. The power to exempt or reduce Panchayat taxes lies with —
A) State Government
B) Adhyaksha
C) CEO
D) Gram Sabha
Answer: A
Explanation: State Government may issue notifications granting exemption.
17. Toll tax can be levied by Panchayats for —
A) Maintenance of bridges and roads built by them
B) Urban highways
C) Court fees
D) Police training
Answer: A
Explanation: Toll collections finance infrastructure maintenance.
18. Sanitation or conservancy tax is used for —
A) Waste disposal and cleanliness services
B) School construction
C) Office maintenance
D) Agricultural irrigation
Answer: A
Explanation: This tax funds village sanitation drives.
19. The Panchayat Fund consists of —
A) Taxes, fees, fines, and grants
B) Police fines only
C) Judicial revenue
D) Foreign donations
Answer: A
Explanation: All local receipts are credited to the Panchayat Fund.
20. The power to audit Panchayat accounts lies with —
A) State Audit Department
B) Comptroller and Auditor General
C) Local MLA
D) Zilla Adhyaksha
Answer: A
Explanation: The State Audit Department ensures accuracy and legality of accounts.
21. House tax is collected —
A) Annually
B) Monthly
C) Once in five years
D) Only on construction
Answer: A
Explanation: House tax is assessed and collected every financial year.
22. Property valuation for house tax is done by —
A) Panchayat tax officials or engineers
B) Taluk Magistrate
C) MLA
D) State Treasury
Answer: A
Explanation: Local officials assess property value as per state guidelines.
23. Failure to pay Panchayat tax results in —
A) Imposition of penalty or recovery as arrears of land revenue
B) Police arrest
C) Loss of citizenship
D) Cancellation of ration card
Answer: A
Explanation: Non-payment can lead to recovery through official procedure.
24. The State Government can assign certain state taxes to Panchayats under —
A) Article 243H(c)
B) Article 243G
C) Article 280
D) Article 356
Answer: A
Explanation: This provision allows the state to share tax revenue with local bodies.
25. The Eleventh Schedule subjects allowing taxation include —
A) Roads, markets, water supply, sanitation
B) Defence
C) Judiciary
D) Banking
Answer: A
Explanation: Panchayats can levy user charges on local public services.
26. The authority responsible for assessing and collecting Panchayat taxes is —
A) Secretary of the Gram Panchayat
B) Taluk Panchayat Executive Officer
C) MLA
D) Police Sub-Inspector
Answer: A
Explanation: The Secretary manages tax registers, issues notices, and collects taxes as per the Act.
27. Tax assessment lists in Panchayats must be —
A) Published for public inspection before final approval
B) Kept secret
C) Sent to Parliament
D) Forwarded to Urban Development
Answer: A
Explanation: Public display ensures transparency and allows objections from taxpayers.
28. Appeals against tax assessment orders of a Gram Panchayat can be filed before —
A) Executive Officer of Taluk Panchayat
B) Chief Minister
C) High Court directly
D) MLA
Answer: A
Explanation: EO acts as the appellate authority in tax disputes at the Taluk level.
29. The penalty for non-payment of Panchayat taxes is usually —
A) A fine or recovery as arrears of land revenue
B) Jail term
C) Loss of property ownership
D) Suspension from Panchayat membership
Answer: A
Explanation: The Act provides for financial penalties and recovery under revenue rules.
30. Lighting tax, drainage tax, and sanitation tax are collectively known as —
A) Service taxes
B) Trade fees
C) Judicial levies
D) Industrial cess
Answer: A
Explanation: They are imposed for public utility services in rural areas.
31. Panchayat markets generate income through —
A) Market fees and stall rent
B) Police licenses
C) Industrial shares
D) Urban grants
Answer: A
Explanation: Panchayats collect rent or user charges from vendors and shopkeepers.
32. Building license fee is mandatory to ensure —
A) Safe and regulated construction within Panchayat area
B) Urban industrial control
C) Political campaigning
D) Judicial registration
Answer: A
Explanation: It helps maintain village planning and safety norms.
33. Advertisement tax can be levied on —
A) Hoardings, signboards, and displays in village limits
B) School textbooks
C) Court orders
D) Election posters
Answer: A
Explanation: Gram Panchayats can collect tax on commercial advertisements.
