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Questions
Under ______ the rate of tax increases with rise in tax payer's income.
Identify which of the following option is correct?
Under ______ the rate of tax increases with rise in tax payer's income.
Options
Progressive taxation
Proportional taxation
Regressive taxation
Digressive taxation
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Solution
Under Progressive taxation the rate of tax increases with rise in tax payer's income.
Explanation:
- Under progressive taxation, the rate of tax increases as the taxpayer's income rises.
- This means that individuals with higher incomes pay a higher percentage of their income in taxes, which is designed to reduce income inequality and ensure that those who have the ability to pay more do so.
RELATED QUESTIONS
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 |
Read the following statements carefully and choose the correct alternative:
Assertion (A): Income tax is a direct tax.
Reason (R): GST is an indirect tax.
Define fiscal policy.
Define direct tax
Differentiate between direct and indirect taxes.
What are progressive taxes.
An indirect tax can be made progressive by imposing higher tax rates on luxuries. Justify the above statement.
How does the state fulfil the following socio-economic objective?
Promoting industrial growth.
Explain the term Incidence of a tax.
Explain how indirect taxes can be made progressive.
