Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

The government increased the tax rates, which of the following can be the reason for the same?

Options:

To extract money from the citizens

To ensure equality in income distribution 

To make black money into white money

All of the above

Correct Answer:

To ensure equality in income distribution 

Explanation:

India follows a progressive system of taxation, which means higher tax rates to higher income people. This is done to promote equal distribution of income among the people. Government collect the tax from rich and exempt the poor from income tax. Thus, the money collected is spent on providing free services to the poor.