CA Foundation · Business Economics · Public Finance
Which of the following is a direct tax in India?
Income tax on an individual's income is a direct tax because the impact and incidence fall on the same person, who cannot shift the burden to others. Customs duty and GST are indirect taxes, as their burden can be passed on to buyers.
- ACustoms duty on imported machinery
- BSecurities transaction tax is not a direct tax
- CIncome tax levied on an individual's total incomeCorrect
- DGoods and Services Tax on a restaurant bill
Explanation
A direct tax is paid by the person on whom it is legally levied, and its burden cannot be shifted. Income tax fits this. Customs duty and GST are indirect taxes because the burden can be passed on to consumers. Option 1 is a statement rather than a tax example, and it is also false in framing.
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