CG Board Class 10 Social Science Chapter 19 Solutions: Government Budget and Taxation (सरकारी बजट और कर निर्धारण) (2026-27)

In our neighbourhood, the government performs crucial public welfare functions: maintaining law and order through the local police force, supplying electricity and clean drinking water, constructing and repairing roads, managing street lighting, disposing of municipal waste, running government schools, providing healthcare through primary health centres, and operating fair price ration shops under the public distribution system.

The government collects money to fund public facilities and activities primarily through various taxes levied on citizens, businesses, and corporations. These taxes are broadly classified into direct taxes (such as income tax and corporate tax) and indirect taxes (such as Goods and Services Tax / GST and custom duties). Additionally, the government earns revenue from non-tax sources like fees, fines, and profits of public sector undertakings, and raises loans when expenditure exceeds revenue.

Based on government reports and news releases, public money is spent on

1. Social Sector: Education (schools, colleges, teacher salaries), public health (hospitals, free medicines), food security (PDS subsidies), and pensions.
2. Infrastructure: Construction of roads, bridges, irrigation canals, check dams, and power plants.
3. Employment & Rural Development: MNREGA wage payments and asset creation like ponds and water harvesting structures.
4. Administration & Security: Defense forces, police administration, legal systems, and administrative overheads.

The government plays a vital role in ensuring food security by procuring food grains from farmers at Minimum Support Prices (MSP), maintaining buffer stocks in central and state warehouses, and distributing essential food commodities (like rice, wheat, and sugar) at heavily subsidized prices to low-income families through the Public Distribution System (PDS). Additionally, it implements nutrition schemes like the Mid-Day Meal scheme in schools and supplementary nutrition through Anganwadis.

The government provides public facilities because these are essential collective goods (such as roads, electricity, healthcare, and education) that benefit everyone in society once established. Private companies operate for profit and would either not supply these services in remote/poor areas or charge exorbitant prices beyond the reach of common people. The government ensures that every citizen, regardless of income level, has affordable and equal access to essential living standards.

List of Public Facilities:** Government roads and bridges, street lights, public parks, electricity grids, government schools, public hospitals, municipal water taps, and railways.

• Equal Access Analysis: No, everyone does not have equal access in practice. Wealthier urban neighborhoods often enjoy better roads, 24×7 electricity, and cleaner water supply, whereas remote rural villages, slum pockets, and marginalized communities frequently suffer from broken infrastructure, water shortages, and understaffed health centers.

Government activities directly linked to poverty alleviation include

1. Employment Guarantee: Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), guaranteeing 150 days of wage employment per year to rural households demanding work.
2. Food Security: Subsidized food grains through the Public Distribution System (PDS) under the National Food Security Act.
3. Maternal & Child Welfare: Financial assistance to pregnant/lactating mothers (Rs 6,000 under NFSA) and supplementary nutrition at Anganwadis.
4. Infrastructure & Housing: Building rural check dams, ponds, roads, and affordable housing schemes.

The government increases its estimated public expenditure every year due to

1. Population growth, requiring expanding coverage of education, healthcare, and water supply.
2. Inflation and rising costs of materials, equipment, and staff salaries.
3. Expansion of social development schemes, employment generation programs, and infrastructure projects.
4. Rising economic development goals and maintenance of existing public assets.

In the 2016-17 Chhattisgarh budget, the government reallocated resources according to changing state priorities. Expenditure was increased in education, roads/bridges, pensions, and public health to strengthen long-term human development and physical connectivity. Conversely, expenditure on food and warehousing was reduced because sufficient grain stocks had already been built up in previous years or administrative efficiency reduced procurement costs, allowing funds to be directed to under-funded sectors.

If sales tax revenue falls short by Rs 6,000 crores, the government can take the following measures

1. Borrow funds from the central government, Reserve Bank of India, or financial markets.
2. Re-prioritize expenditure by cutting non-essential administrative spending while protecting critical social schemes.
3. Introduce measures to curb tax evasion and recover outstanding tax dues.
4. Adjust tax rates or non-tax revenue charges to bridge the fiscal deficit.

1. Necessity of Approval: India is a parliamentary democracy where the elected members of the Vidhan Sabha represent the sovereign power of the people. Getting budget approval ensures that public money collected through taxes is utilized ethically, transparently, and in alignment with public welfare and development goals.
2. Limits on Government Freedom: If the government had unrestricted authority to levy taxes and spend money, it could lead to arbitrary taxation, financial corruption, and dictatorial misuse of public funds. Parliamentary control makes the government answerable to the citizens through their elected representatives.

