Which of the following statement/statements are true?
Statement I: Corporation tax is a direct tax.
Statement II: Revenue deficit is that in which revenue receipts are more than revenue expenditure.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is true and Statement II is false
Statement I: Corporation tax is a direct tax. — True. Firms pay it themselves on their profits, so it is a direct tax.
Statement II: Revenue deficit is that in which revenue receipts are more than revenue expenditure. — False. A revenue deficit is the excess of revenue expenditure over revenue receipts.
NCERT (2026-27): “5.1.2 Classification of Receipts … Tax revenues, an important component of revenue receipts, have for long been divided into direct taxes (personal income tax) and firms (corporation tax) …” “5.2.1 Measures of Government Deficit … Revenue Deficit: The revenue deficit refers to the excess of government’s revenue expenditure over revenue receipts” |