Which tax is classified as a direct tax because its burden generally falls on the person legally assessed?
Correct answer: A. Income tax on taxable income
- A. Income tax on taxable income
- B. Customs duty on imported goods
- C. Sales tax on retail purchases
- D. Federal excise duty on products
Explanation
Income tax is imposed directly on the income of a person or entity, so the legal and economic burden usually rests with the taxpayer. Sales tax, customs duty and federal excise duty are generally treated as indirect taxes because their burden may be shifted to consumers.
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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.
Practise Taxation
50 free Taxation MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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