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Questions
Define a degressive tax.
Define digressive taxation.
Explain the following with examples:
Digressive tax
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Solution
- Under this system, the rate of tax increases up upto a certain limit but after that, a uniform rate is charged.
- Income tax in India is an example of a digressive tax.
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RELATED QUESTIONS
______ are those taxes which are paid by the same person on whom they have been imposed.
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 |
Match the following:
| Column I | Column II | ||
| A. | Impact of tax | (i) | Price stability |
| B. | Incidence of tax | (ii) | Simple to calculate |
| C. | Objective of Monetary Policy | (iii) | Ultimate burden of tax |
| D. | Proportional tax | (iv) | Original imposition of tax |
Distinguish between fiscal policy and monetary policy.
Define Indirect tax
Citing reason state the advantage of a progressive tax over proportional tax.
An indirect tax is not always equitable. Give two reasons to support your answer.
Explain clearly tour ways by which the state can promote economic growth and development.
Explain how tax can be used as an instrument to regulate consumption and production in an economy.
