Multiple choice

Which among the following taxes has been the most elastic source of tax revenue in India?

  1. Excise duty

  2. Service tax

  3. Custom duty

  4. Corporation tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Corporation tax has proven to be the most elastic source of tax revenue in India, meaning its revenue growth responds most strongly to economic growth. As corporate profits rise during economic expansions, corporation tax collections grow faster than GDP. Compared to indirect taxes like excise, customs, and service tax (now GST), corporation tax has shown higher revenue elasticity because profits are more cyclical and sensitive to economic conditions than consumption-based taxes.

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