Which of the following is a direct tax collected by the government?
Show answer & explanation
Correct answer: B
Explanation
Correct Answer
Income Tax
Explanation
Income Tax is a prime example of a direct tax collected by the government. A direct tax is a type of tax that is levied straight on an individual's or entity's income, salary, or wealth, and it cannot be shifted or passed onward to someone else. The person or organization responsible for earning the income is legally obligated to pay this tax directly to the government authority.
On the other hand, Goods and Services Tax (GST), Customs Duty, and Excise Duty are classified as indirect taxes. These are imposed on goods, manufacturing processes, or services, and the financial burden of the tax is ultimately shifted to the final consumer purchasing the product.
Key Points
In India, direct taxes are administered and regulated under the supervision of the Central Board of Direct Taxes (CBDT). Corporate Tax, which is levied on the net profits of domestic and foreign companies, is also another prominent form of direct tax. Indirect taxes are overseen by a separate apex body known as the Central Board of Indirect Taxes and Customs (CBIC).
Important Questions and Answers
Question: Which statutory authority functions as the apex body for the administration of direct taxes in India?
Answer: Central Board of Direct Taxes (CBDT).
Question: What type of tax is levied on the entry of goods into a country from international borders, and under which category does it fall?
Answer: Customs Duty, which is an indirect tax.