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Question
Which of the statement is true for income tax?
Options
It is regressive by nature.
It is an example of indirect tax.
Impact and incidence of the tax lies on the same person.
Impact and incidence of the tax lies on the different persons.
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Solution
Impact and incidence of the tax lies on the same person.
Explanation:
Income tax is a direct tax, which means that the impact and incidence fall on the same person.
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RELATED QUESTIONS
Which of the following is an advantage of direct taxes?
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 |
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