Question

Assertion (A): Direct tax is a regressive tax.

Reason (R): People pay a higher amount of tax as they earn a higher income.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Assertion (A) is false but Reason (R) is true.

Explanation:

Direct taxes are progressive rather than regressive, hence the assertion is false. However, the reasoning statement is entirely true because it captures the fundamental mechanism of progressive taxation, in which tax payments rise in tandem with an individual's income.