Which one of the following is the correct statement? Service tax is a/an:
✓ Correct answer: b) indirect tax levied by the Central Government.
ExplanationAn indirect tax is one that can be partially or complete- ly shifted from the person who pays it to others.Service Tax falls under this category as it is imposed on service providers but is typically shifted to the service recipient.Other examples are: Goods and Services Tax (GST), Customs Duty, Excise Duty, Ser- vice Tax (before GST), Value Added Tax (VAT) (before GST).A direct tax is one that the taxpayer is obligated to pay directly to the government and cannot be passed on to someone else.Exam- ples include income tax and property tax.Examples of Direct Tax- es in India are Income Tax, Corporate Tax, Wealth Tax (now abolished), Capital Gains Tax,Property Tax.Service Tax was an indirect tax imposed by the Central Gov- ernment on services provided in India until it was subsumed under the Goods and Services Tax (GST) on July 1, 2017. It was introduced under the Finance Act of 1994 and was applica- ble to various services, including those offered by travel agents, restaurants, and cable providers.203
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