Assertion (A): Under excise taxes, necessities of life are exempted or taxed at low rates, while luxuries are taxed heavily.
Reason (R): Excise taxes are duties levied on goods imported into the country.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) is true but (R) is false.
Assertion (A): Under excise taxes, necessities of life are exempted or taxed at low rates, while luxuries are taxed heavily. — True. Comforts and semi-luxuries are taxed moderately in between.
Reason (R): Excise taxes are duties levied on goods imported into the country. — False. Excise taxes are levied on goods produced within the country. Taxes on imports are customs duties.
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. …” |