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Question
Explain the term proportional taxation.
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Solution
- Under the proportional tax system, all incomes are taxed at a uniform rate.
- In other words, a proportional tax (also referred to as a flat tax) is one in which the rate of tax remains the same.
- Corporation tax is an example of proportional tax in India where the government charges a flat rate of 30% on the income earned by the companies.
RELATED QUESTIONS
______ are those taxes which are paid by the same person on whom they have been imposed.
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| 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 |
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Classify the following type of tax into direct and indirect taxes:
House tax
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