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Questions
Explain the term Incidence of a tax.
What is meant by incidence of taxation?
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Solution
Incidence means the final resting place of a tax. The incidence is on the person who ultimately bears the money burden of the tax.
RELATED QUESTIONS
Fiscal policy means public expenditure and tax policy of the government.
Monetary policy means regulation of money supply by the monetary authority.
The major objective of monetary policy is ______.
Match the following:
| Column I | Column II | ||
| A. | Direct tax | (i) | Tax rate increases with tax base |
| B. | Indirect tax | (ii) | Tax rate remains constant |
| C. | Proportional tax | (iii) | Imposed on goods and services |
| D. | Progressive tax | (iv) | Impact and incidence lie on the same person |
State two objectives of fiscal policy.
Citing reason state the advantage of a progressive tax over proportional tax.
Classify the following types of tax into direct and indirect taxes:
- Entertainment tax
- Income tax
- House tax
- Sales tax
How does the state fulfil the following socio-economic objective?
Reducing income inequality.
How does the state fulfil the following socio-economic objective?
Promoting industrial growth.
Discuss four fiscal policy objectives with reference to India.
