Consider the following statements about excise taxes in India:
(A) Necessities of life are exempted or taxed at low rates.
(B) Comforts and semi-luxuries are moderately taxed.
(C) Luxuries, tobacco and petroleum products are taxed heavily.
(D) Excise taxes are duties levied on goods imported into the country.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B) and (C) only
Excise taxes are duties on goods produced within the country. Their rates rise from necessities to luxuries.
(A) Necessities of life are exempted or taxed at low rates. — Correct. This keeps the tax light on what everyone needs.
(B) Comforts and semi-luxuries are moderately taxed. — Correct. They carry a middle rate.
(C) Luxuries, tobacco and petroleum products are taxed heavily. — Correct. These carry the highest rates.
(D) Excise taxes are duties levied on goods imported into the country. — Incorrect. Taxes on imports and exports are customs duties. Excise is on goods made within the country.
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), and indirect taxes like excise taxes (duties levied on goods produced within the country), customs duties (taxes imposed on goods imported into and exported out of India) … With respect to excise taxes, necessities of life are exempted or taxed at low rates, comforts and semi-luxuries are moderately taxed, and luxuries, tobacco and petroleum products are taxed heavily. …” |