In taxation, what is meant by the incidence of a tax?
Correct answer: C. The person who ultimately bears the economic burden
- A. The authority that collects the tax
- B. The date on which the tax return is submitted
- C. The person who ultimately bears the economic burden
- D. The legal document used to calculate tax
Explanation
Tax incidence refers to who finally bears the economic cost of a tax, which may differ from the person legally required to pay it. The legal obligation to remit tax is not always the same as its final economic burden.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
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