Which of the following is an example of an Indirect Tax?
(a) Income Tax
(b) Corporate Tax
(c) Goods and Services Tax (GST)
(d) Wealth Tax

Question

Accepted Answer

An indirect tax is a tax whose impact (who initially pays it) and incidence (who ultimately bears its burden) fall on different persons, because the burden can be shifted through the price of a good or service.

**Option-by-option analysis:**

- (a) Income Tax — incorrect; this is a direct tax on an individual's income, which cannot be shifted to another person.
- (b) Corporate Tax — incorrect; this is a direct tax on a company's profits, borne by the company itself.
- (c) Goods and Services Tax (GST) — correct; GST is levied on the supply of goods and services, and sellers pass its burden on to the final consumer through the price charged — a textbook indirect tax.
- (d) Wealth Tax — incorrect; a tax on an individual's wealth is a direct tax, non-shiftable.

> [!ANSWER]
> Option (c) Goods and Services Tax (GST) is correct — it is an indirect tax whose burden is shifted to the final consumer.

Type	Meaning	Examples
Direct tax	Impact and incidence fall on the same person; burden cannot be shifted	Personal income tax, corporate tax, wealth tax
Indirect tax	Levied on goods and services; burden can be shifted to the final consumer	GST, customs duty, excise duty

Q.Which of the following is an example of an Indirect Tax?

Concept understanding — Public Revenue — Tax and Non-Tax Revenue

Q.Which of the following is an example of an Indirect Tax?

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