Consider the following taxes:1. Corporation tax2. Customs duty 3. Wealth tax4. Excise duty Which of these is/are indirect taxes?
✓ Correct answer: b) 2 and 4
ExplanationAn indirect tax is a tax imposed on the consumption of goods and services, rather than directly on an individual’s income.The tax is paid by the consumer as part of the price of the goods or services purchased from the seller.In case of Indirect taxes, the individual who pays the tax to the government is different from the person who ultimately bears the burden of the tax.Customs duty and excise duty are classified as indirect taxes because their burden is ultimately passed on to consumers through the pricing of goods and services.Customs duty is levied on the import and export of goods and indirectly borne by the consumers.Excise duty is a tax on the manufacture of goods, indirectly passed on to consumers.According to the Economic Survey 2000–01, indirect taxes like excise and customs duties formed a significant part of India’s revenue during this period.Corporation tax is a direct tax imposed on a company’s profits.Wealth tax is a direct tax on an individual’s or entity’s net wealth, it was abolished in 2015. 223
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