|Which of the following statements is/are true for the Income Tax in India?|
|I. It is a progressive tax|
|II. It is a direct tax|
|III. It is collected by the State Governments|
|IV. It is a proportional tax|
A) Only I is correct
B) I and II are correct
C) I, II and III are correct
D) II, III and IV are correct
Correct Answer: B
Solution :[b] Income taxes are widely viewed as a Progressive tax, meaning the incidence of tax increases as income increases. A progressive tax system (in which the rich pay more than the poor) is one in which direct taxes account for more revenue than indirect taxes (which are on goods and services). In that respect, India's period of supposedly extortionate tax rates produced a most undesirable result because the Centre's next direct tax revenue was barely a fifth of its net indirect tax revenue.
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