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प्रश्न
Three demerits of an Indirect tax.
Explain briefly two demerits of indirect tax.
Give two disadvantages of indirect taxes.
Mention three demerits of indirect taxes.
Explain any two demerits of indirect tax.
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उत्तर
The following are the demerits of indirect taxes:
- Regressive: The primary disadvantage of indirect taxes is that they are regressive and, so, unjust. Indirect taxes are typically levied on the consumption of products. The tax rate for such taxes is uniform for both the rich and the poor. They are indiscriminate, meaning that poor people must pay the same as wealthier ones. They ignore the principle of ability to pay, and as a result, their burden falls disproportionately on the poor, who have a lower ability to pay than the wealthy. This renders them regressive in character. When an indirect tax is placed on needs, the burden falls disproportionately on the poor. As a result, these taxes are unfair to the poor and inequitable.
- No Civic Consciousness: Indirect taxes do not create civic consciousness among the taxpayers because they are imposed on commodities and hence the taxpayers do not feel at all that they are paying the tax.
- Uncertain: Another great demerit of indirect taxes is that they are extremely uncertain. Taxes on goods with elastic demand are very uncertain. When a commodity is taxed, its market prices rise, which results in lower demand. So it is quite difficult to anticipate the income from indirect taxes. However, indirect taxes can be made certain if they are imposed on necessities of life. But such taxes will become regressive and hence unpopular.
- Discourage Savings: Indirect taxes discourage savings as they are included in price. People have to spend more on commodities. Hence, they discourage savings.
Notes
Students should refer to the answer according to their questions.
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संबंधित प्रश्न
Under ______ the rate of tax increases with rise in tax payer's income.
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | Taxes imposed on income and wealth | A. | Regressive |
| (ii) | Taxes imposed on goods and services | B. | Progressive |
| (iii) | A tax system where the rate of tax decreases with increase income | C. | Direct taxes |
| (iv) | A tax system where the rate of tax increases as income increase | D. | Indirect taxes |
A policy under which the government uses its expenditure and revenue to produce desirable effect and avoid undesirable effects on the national income, production and employment. This defines ______.
Identify the tax which is most likely to faster civic conciousness.
The tax whose rate remains unchanged irrespective of the income of the taxpayer is called as ______.
Read the following statements carefully and choose the correct alternative:
Assertion (A): Income tax is a direct tax.
Reason (R): GST is an indirect tax.
Classify the following type of tax into direct and indirect taxes:
Sales tax
Give one example of progressive tax.
Explain the term Impact of a tax.
Explain briefly two merits of indirect tax.
