CMA Intermediate · Direct and Indirect Taxation · Concept of Indirect Taxes
Which of the following is an indirect tax in India?
Customs duty on imported goods is an indirect tax, because the importer pays it and recovers it through the selling price, shifting the burden onward. Taxes on salary, capital gains and company profits are direct taxes on income and cannot be passed on.
- AIncome tax on salary
- BCustoms duty on imported goodsCorrect
- CTax on long-term capital gains
- DTax on business profits of a company
Explanation
Customs duty is levied on import of goods and is built into the price paid by the buyer, so the burden can be shifted. The other three are taxes on income and are borne directly by the assessee.
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