A tax which is paid by the person on whom the tax is incident is called a ?
Correct answer: C. Direct tax
- A. Local tax
- B. Indirect tax
- C. Direct tax
- D. Rate
Explanation
A direct tax is imposed on, and normally paid by, the same person or entity on whom the legal burden falls, as with income tax. An indirect tax can be shifted to others through prices, as with sales tax.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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