The question asks why indirect taxes like GST are considered regressive. A regressive tax is one where the tax burden falls disproportionately on lower-income individuals compared to higher-income individuals. We need to evaluate each option based on this definition.
C) The same tax rate on a good takes up a larger proportion of income for a poorer person than for a wealthier person
This statement accurately describes why indirect taxes are considered regressive. Since the tax amount on a specific good is fixed regardless of the buyer's income, it constitutes a higher percentage of income for those with lower incomes, thereby placing a heavier relative burden on them.
The question asks for the economic concept that describes who ultimately bears the real burden of a tax, as distinct from who initially pays it to the government. We need to identify the term that refers to this final distribution of the tax burden.
Correct Option: D) Incidence of tax
The incidence of tax refers to the economic burden of a tax, indicating who ultimately pays the tax, regardless of who is legally responsible for remitting it to the government. This concept is crucial in understanding the true impact of taxation on different economic agents.
The question asks to identify the term for the legal and planned use of tax law provisions to minimize tax liability. This involves understanding the distinctions between various terms related to tax practices.
Correct Option: B) Avoidance — Tax avoidance is the legal utilization of the tax regime to one's own advantage to reduce the amount of tax that is payable by means that are within the law. It involves taking advantage of loopholes, deductions, and exemptions provided in the tax laws.
The question asks to identify the term for the illegal act of not paying legally due taxes by concealing income or falsifying records. We need to understand the definitions of the given options in the context of taxation.
C) Evasion — Tax evasion is the illegal practice of not paying taxes that are legally due. It involves deliberate misrepresentation of financial information to the tax authorities, such as concealing income or falsifying records, to reduce or eliminate tax liability. This definition perfectly matches the scenario described in the question.
The question asks for the best description of 'tax buoyancy'. We need to understand the definition of tax buoyancy and distinguish it from related but different economic concepts.
Correct Option: B) The responsiveness of tax revenue to changes in national income, including the effect of discretionary changes in tax policy
The question asks about the fundamental principle laid down by Article 265 of the Constitution of India. To answer this, we need to recall the specific provision of Article 265.
Correct Option: A) No tax shall be levied or collected except by authority of law