34. The collection of water rate is linked to —
A) Maintenance of water supply schemes
B) Land ownership
C) Police budget
D) Urban power grid
Answer: A
Explanation: Water tax funds public drinking water and maintenance systems.
35. Panchayat property tax is based on —
A) Annual rental value of property
B) Market price of land
C) Court valuation
D) Urban municipal rate
Answer: A
Explanation: Rental value or plinth area determines tax computation.
36. In rural Karnataka, tax exemption can be granted to —
A) Religious institutions or public charities
B) Private commercial houses
C) Urban apartments
D) Personal farms
Answer: A
Explanation: Such exemptions encourage social service activities.
37. Panchayat taxes are entered in —
A) Tax Demand Register
B) Case File
C) Urban Logbook
D) Judicial Record
Answer: A
Explanation: This register maintains records of assessed tax, payments, and arrears.
38. The Executive Officer (EO) is empowered to —
A) Supervise collection of Panchayat taxes
B) Impose new taxes
C) Conduct elections
D) Enforce criminal law
Answer: A
Explanation: EO oversees revenue collection efficiency.
39. State Government can suspend Panchayat’s power to levy a tax when —
A) Misuse or irregularity is found
B) Gram Sabha requests
C) Election is near
D) MLA intervenes
Answer: A
Explanation: The State can act to protect public interest and ensure lawful taxation.
40. The Panchayat Raj Act provides for recovery of arrears by —
A) Distraining property or attaching movable goods
B) Police action
C) Court order
D) Election authority
Answer: A
Explanation: Revenue recovery procedures are similar to land revenue recovery.
41. The State Government can assign to Panchayats —
A) Surcharge on State taxes collected in rural areas
B) GST
C) Customs duty
D) Excise tax
Answer: A
Explanation: Assigning surcharge on certain state taxes increases local funds.
42. The Profession Tax under Panchayat is limited to a maximum of —
A) ₹2,500 per annum (as per State Act)
B) ₹10,000 per annum
C) ₹5,000 per annum
D) ₹1,000 per annum
Answer: A
Explanation: Karnataka Profession Tax Act limits the annual ceiling to ₹2,500.
43. The revenue from Panchayat taxes is deposited into —
A) Panchayat Fund Account maintained in a local bank
B) MLA Fund
C) Treasury of Urban Corporation
D) Private account of Secretary
Answer: A
Explanation: Panchayat Fund is the legal depository for all receipts.
44. Panchayat license fees are collected from —
A) Traders, shops, and small industries
B) Farmers
C) Public schools
D) Government offices
Answer: A
Explanation: Fees ensure business regulation and public health compliance.
45. Which of the following is not a Panchayat tax?
A) Income Tax
B) House Tax
C) Water Tax
D) Lighting Tax
Answer: A
Explanation: Income tax is levied by the Union Government, not Panchayats.
46. Gram Panchayats maintain financial transparency by —
A) Displaying income and expenditure details publicly
B) Keeping records secret
C) Reporting to private agencies
D) Avoiding audit
Answer: A
Explanation: Transparency builds public trust in local governance.
47. Panchayat fees on fairs and festivals are known as —
A) Jatra or mela fees
B) Urban levies
C) Temple tax
D) Government cess
Answer: A
Explanation: Such fees are charged from vendors or stallholders during local fairs.
48. The power of Taluk Panchayat in taxation is —
A) Supervisory and advisory over Gram Panchayats’ collections
B) Direct levy on urban trade
C) Collection of excise duty
D) Enforcement of GST
Answer: A
Explanation: Taluk Panchayats coordinate revenue performance across Gram Panchayats.
49. A Panchayat can revise or increase tax rates only —
A) With prior approval of the State Government
B) On MLA’s request
C) Through local contractor
D) After elections
Answer: A
Explanation: Any rate revision must follow state notification procedures.
50. The taxes levied by Panchayats primarily aim to —
A) Fund essential public services like roads, water, and sanitation
B) Generate profit for government
C) Increase property prices
D) Replace State revenue
Answer: A
Explanation: Local taxation sustains development and maintenance of rural services.
