Which of the following is an example of direct tax?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Income Tax.
- Income Tax is an example of a direct tax.
- A direct tax is levied directly on the income, wealth, or property of an individual or entity.
- Income tax is paid directly by the individual or organization on their earnings.
- Unlike indirect taxes like custom duty or GST, which are paid indirectly through goods and services, direct taxes are paid directly to the government based on income or property.
- This ensures that the tax burden is directly related to the taxpayer’s financial condition.