Multiple choice

In which of the following cases, can the impact and incidence of excise duty levied on cigarettes fall on the same person?

  1. Manufacturer uses the cigarettes for his own consumption.

  2. Manufacturer sells the cigarettes to wholesaler.

  3. Manufacturer sells the cigarettes directly to the consumer.

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

It is when manufacturer uses the cigarettes for his own consumption. When the manufacturer uses the cigarettes for his own consumption, he has to pay the excise duty to the government. He can shift the burden of cigarettes to another person only if cigarettes are sold. As the manufacturer is using the cigarettes for his own consumption, the impact and incidence of the tax will fall on one person that is the manufacturer.

Keep practicing — related questions