Question

Assertion (A): Indirect taxes can be made progressive.

Reason (R): More excise duty imposed on producing luxury items and exempting taxes on necessary items.

Options

• (A) is true and (R) is false.

• (A) is false and (R) is true.

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

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

Answer 1

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

Explanation:

Indirect taxes can be made progressive by levying higher excise duties on luxury goods and exempting or lowering taxes on essential items. This ensures that richer individuals pay a greater share of tax, making the system fairer. Therefore, the reason correctly explains the assertion.