51. Fees collected by Panchayats are different from taxes because —
A) Fees are linked to specific services rendered
B) Fees are mandatory without service
C) Fees are collected only annually
D) Fees are equal to penalties
Answer: A
Explanation: A tax is general revenue, but a fee is charged in return for a specific facility or service (e.g. market, building license).
52. The Market Fee collected by Gram Panchayat is meant for —
A) Maintenance of village markets and sanitation
B) Police expenditure
C) Election campaigns
D) Industrial investment
Answer: A
Explanation: Market fees ensure cleanliness, maintenance, and facilities for vendors and buyers.
53. License fees on trades and professions are collected to —
A) Regulate public health and safety
B) Encourage illegal trade
C) Collect donations
D) Reduce population
Answer: A
Explanation: Licensing ensures business activities meet legal and sanitary standards.
54. The building license fee is imposed —
A) For construction, alteration, or renovation of buildings within Panchayat limits
B) On renting property
C) On selling furniture
D) On agricultural production
Answer: A
Explanation: It regulates safe and planned building construction in rural areas.
55. Fairs and festival (Jatra) fees are collected from —
A) Temporary stalls, shops, and amusement owners during events
B) Residents only
C) Urban shops
D) Schools
Answer: A
Explanation: The fee is collected for the use of Panchayat premises during public events.
56. Advertisement or hoarding fees are collected when —
A) Commercial boards are displayed on Panchayat property
B) People advertise free of cost
C) NGOs conduct campaigns
D) Government installs boards
Answer: A
Explanation: It helps regulate visual advertisements and earns local revenue.
57. The slaughterhouse fee is collected by Gram Panchayat for —
A) Maintenance and cleanliness of public slaughter places
B) Police funding
C) Political rallies
D) Private parties
Answer: A
Explanation: Such fees support hygiene in public slaughtering spaces.
58. Panchayats can collect ferry fees from —
A) Persons using boats across rivers managed by Panchayat
B) Urban bridges
C) Airports
D) Highways
Answer: A
Explanation: Ferry fees are collected as user charges for Panchayat-operated transport facilities.
59. Penalties imposed for violation of Panchayat by-laws are —
A) Credited to the Panchayat Fund
B) Deposited in personal accounts
C) Sent to judiciary
D) Given to contractors
Answer: A
Explanation: All receipts, including fines, belong to the Panchayat Fund.
60. The Panchayat Fund is maintained in —
A) A scheduled or cooperative bank authorized by the State Government
B) Personal account of Adhyaksha
C) Post office
D) Cash box only
Answer: A
Explanation: Funds must be maintained in a recognized financial institution for accountability.
61. The Custodian of the Panchayat Fund is —
A) Chief Executive Officer / Secretary
B) MLA
C) Police Inspector
D) President of India
Answer: A
Explanation: The CEO (Zilla Panchayat) or Secretary (Gram Panchayat) manages the fund as per the rules.
62. Expenditure from Panchayat Fund requires —
A) Sanction by the Adhyaksha or prescribed authority
B) MLA permission
C) Governor’s approval
D) Judicial order
Answer: A
Explanation: Only authorized officers can approve expenditure.
63. The Local Fund Audit Department audits Panchayat accounts —
A) Annually or periodically as prescribed
B) Every month
C) Once in 10 years
D) Not required
Answer: A
Explanation: Regular audits ensure financial transparency and accountability.
64. Unspent grants-in-aid at the end of financial year —
A) Are carried forward or refunded to Government
B) Are lapsed immediately
C) Can be spent for any purpose
D) Are transferred to personal accounts
Answer: A
Explanation: Unused grant funds are either carried forward with permission or refunded.
65. The State Government provides matching grants to Panchayats based on —
A) Performance and collection efficiency
B) MLA recommendations
C) Urban population
D) Judicial direction
Answer: A
Explanation: Panchayats with better tax collection and project implementation get incentive grants.
66. The main objective of Panchayat fees and fines is —
A) To ensure service sustainability and civic discipline
B) To punish residents
C) To create surplus for profit
D) To fund politics
Answer: A
Explanation: Fees and fines promote responsibility and help maintain public services.
