Question

Statement (1): In case of direct taxes, the tax burden cannot be transferred to another person.

Statement (2): Indirect taxes are charged on the sale or consumption of goods and services.

Options

• Both statements are true.

• Both statements are false.

• Statement 1 is true but Statement 2 is false.

• Statement 2 is true but Statement 1 is false.

Answer 1

Both statements are true.

Explanation:

• Statement (1): The impact and incidence of a direct tax fall on the same individual, making it legally and practically difficult to shift the tax liability to another person.
• Statement (2): Indirect taxes are consumption-based levies that are built directly into the prices of commercial goods and services.