Disadvantages of Indirect Taxes Quiz

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What is one of the advantages of indirect taxes?

Causing a concentration of wealth in a few hands

Increasing unemployment rates

Creating regional disparities

Revenue generation (correct)

Which of the following is NOT a purpose or effect of taxation?

Increasing unemployment rates (correct)

Preventing concentration of wealth in a few hands

Redistributing wealth for common goods

Boosting the economy

How do indirect taxes help in reducing regional disparities?

By funding infrastructural developments in all regions equally

By concentrating wealth in a few regions

By removing regional disparities (correct)

By increasing unemployment rates in specific regions

Why are goods and services considered essential in an economy?

To fulfill consumer requirements and provide utility Signup and view all the answers

What is one of the disadvantages of indirect taxes?

Concentrating wealth in a few hands Signup and view all the answers

How does taxation help prevent the concentration of wealth in a few hands?

By redistributing wealth for common goods Signup and view all the answers

What is one advantage of Indirect taxes mentioned in the text?

They are collected at the time of making a purchase. Signup and view all the answers

Why are indirect taxes considered convenient?

They are only collected at the time of making purchases. Signup and view all the answers

How do indirect taxes relate to the costs of products and services?

They are directly related to the costs of products and services. Signup and view all the answers

Which group is exempt from income tax according to the text?

Those who earn less than Rs.2.5 lakh p.a. Signup and view all the answers

What is an implication of indirect taxes being easy to collect?

Authorities do not worry about their collection. Signup and view all the answers

Why do high-income earners contribute more through indirect taxes?

Because indirect taxes relate directly to costs of products and services. Signup and view all the answers

What is the purpose of charging lower rates of tax on basic necessities and higher rates on luxury items?

To ensure equitable contributions based on people's ability to pay Signup and view all the answers

What is a disadvantage of Indirect taxes related to cumulativeness?

Middlemen can charge their own service tax, increasing overall product prices Signup and view all the answers

How can Indirect taxes be regressive in nature according to the text?

Both poor and rich individuals pay the same amount for certain goods Signup and view all the answers

Why is Indirect Tax considered not industry friendly according to the text?

Taxes on raw materials increase the cost of production for industries Signup and view all the answers

What happened to different types of indirect taxes in India after the implementation of GST?

They were bundled into one singular tax under GST Signup and view all the answers

What is the purpose of Excise Duty in India according to the text?

To levy a tax on goods manufactured in India Signup and view all the answers