CA Foundation · Business Economics · Public Finance
Which of the following is an example of a direct tax in India?
Income tax on a salaried employee's earnings is a direct tax, because the person on whom it is levied also bears its burden and cannot shift it to someone else. Customs duty, GST and excise duty are indirect taxes whose burden can be passed on.
- ACustoms duty on imported electronics
- BGoods and Services Tax on restaurant meals
- CIncome tax on a salaried employee's earningsCorrect
- DExcise duty on petroleum products
Explanation
A direct tax is one whose burden cannot be shifted by the person on whom it is legally imposed. Income tax is paid directly by the earner to the government. Customs duty, GST and excise duty are indirect taxes because the burden can be passed on to consumers.
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