67. Gram Panchayat budgets are prepared by —
A) Panchayat Secretary in consultation with Adhyaksha
B) MLA
C) State Treasury
D) Police Station
Answer: A
Explanation: Secretary drafts the annual budget and submits it for Panchayat approval.
68. The budget year of Panchayat runs from —
A) 1st April to 31st March
B) 1st January to 31st December
C) 1st June to 31st May
D) 1st October to 30th September
Answer: A
Explanation: Panchayat financial year follows the same as Government’s fiscal year.
69. Supplementary budgets are prepared when —
A) Additional funds are needed during the financial year
B) Elections are held
C) New Gram Sabha meets
D) MLA requests
Answer: A
Explanation: Supplementary budgets provide for unforeseen or extra expenditure.
70. The annual accounts of Panchayat include —
A) Receipts and expenditure statements
B) Only receipts
C) Judicial fines
D) Urban accounts
Answer: A
Explanation: Annual statements reflect financial performance and accountability.
71. Panchayat audit reports are submitted to —
A) Zilla Panchayat and RDPR Department
B) Parliament
C) Police Headquarters
D) MLA Office
Answer: A
Explanation: These bodies review compliance and follow-up action.
72. If a serious financial irregularity is found —
A) State Government may order special audit or enquiry
B) The case is ignored
C) Police automatically arrests the staff
D) Gram Sabha dissolves the Panchayat
Answer: A
Explanation: The Government can intervene to ensure accountability.
73. Grants received from State Government for schemes must be used —
A) Only for the purpose specified
B) For any purpose
C) As personal reward
D) For elections
Answer: A
Explanation: Diversion of funds is illegal and punishable.
74. Panchayat funds are spent mainly on —
A) Rural infrastructure, sanitation, health, and education
B) Urban smart cities
C) Private industries
D) Military development
Answer: A
Explanation: The funds are earmarked for local public welfare.
75. The financial control in Panchayats ensures —
A) Proper planning, spending, and accountability
B) Political interference
C) Wasteful expenditure
D) Tax reduction
Answer: A
Explanation: Financial discipline maintains trust and effective use of local funds.
76. The power to authorize Panchayats to levy taxes and fees rests with —
A) State Legislature
B) Parliament
C) Finance Commission of India
D) District Collector
Answer: A
Explanation: As per Article 243H, only the State Legislature can empower Panchayats to levy and collect taxes.
77. The purpose of devolving taxation powers to Panchayats is —
A) To strengthen financial autonomy and self-sufficiency
B) To centralize power in the State
C) To increase bureaucracy
D) To reduce public accountability
Answer: A
Explanation: Local taxation ensures Panchayats have their own resources for local development.
78. Which body reviews and recommends revenue devolution to Panchayats every five years?
A) State Finance Commission
B) Central Vigilance Commission
C) CAG
D) Lokayukta
Answer: A
Explanation: Under Article 243I, State Finance Commission reviews financial status and recommends sharing of taxes.
79. The First State Finance Commission in Karnataka was constituted in —
A) 1994
B) 1993
C) 1996
D) 2001
Answer: A
Explanation: Following the 73rd Amendment, Karnataka formed its first SFC in 1994.
80. The role of the State Finance Commission is to recommend —
A) Distribution of State revenues between State and Panchayats
B) Election reforms
C) Urban planning
D) Police reforms
Answer: A
Explanation: SFC ensures equitable devolution of resources among rural and urban local bodies.
81. Which type of tax provides the largest revenue to Gram Panchayats?
A) House tax
B) Toll tax
C) Advertisement fee
D) Ferry fee
Answer: A
Explanation: Property or house tax is the major local tax base in rural areas.
82. Which Panchayat level has no direct taxation power?
A) Zilla Panchayat
B) Gram Panchayat
C) Taluk Panchayat
D) None
Answer: A
Explanation: Zilla Panchayats receive grants and assigned revenues but do not levy direct taxes.
83. Gram Panchayat’s power to levy profession tax is derived from —
A) Karnataka Panchayat Raj Act, 1993
B) Indian Penal Code
C) Urban Local Bodies Act
D) Central Finance Act
Answer: A
Explanation: The Act explicitly empowers Gram Panchayats to levy certain local taxes.
