Podcast
Questions and Answers
Which of the following is not a characteristic of a regressive tax system?
Which of the following is not a characteristic of a regressive tax system?
- It places a greater burden on lower-income individuals
- Lower-income individuals pay a higher proportion of their income in taxes
- Higher-income individuals pay a higher proportion of their income in taxes (correct)
- The tax rate decreases as the amount subject to taxation increases
What is the main purpose of a consumption tax?
What is the main purpose of a consumption tax?
- To encourage savings and investment (correct)
- To generate revenue for the government
- To distribute the tax burden equally among all income levels
- To discourage spending and boost the economy
Which of the following is an example of a 'toll tax'?
Which of the following is an example of a 'toll tax'?
- Gasoline tax used to maintain roads and bridges (correct)
- Sales tax on luxury goods
- Corporate income tax on business profits
- Property tax levied on homeowners
What is the impact of 'bracket creep' on taxpayers?
What is the impact of 'bracket creep' on taxpayers?
Who introduced the first modern Income Tax in India?
Who introduced the first modern Income Tax in India?
When was the Income Tax Act enacted in India?
When was the Income Tax Act enacted in India?
What is the main focus of the Income Tax Act 1961?
What is the main focus of the Income Tax Act 1961?
What are the different sources of income mentioned in the Income Tax Act 1961?
What are the different sources of income mentioned in the Income Tax Act 1961?
What is the main objective of taxation?
What is the main objective of taxation?
Which of the following is not an objective of taxation mentioned in the text?
Which of the following is not an objective of taxation mentioned in the text?
What is the primary objective of taxation?
What is the primary objective of taxation?
How can the state discourage consumption of harmful goods?
How can the state discourage consumption of harmful goods?
What is a common way to regulate production through taxation?
What is a common way to regulate production through taxation?
How is economic development measured?
How is economic development measured?
What is the Indian household savings rate?
What is the Indian household savings rate?
What is the definition of 'Assessment' in the context of income tax?
What is the definition of 'Assessment' in the context of income tax?
Who is considered an 'Assessee' under the income tax act?
Who is considered an 'Assessee' under the income tax act?
What is the definition of 'Income' according to the Sec.2 (24)?
What is the definition of 'Income' according to the Sec.2 (24)?
When is the taxpayer's income assessed for tax purposes?
When is the taxpayer's income assessed for tax purposes?
Who is considered a 'Person' according to Sec.2 (7)?
Who is considered a 'Person' according to Sec.2 (7)?
Flashcards
Regressive Tax System Feature
Regressive Tax System Feature
A tax system where lower-income individuals pay a higher percentage of their income in taxes.
Consumption Tax Purpose
Consumption Tax Purpose
To encourage savings and investment by reducing the cost of consuming goods.
Toll Tax Example
Toll Tax Example
A tax on gasoline, used to maintain roads and bridges.
Bracket Creep Impact
Bracket Creep Impact
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Indian Income Tax Introducer
Indian Income Tax Introducer
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Income Tax Act Enactment Year
Income Tax Act Enactment Year
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Income Tax Act 1961 Focus
Income Tax Act 1961 Focus
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Income Tax Sources
Income Tax Sources
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Taxation Main Objective
Taxation Main Objective
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Non-Taxation Objective
Non-Taxation Objective
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Assessment (Income Tax)
Assessment (Income Tax)
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Assessee Definition
Assessee Definition
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Income (Sec. 2(24))
Income (Sec. 2(24))
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Taxpayer Income Assessment Time
Taxpayer Income Assessment Time
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Person (Sec. 2(7))
Person (Sec. 2(7))
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Discouraging Harmful Goods
Discouraging Harmful Goods
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Regulating Production Through Taxation
Regulating Production Through Taxation
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Economic Development Measurement
Economic Development Measurement
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Indian Household Savings Rate
Indian Household Savings Rate
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Study Notes
Taxation Characteristics
- A regressive tax system is not characterized by a proportionate tax rate that increases with income.
Consumption Tax
- The main purpose of a consumption tax is to tax goods and services at the point of sale.
Toll Tax
- A toll tax is exemplified by a tax on the use of roads or bridges.
Bracket Creep
- Bracket creep occurs when taxpayers are pushed into higher tax brackets due to inflation, increasing their tax liability.
Income Tax History
- The first modern Income Tax in India was introduced by James Wilson in 1860.
- The Income Tax Act was enacted in India in 1961.
Income Tax Act 1961
- The main focus of the Income Tax Act 1961 is to consolidate and amend the laws related to income tax.
- The Act mentions five heads of income: Salaries, Income from House Property, Profits and Gains of Business or Profession, Capital Gains, and Income from Other Sources.
Objectives of Taxation
- The primary objective of taxation is to raise revenue for the government.
- One objective of taxation is to discourage consumption of harmful goods by imposing higher taxes.
- A common way to regulate production through taxation is by imposing higher taxes on undesirable goods.
- Economic development can be measured through indicators such as GDP per capita.
Indian Economy
- The Indian household savings rate is relatively high.
Income Tax Definitions
- Assessment in the context of income tax refers to the process of determining the tax liability of a taxpayer.
- An Assessee is any person or entity whose tax liability is being assessed.
- Income, according to Sec.2 (24), includes dividends, capital gains, and profits from business or profession.
- A taxpayer's income is assessed for tax purposes at the end of the financial year.
- A Person, according to Sec.2 (7), includes an individual, Hindu Undivided Family, firm, local authority, company, or trust.
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Description
Test your knowledge of income tax law and accounts unit 1 with this multiple-choice quiz. Answer questions about regressive tax system, consumption tax, toll tax, and bracket creep.
