Public FinancePYQ - Nov 2022 (Inter)Question 130 of 20
All Questions

Which of the following is a Direct Tax?

Options

AGST
BCustoms Duty
CIncome Tax
DExcise Duty
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Correct Answer

✅ Option c — Income Tax

All Options:

  • AGST
  • BCustoms Duty
  • CIncome Tax
  • DExcise Duty

Detailed Solution & Explanation

To determine the correct answer, let's break down the concept of direct tax. • Direct tax is a type of tax that is levied directly on the taxpayer, such as individuals or businesses, and is typically based on their income or wealth. • The key characteristic of a direct tax is that it is non-transferable, meaning that the taxpayer cannot pass on the tax burden to someone else. • Income Tax is a classic example of a direct tax, as it is levied on an individual's or business's income and is typically withheld at the source. The correct answer is right because Income Tax meets the definition of a direct tax, as it is levied directly on the taxpayer and is based on their income. In contrast, options like GST and Excise Duty are incorrect because they are indirect taxes, which are levied on goods and services and can be transferred to the consumer. • GST, for example, is a consumption tax that is levied on the value added to goods and services at each stage of production and distribution, and is typically passed on to the consumer. • Customs Duty is also an indirect tax, as it is levied on imported goods and can be transferred to the consumer.

About This Chapter: Public Finance

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Fiscal Policy, Budget, Market Failure

This chapter deals with government finances — how the government earns (taxation) and spends (expenditure) money. Key topics include Fiscal Policy, types of taxes (Direct and Indirect), the Union Budget, Public Debt, and the concept of Market Failure and how government intervention corrects it.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on the difference between Revenue and Capital items in the budget. Understand Fiscal Deficit and its implications. Tax-related MCQs are commonly asked.

More Questions from Public Finance

The burden of indirect tax can be:

Example of merit good is:

The "Ability to Pay" principle is related to:

Which of the following is a function of public finance?

GST is best described as:

A progressive tax system implies:

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