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SSC MTS 2024 PYQ — Question 58

SSC MTS - 09/10/2024 - (12:30 PM - 2:30 PM) • General Awareness • Q58

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If the tax rate increases with the taxable base, then this type of taxation is called:

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Correct answer: D

Explanation

The correct answer is  option 4  i.e. progressive.

When the tax rate increases as the taxable base increases, it is known as progressive taxation. In this system, individuals or entities with higher incomes or larger taxable amounts pay a higher percentage of their income in taxes compared to those with lower incomes. This approach aims to reduce income inequality by ensuring that wealthier people contribute a larger share to public revenue. Progressive taxes are commonly used in income tax systems around the world and are designed to be fairer by placing a greater tax burden on those more capable of paying, while easing the load on lower-income earners.

Incorrect Options:

  1. Proportional – The tax rate is constant, no matter how much the taxable base increases (same percentage for all).

  2. Regressive – The tax rate decreases as the taxable base increases, so lower-income people pay a higher proportion of their income.

  3. Digressive – The tax rate increases initially but then levels off or decreases for higher incomes; it's a mix between progressive and regressive.