Which tax is generally classified as an indirect tax?
Correct answer: A. Sales tax charged on taxable supplies
- A. Sales tax charged on taxable supplies
- B. Income tax charged on an individual
- C. Tax on a company's taxable profit
- D. Tax on an employee's salary
Explanation
Sales tax is indirect because it is collected by the supplier but its economic burden is generally passed to the consumer. Income tax on income or profit is normally a direct tax.
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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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