Common citizens can use democratic methods to get demands included in the budget

1. Submitting memorandums and charters of demands to local MLAs, ministers, or government departments through civil society organizations and NGOs (as seen in the Right to Food Campaign).
2. Participating in pre-budget public consultations, Gram Sabhas, and town hall meetings.
3. Organizing peaceful rallies, public demonstrations, and media campaigns to highlight pressing social needs.
4. Raising public audit demands and contacting elected representatives during election campaigns.

As depicted in Figure 19.4, raising the tax on iron creates a widespread chain effect throughout the economy. An increased tax on iron raises the price of iron ore and raw iron, which increases the price of steel. Consequently, the manufacturing cost of steel sheets and steel pipes goes up, leading to an automatic increase in the final retail prices of consumer items like steel almirahs, bicycles, machinery, and transport vehicles.

1. Proportion of Tax: Manufacturing cost including profit = Rs 10,000; Tax = Rs 1,800; Final consumer price = Rs 11,800. The tax paid by the consumer is 18% of the manufacturing cost ((1800)/(10000) × 100) or 15.25% of the total price paid ((1800)/(11800) × 100).
2. Unfairness of Tax Evasion: If one manufacturer evades tax, they can sell the product at Rs 10,000 while the honest tax-paying manufacturer must charge Rs 11,800. This creates unfair price competition, harms honest businesses, and causes revenue loss to the government.
3. Impact of Intermediate Tax: Taxing intermediate goods raises the cost of production at every subsequent stage. Example: If tax on cement and iron rods (intermediate goods) increases, the cost of constructing houses, bridges, and commercial complexes (final products) rises significantly.

Calculation:**

• Base sale price by retailer = Rs 800
• Total GST @ 18% on Rs 800 = Rs 144
• Input Tax Credit (GST already paid by trader up to Rs 700 output) = Rs 126
• Net GST payable by retailer on Value Added (18% of Rs 100 added value) = Rs 18
• Retailer Bill:

(Note: The retailer collects Rs 144 GST from the customer, retains Rs 126 as Input Tax Credit for taxes previously paid, and deposits the net Rs 18 to the government).

1. Effect of Multiple Indirect Taxes: Levying different sales tax rates (ranging from 26% to 43% for petrol) causes a cascading effect on transportation costs. High diesel taxes increase freight charges for all goods transported by trucks across India, raising the retail prices of essential food items and raw materials.
2. People’s Response to Tax Differences: As shown in the textbook table, sales tax on petrol is 43% in Maharashtra compared to 29% in Chhattisgarh. People living near state borders drive across to neighboring states with lower tax rates to refuel their vehicles. Transport operators buy bulk diesel in lower-tax states, leading to revenue loss for high-tax states and smuggling across borders.

1. Reason for Different Rates: Under GST, items are taxed according to necessity and social benefit. LED bulbs carry a lower rate (12%) to encourage energy conservation. Water purifiers carry a moderate rate (18%) as health necessity items. Consumer durables like juicers and irons are treated as comfort/luxury goods and taxed at the higher rate of 28%.
2. CGST and SGST Definition:

• CGST (Central Goods and Services Tax): Tax portion collected by the Central Government on intra-state sales.
• SGST (State Goods and Services Tax): Tax portion collected by the State Government on intra-state sales.

No, it is entirely unjustifiable. A daily labourer earning Rs 1,500 struggles to meet basic food needs, so deducting Rs 50 places an unbearable burden on her survival, whereas Rs 50 is negligible for a trader earning Rs 30,000.

• Case 2: Proportional Tax of 10% for all
• (Complete the table)

No, a flat 10% tax is still unjust. Paying Rs 150 out of Rs 1,500 leaves Jyothi with only Rs 1,350, creating severe distress for basic meals. Meanwhile, Jatinder retains Rs 27,000 after tax, leaving him with plenty of surplus wealth.

• Case 3: Progressive Tax System
• (Complete the table)

Yes, this progressive tax system is equitable and justifiable. Low earners (Jyothi) are exempt so they can meet basic needs, middle earners pay a modest rate, and high earners pay a higher percentage because they have surplus capacity to pay.

Indirect taxes earn more revenue for the government, contributing 67%** of total tax collection compared to 33% from direct taxes.

1. Kamlesh pays more income tax in absolute amount (Rs 5,500 compared to Kanti’s Rs 3,000).
2. Kanti pays a greater percentage of his income as tax ((3000)/(100000) × 100 = 3\%), whereas Kamlesh pays ((5500)/(200000) × 100 = 2.75\%).
3. In this situation, the person who has a larger income pays more total tax amount, but a lesser percentage rate.