84. The tax base of Panchayats mainly consists of —
A) Immovable property and local services
B) Excise duty and customs
C) Income tax
D) Corporation tax
Answer: A
Explanation: Panchayat taxes cover property, water supply, lighting, sanitation, etc.
85. Panchayat tax collection efficiency can be improved through —
A) Digitization, transparency, and citizen awareness
B) Political interference
C) Avoiding audits
D) Increasing tax rates without service improvement
Answer: A
Explanation: Technology-based collection and awareness increase compliance and trust.
86. State Finance Commissions submit their reports to —
A) Governor of the State
B) Chief Minister
C) Zilla Panchayat
D) Lok Sabha
Answer: A
Explanation: The Governor lays the report before the State Legislature with action taken notes.
87. The grants-in-aid to Panchayats are classified as —
A) General and specific grants
B) Judicial and police grants
C) Private and industrial grants
D) Urban and municipal grants
Answer: A
Explanation: General grants are for overall development; specific grants target particular schemes.
88. A Panchayat’s right to levy taxes can be withdrawn by —
A) State Government through notification
B) Governor of India
C) Lokayukta
D) Supreme Court
Answer: A
Explanation: If misuse or irregularity is found, the State may suspend such powers.
89. “Matching grants” are given to Panchayats —
A) In proportion to local tax collection
B) Based on political strength
C) Based on population only
D) By Parliament
Answer: A
Explanation: Efficient Panchayats get additional funds matching their revenue generation.
90. The Panchayat’s power to impose “service tax” on lighting or water supply is an example of —
A) User-based taxation
B) Excise duty
C) Judicial tax
D) Import tax
Answer: A
Explanation: These taxes are collected for specific community services.
91. The Panchayat budget is approved finally by —
A) Gram Sabha
B) MLA
C) Deputy Commissioner
D) RDPR Minister
Answer: A
Explanation: Gram Sabha approves annual plans and budgets for accountability.
92. “Own source revenue” of Panchayats includes —
A) Local taxes, fees, fines, and rents
B) State grants only
C) Central assistance only
D) Private donations
Answer: A
Explanation: OSR forms the core of financial self-reliance for Panchayats.
93. The Panchayat budget must be balanced, meaning —
A) Estimated expenditure should not exceed income
B) Income is unlimited
C) Loans can be freely taken
D) Tax rates can be arbitrary
Answer: A
Explanation: Fiscal discipline requires maintaining a balance between revenue and spending.
94. Panchayat accounts are maintained as per —
A) Double entry system prescribed by State Government
B) Urban accounting manual
C) Central banking code
D) MLA instructions
Answer: A
Explanation: Modern accounting practices ensure transparency and audit readiness.
95. State Government can assign Panchayats —
A) A portion of land revenue or State taxes
B) Excise duty of urban areas
C) Central income tax
D) Foreign aid
Answer: A
Explanation: Assignment of local share of State revenue enhances Panchayat finances.
96. Panchayat tax recovery proceedings are similar to —
A) Land revenue recovery procedures
B) Judicial trial
C) Police investigation
D) Urban tax collection
Answer: A
Explanation: Non-payment of tax is recoverable as arrears of land revenue.
97. “Fiscal decentralization” under Panchayat Raj refers to —
A) Transfer of financial powers and resources to local bodies
B) Centralized control by RDPR
C) Urban privatization
D) Loan-based funding only
Answer: A
Explanation: It gives Panchayats authority over local revenue and expenditure decisions.
98. The Eleventh Schedule empowers Panchayats to collect taxes for —
A) Local public services like markets, sanitation, water, and roads
B) Defence budget
C) Banking sector
D) Railways
Answer: A
Explanation: The Schedule lists 29 subjects including services that require local financing.
99. The constitutional intent behind granting tax powers to Panchayats is —
A) To make local bodies financially independent and accountable
B) To reduce their functions
C) To centralize development
D) To create competition with the State
Answer: A
Explanation: Financial independence is essential for true self-governance.
100. The ultimate aim of Panchayat taxation and finance system is —
A) To achieve decentralized, people-oriented rural development
B) To control urbanization
C) To regulate industries
D) To maintain police
Answer: A
Explanation: Panchayat taxation ensures sustainable revenue for rural welfare and local democracy.