Legal Terms — Set 3

Correct Answer: D. Goods and Services Tax

GST stands for Goods and Services Tax, which is an indirect tax used in India on the supply of goods and services. It replaced many former taxes like excise duty and VAT. This tax system was implemented on July 1, 2017.

Correct Answer: A. Value Added Tax

VAT stands for Value Added Tax, which is a consumption tax placed on a product whenever value is added at a stage of production. It was a major source of revenue for state governments before the rollout of GST. Most countries globally use some form of VAT.

Correct Answer: C. Special Economic Zone

SEZ stands for Special Economic Zone, an area in which business and trade laws are different from the rest of the country. These zones are created to attract foreign investment and increase exports. Companies operating in these zones often receive tax incentives.

Correct Answer: B. Employees' Provident Fund

EPF stands for Employees' Provident Fund, a retirement benefit scheme available to all salaried employees. It is managed by the EPFO and involves contributions from both the employer and the employee. This fund provides financial security to workers after retirement.

Correct Answer: D. Foreign Exchange Management Act

FEMA stands for the Foreign Exchange Management Act, enacted in 1999. It replaced the more restrictive FERA to liberalize foreign trade and payments. The act regulates the flow of foreign currency into and out of India.

Correct Answer: A. Tax Deducted at Source

TDS stands for Tax Deducted at Source, a means of collecting income tax by having the person making a payment deduct tax at a specific rate. The deducted amount is then deposited with the government. This ensures a steady flow of tax revenue for the state.

Correct Answer: C. Real Estate (Regulation and Development) Act

RERA stands for the Real Estate (Regulation and Development) Act, passed in 2016. It aims to protect home-buyers and boost investments in the real estate sector. The act makes it mandatory for developers to register their projects with the authority.

Correct Answer: C. Permanent Account Number

PAN stands for Permanent Account Number, which is a 10-digit alphanumeric code issued by the Income Tax Department. It is essential for tracking financial transactions and preventing tax evasion. A single person can generally hold only one PAN.

Correct Answer: A. Know Your Customer

KYC stands for Know Your Customer, a process used by financial institutions to verify the identity of their clients. It is a mandatory requirement to prevent money laundering, fraud, and identity theft. Standard documents like Aadhaar or PAN are used for this process.

Correct Answer: D. Limited Liability Partnership

LLP stands for Limited Liability Partnership, a business structure where partners have limited liability for the company's debts. It combines the flexibility of a partnership with the benefit of limited liability of a company. This form is popular among professional service firms.