(Key Observations from Textbook Table 19.1)

• English Summary Analysis: Total tax collection in India (16.6% of GDP) is lower than in developed and developing countries like Britain (32.9%) and Brazil (35.6%) due to widespread tax evasion and tax concessions. Low tax collection directly reduces government expenditure on human capital (health and education is only 5.1% in India), which limits human development indicators.
• : 19.1: :
• : (32.9%) (35.6%) , ,

(c) 150 days* (Note: In Chhattisgarh textbook reference context, MNREGA guarantees 150 days).*

(c) Taxes**.

(d) Budget**.

(a) Parliament**.

(d) None of these* (Explanation: Direct taxes include Income tax and Corporate tax; Entertainment tax, Services tax, and Sales tax are all indirect taxes).*

(a) Car* (Explanation: A car is a private good, whereas electricity, roads, and railways are public facilities).*

Public**

Food Safety and Standards Authority of India**

Budget**

Excise duty**

Entertainment**

Direct (or Income)**

Goods, Services**

Need for Budget:** The government performs extensive duties including defense, law enforcement, infrastructure development, and social welfare. To fund these, it must systematically estimate expected revenue collection and plan itemized expenditure across departments. The budget serves as an accounting tool and a blueprint for economic development.

• Why Proposed Taxes are Discussed: In a parliamentary democracy, the government cannot levy taxes or spend public money without parliamentary approval. Discussing proposed taxes in Parliament/Vidhan Sabha ensures that taxation is fair, transparent, prevents excessive financial burden on common citizens, and holds the government answerable to elected public representatives.

How and Why Impact Occurs:** Basic raw materials and intermediate goods (like iron ore and steel) are used as essential inputs across various manufacturing industries and transport sectors. When taxes on intermediate goods increase, production costs rise for every subsequent factory, setting off a chain reaction that raises the final prices of all finished consumer goods.

• Greatest Impact: A tax increase on iron ore and steel has the greatest widespread impact because steel is used to make machinery, tools, transport trucks, factories, building frameworks, and household items. Higher steel costs inflate costs across the entire manufacturing and supply network.

Indirect taxes on essential food commodities affect the poor the most because poor households spend a dominant portion (often 70% to 80%) of their total small income on basic food grains, pulses, and edible oil just to survive. Since indirect taxes are charged at uniform rates for rich and poor alike, a tax on essential food items absorbs a large percentage of a poor person’s daily wages, leaving them unable to afford basic meals, whereas the same tax is a negligible fraction of a rich person’s income.

Equal Division Method: Total Rent = Rs 2,000. If divided equally among 4 friends, each pays Rs 500**.

• Friend 1 & 2 (Income Rs 3,000): Pay Rs 500 = 16.67% of income.
• Friend 3 & 4 (Income Rs 7,000): Pay Rs 500 = 7.14% of income.
• Proportional / Progressive Division Method (Equal Relative Burden): To make the financial burden equitable, divide rent in proportion to their incomes (Total Income = 3000 + 3000 + 7000 + 7000 = Rs 20,000).
• Total rent is 10% of total combined income ((2000)/(20000) × 100 = 10\%).
• Friend 1 & 2 (Income Rs 3,000 each): Pay 10% = Rs 300 each.
• Friend 3 & 4 (Income Rs 7,000 each): Pay 10% = Rs 700 each.
• Preferred Method: The Proportional Division Method (Rs 300 and Rs 700) is preferred because it follows the economic principle of equitable ability to pay. It ensures that lower-income friends retain enough money for essential living expenses without carrying a disproportionately heavy burden.

Tax on Income (Direct Tax) affects the RICH the most:** Income tax is progressive; higher earners fall into higher tax brackets and pay a larger percentage of their income, while low earners are exempt. Thus, it collects more revenue from the wealthy.

• Tax on Goods (Indirect Tax) affects the POOR the most: Indirect taxes are regressive because rich and poor pay the exact same tax amount when buying a commodity. Since poor households spend almost all their earnings on basic goods, indirect taxes consume a far higher percentage of a poor person’s income than a rich person’s.

Goods and Services Tax (GST) reduces tax evasion through its built-in digital Input Tax Credit (ITC) mechanism

1. Incentive for Invoices/Bills: To claim Input Tax Credit for taxes paid on raw materials, traders must produce valid tax bills from their suppliers. This forces every buyer and seller in the supply chain to demand formal bills.
2. Automated Digital Matching: GST operates on an integrated digital network where seller sales records must automatically match buyer purchase records, making fake billing and off-the-books transactions extremely difficult.
3. One Nation One Tax: Uniform tax rates across states eliminate border checkpoints and illegal smuggling between states.