Practicing Success
Net Indirect tax refers to : |
Indirect tax + subsidies Indirect tax - subsidies Indirect tax × subsidies Indirect tax ÷ subsidies |
Indirect tax - subsidies |
The correct answer is option (2) : Indirect tax - subsidies The reason Net Indirect Tax is defined as "Indirect tax - Subsidies" is as follows: 1. Indirect Tax: Indirect taxes are levies imposed by the government on the production and sale of goods and services. They include taxes like the Goods and Services Tax (GST), excise duty, customs duty, and others. These taxes add to the cost of goods and services, and consumers end up paying more for products as a result of indirect taxes. 2. Subsidies: Subsidies are financial assistance provided by the government to reduce the cost of goods and services. They are often given to support specific sectors or to make essential items more affordable for consumers. Subsidies help lower the final price of products. When we add indirect taxes and subtract subsidies from the equation, it helps us access the net effect of these fiscal policies on the economy. The "Net Indirect Tax" reflects the overall financial impact on consumers and businesses, considering both the cost-increasing effect of indirect taxes and the cost-reducing effect of subsides. |