CMA Intermediate · Direct and Indirect Taxation · Concept of Indirect Taxes
Which of the following statements about the classification of taxes in India is correct?
Customs duty on imports is an indirect tax because its burden is passed on to buyers, while tax on a company's profits is direct because the company bears it. GST remains indirect even though the supplier deposits it with the government.
- ACustoms duty on imports is an indirect tax, while tax on a company's profits is a direct taxCorrect
- BGST is a direct tax because it is deposited directly with the government
- CSecurities Transaction Tax and income tax are both indirect taxes
- DTax on agricultural income of a person is a customs duty
Explanation
Customs duty is imposed on goods crossing the border and shifted to consumers, so it is indirect. Tax on company profits is borne by the company itself, so it is direct. GST is indirect even though the supplier deposits it, because the burden is passed on. Income tax is direct, and agricultural income tax is not customs duty.
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