Which of the following is an indirect tax in India?

Question

Read the passage below and answer the question:

The Goods and Services Tax (GST) represents a significant reform in India's indirect taxation system. Introduced nationwide from July 1^st, 2017, its primary aim was to replace a multitude of central and state-level indirect taxes, such as excise duty, service tax, and VAT. The core objectives behind this transition included mitigating the cascading effect of taxes and creating a unified national market. GST is designed as a comprehensive tax levied on the supply of goods and services, with the tax burden ultimately borne by the final consumer. The system operates under a dual structure, involving both the central government (CGST) and state governments (SGST) concurrently. For transactions occurring between different states, an Integrated GST (IGST) mechanism is in place. The framework is based on the principle of a destination-based consumption tax and incorporates an Input Tax Credit (ITC) mechanism. This reform intends to simplify the tax structure and enhance efficiency in the economy.

Answer 1

Step 1: Recall the direct versus indirect tax distinction.
A direct tax is paid straight to the government by the person on whom it is levied, while an indirect tax is collected through the price of goods and services.
Step 2: Classify the other options.
Income tax, wealth tax, and property tax are all charged directly on a person's income or property, making them direct taxes.
Step 3: Identify the indirect tax.
Goods and Services Tax is added to the price of goods and services and collected from the seller who passes on the burden, making it an indirect tax.
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Which of the following is an indirect tax in India?

Show Hint

The Correct Option is C

Solution and Explanation

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