UGC NET JRF Commerce PYQP 2025 January – Passage

The first phase of modem banking in India began after independence in 1947, when the government nationalized the major banks and introduced various reforms to promote financial inclusion and social welfare. The second phase started in the 1990s, when the liberalization of the economy and the advent of technology enabled the emergence of new private and foreign banks, offering competitive and innovative products and services to the customers. In the 2000s, the third phase commenced when the Internet and mobile penetration increased, leading to the rise of online and mobile banking, as well as the entry of Non-Banking Financial Companies (NBFCs) and fintech startups, offering digital solutions to cater to the unbanked and under banked segments of the population. The fourth and current phase of banking in India is characterized by the emergence of neo banks, which are digital-only banks that operate without physical branches and offer a range of banking and financial services through mobile apps and web platforms. Neo banks often function by partnering with licensed banks to provide their services to customer. While the digital banking landscape in India is evolving rapidly, there are still many challenges and gaps that need to be addressed. One of the major challenges is the lack of standardization and interoperability among the various players, platforms, and systems in the ecosystem. For instance, there are multiple payment methods, such as UPL IMPS, NEFT, RTGS, cards, wallets and QR codes, each with its own features, limitations and charges. This creates confusion and inconvenience for customers, who have to switch between different apps and interfaces to make payments and access their accounts.

Artificial Intelligence (AI) is a potent technology that can help digital banks to overcome the challenges and gaps mentioned above, and add value to their customers and stakeholders. Al can enable digital banks to leverage data and analytics, machine learning, natural language processing, computer vision, and other advance techniques to automate and enhance various banking processes, such as customer identification and verification, customer service and support, product recommendation and cross-selling, fraud detection and risk management, credit scoring and underwriting, and regulatory compliance and reporting.

  1. What is the primary focus of neo banks in India?
    (a) Offering physical branch services
    (b) Catering to the unbanked and under banked segments
    (c) Providing traditional banking services
    (d) Emphasizing paper – based transaction
  2. How can artificial intelligence (AI) help digital banks to overcome challenges?
    (a) By reducing Internet penetration
    (b)By increasing physical branches
    (c) By providing advanced analytics
    (d) By reducing customer base
  3. What is one-of the major challenges in the digital banking landscape in India?
    (a) Lack of internet penetration
    (b) Overabundance of physical branches
    (c) Lack of standardization and interoperability
    (d) Over regulation by the government

The major source for the revenue for the government is indirect tax. The Central Board of Indirect Taxes and Customs (CBIC) (erstwhile Central Board of Excise and Customs) is the apex regulatory body that supervises the levy and administration of Indirect Taxes in India. CBIC is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matter relating to customs, Central Excise, Central Goods & Services Tax (CGST), IGST and narcotics to the extent under CBIC’s purview. The board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerate’s and the Central Revenue Control Laboratory. In recent years, the Indian government has undertaken significant reforms under the indirect taxation system. This includes the implementation of Goods and Services Tax (GST). Goods and Services Tax (GST) is an indirect tax has replaced many indirect taxes in India. The Goods and Services Tax Act was passed in the Parliament on March 29, 2017. This Act came into effect on July 01, 2017. GST is a destination based tax on consumption with credit of taxes paid at previous stages available as set-off. In nutshell, only value addition will be taxed and the burden of tax is to be borne by the final consumer.

Destination based tax on consumption means the tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply. GST has removed the cascading effect of taxes. This cascading effect implies charging tax on tax. In other words, at the time of levy of tax, the total value is considered which is inclusive of all taxes paid up to the points. In this manner, if the fax is always charged on the selling price of the products, the burden of tax keeps on increasing at each point of sales. In this process, the effect of taxation magnifies as at each level tax is calculated on value, which includes taxes already levied and paid. The charging of fax on tax is called the ‘Cascading Effect of Tax”.

  1. ‘Which department oversees the administration of matters related to custom, central excise, Central Goods & Services Tax (CGST), (IGST), and narcotics under the Indian government?
    (a) Ministry of Finance
    (b) Central Board of Direct Taxes
    (c) Central Board of Indirect Taxes and Customs (CBIC)
    (d) Department of Revenue
  2. ‘What is the significance of the term “destination – based tax” in the context of GST?
    (a) Tax is based on the destination of goods only
    (b) Tax is levied based on the origin of goods
    (c) Tax is collected at the point of sale.
    (d) Tax accrues to the taxing authority at the place of consumption.
  3. Who bears the burden of tax in the GST system?
    (a) Manufacturers
    (b) Retailers
    (c) Final Consumer
    (d) Government
  4. How does GST eliminate the cascading effect of taxes?
    (a) By increasing tax rates
    (b) By reducing the number of tax types
    (c) By allowing tax credit on previous stages
    (d) By exempting certain product from tax
  5. What does the term “cascading effect of taxes” refer to?
    (a) Tax evasion
    (b) Tax avoiding
    (c) Charging tax on tax
    (d) Tax exemption