Read the following statements - Assertion (A) and Reason (R):
Assertion: Government deficit can be reduced by an increase in taxes or reduction in expenditure.
Reasoning: In India, the government has been trying to increase tax revenue with greater reliance on indirect taxes .
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 3
The correct answer is option 3: Assertion (A) is true but Reason (R) is false.
Assertion: Government deficit can be reduced by an increase in taxes or reduction in expenditure. This is correct.
Reasoning: In India, the government has been trying to increase tax revenue with greater reliance on indirect taxes. This is incorrect. In India, the government has been trying to increase tax revenue with greater reliance on direct taxes (indirect taxes are regressive in nature – they impact all income groups equally).