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IAI Actuarial Core Principles · Business Finance · Personal and corporate taxation

Which of the following is correctly classified as an indirect tax in the Indian system?

Goods and Services Tax on a supply of goods is the indirect tax. It is levied on the transaction and passed on to the consumer, whereas taxes on company profits, salary, capital gains and dividends fall directly on the income of the person who pays.

  1. ATax on the net profits of a company
  2. BTax on the salary income of an individual
  3. CGoods and Services Tax charged on a supply of goodsCorrect
  4. DTax on long-term capital gains from shares
  5. Tax on dividend income received by a resident

Explanation

An indirect tax is levied on a transaction and can be passed on to the final consumer. GST on supplies fits this. The other options tax the income or gains of the person who bears them directly.

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