Question

Which of the following contributes to the highest share of revenue earned by the Government of India?

• A. Income Tax
• B. Excise Duty
• C. Value Added Tax
• D. Corporate Tax

Hint:

Think about which tax on company profits outweighs personal income tax in central government collections.

Answer 1

The Correct Option is D

Corporate Tax is the answer here.

The Government of India collects money through several channels, and when you rank them by how much each brings in, the tax on company profits, known as corporate tax, comes out on top. Companies operating in India, particularly the larger ones, generate substantial taxable profits, and the tax collected from these profits has historically exceeded what the government collects from taxing individual incomes.

Now look at why the other choices fall short. Income Tax applies to individuals and Hindu Undivided Families, and while it is a major revenue source, its total collection trails behind corporate tax. Excise Duty, an indirect tax on goods made in the country, also contributes a smaller slice of the pie. Value Added Tax is a state-level levy on the sale of goods within a state, meaning it goes to state treasuries rather than the central government, so it cannot even be compared on the same footing as a central revenue source.

Putting it all together, Corporate Tax stands as the biggest revenue earner for the Government of India, making option 4 the right answer.