Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes

Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Short Questions – Q.10 Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes.

Solution:-

The basis of classifying between direct tax and indirect tax is burden to pay. In other words, in case of direct taxes burden to pay tax cannot be shifted but in case of indirect taxes burden to pay tax can be shifted. For example, income tax is a direct tax as it is levied and burden to pay lies on the same person whereas GST is an indirect tax because it is levied on businesses but the burden to pay lies on the customer or consumer.

Short Questions – Sandeep Garg Macroeconomics Class 12 Solutions Government budget and the Economy

• State three objectives of a government budget
• Explain objective of stability of prices of government budget
• How can a government budget help in reducing inequalities reducing inequalities of income? Explain.
• Explain the ‘allocation of resources’ objective of Government budget.
• What is a government budget? Name two sources each of non-tax revenue receipts and capital Receipts.
• What is a government budget? Give the meaning of: (a) Revenue deficit; (b) Fiscal deficit.
• What are the two broad divisions of receipts of the government budget? Name two sources of each kind of receipt.
• Define tax revenue. What are the two kinds of tax revenues? Give two examples of each.
• Distinguish between Direct Tax and Indirect Tax
• Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes
• Distinguish between revenue receipts and capital receipts
• Give meanings of Capital receipts and Revenue receipts with an example of each.