What is the difference between tax incidence and tax impact?

Tax incidence differs from tax impact.

• Incidence shows tax imposition point.

• Impact reflects economic effects.

Fill in the blank: A good tax system should prioritize ___, efficiency, administrative simplicity, flexibility, and transparency.

Fairness

True or False: Indirect taxes are paid directly by the individual who bears the burden of the tax.

False. Indirect taxes are imposed on producers or traders, and the burden is ultimately passed on to consumers.

Explain the concept of progressive taxation and provide an example.

Progressive taxation increases with income.

• Tax rates rise with income.

• Wealthier individuals pay more.

• Example: Indian income tax system.

What is the primary purpose of implementing Value Added Tax (VAT)?

VAT aims to improve tax efficiency.

• Reduces tax on final prices.

• Minimizes tax burden on consumers.

• Enhances government revenue collection.

Fill in the blank: The Goods and Services Tax (GST) aims to create a ___ market across India.

Single

True or False: The Minimum Alternate Tax (MAT) is imposed on companies that show zero taxable income.

True.

Describe the relationship between tax expenditure and government incentives.

Tax expenditure impacts government incentives.

• Reduces tax revenue for programs.

• Encourages investments in targeted areas.

• Promotes social and economic goals.

Fill in the blank: The Commodities Transaction Tax (CTT) is aimed at discouraging ___ in the commodities market.

Excessive speculation

What is the significance of administrative simplicity in a tax system?

Administrative simplicity is crucial.

• Reduces compliance costs effectively.

• Encourages timely tax payments.

• Minimizes tax evasion risk.

Explain the importance of transparency in a tax system.

Transparency builds trust in tax systems.

• Clarity for taxpayers' obligations.

• Assurance of proper public service funding.

• Encourages compliance and reduces evasion.

Fill in the blank: The Corporate Tax Reform in India was influenced by global trends to attract ___ and create jobs.

Investment

What are the potential benefits of the Goods and Services Tax (GST) implementation for India's economy?

GST benefits India's economy significantly.

• Simplifies tax compliance process.

• Boosts ease of doing business.

• Potentially increases GDP growth.

Describe how technology is used to improve tax administration in India.

Technology enhances India's tax system.

• Streamlines tax processes efficiently.

• Increases transparency in assessments.

• Reduces bias, enhances fairness.

Fill in the blank: The tax to GDP ratio in India is considered ___ compared to global standards.

Low

What are the challenges faced in enhancing tax compliance in India?

Enhancing tax compliance faces key challenges.

• Low tax base limits revenue.

• Taxpayer awareness is insufficient.

• Technical glitches hinder process.

Fill in the blank: The incidence of tax refers to the point where tax is ___, while the impact of tax refers to the point where tax makes its ___ felt.

Imposed; effect

True or False: Progressive taxation involves decreasing rates of tax for increasing income levels.

False; Progressive taxation involves increasing rates of tax for increasing income levels.