Indian Taxation System

Option (2) is the correct answer.

Corporation tax is a direct tax levied, collected and appropriated by the Union or the central government. No part of this tax can be assigned to the states.

Progressive taxation is a process in which, when the income of a person increases, rate of income tax on the income also goes up. Regressive taxation is the process according to which, when the income of a person goes up, rate of tax goes down. A progressive tax structure improves the distribution of income.

Sales tax is an indirect tax because it is levied on goods and services, and the economic burden can be shifted from the seller to the consumer through higher prices. In contrast, gift tax and wealth tax are direct taxes where the person paying the tax cannot shift the burden to another person.

Direct taxes are levied directly on individuals or organizations' income or wealth. Income tax is the most common example of a direct tax, where taxpayers pay directly to the government based on their earnings. Import duty and customs duty are indirect taxes because they are collected through intermediaries when goods are imported.

Customs Duty is NOT a direct tax - it is an indirect tax levied on imported and exported goods. Direct taxes (like Income Tax, Wealth Tax, and Capital Gains Tax) are paid directly by individuals or entities to the government. Indirect taxes are collected through intermediaries.

EASeR is developed by RBI Bangalore for electronic payment through internet bank accounts for the payment of taxes.

Fringe Benefits Tax(FBT) was the tax applied to most, although not all, fringe benefits. A new tax was imposed on employers by India’s Finance Act 2005 and was introduced for the financial year commencing April 1, 2005. The Fringe Benefit Tax was abolished in the Finance Bill of 2009. Securities Transaction Tax (STT) is the tax payable on the value of taxable securities transaction. STT was introduced in India by the 2004 budget and is applicable with effect from 1^st October 2004. Interest Tax is a special tax imposed on interest accrued in specified cases. 

Personal income tax is treated as personal expenses & charged to capital.

The sentence refers to ending a tax. 'Abode' means a home or residence. 'Abound' means to exist in large numbers. 'Abolished' means to officially end or do away with something, especially a law, tax, or system. 'Aborted' means to end prematurely, usually a process or pregnancy. 'Abolished' is the standard and correct term for ending a tax.

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.

A progressive tax imposes a higher percentage rate on higher income brackets - the tax rate increases as income rises. This is different from a flat tax (same percentage for everyone) or a regressive tax (higher percentage on lower incomes). Options A and D describe flat/regressive systems incorrectly.

An indirect tax can be levied on commodities (goods like GST on products), services (service tax), and imported goods (customs duty). Since indirect taxes apply to all these categories, 'all of the above' is the correct answer. Indirect taxes are collected by intermediaries (sellers) from the actual burden-bearers (consumers) and passed on to the government.

The ability-to-pay approach to taxation fulfills both horizontal equity (equals should be taxed equally) and vertical equity (unequals should be taxed unequally). This principle states that those with greater ability to pay (higher income/wealth) should bear a larger tax burden. The benefit approach taxes based on benefits received, while expediency and socio-political approaches don't systematically address equity.

Direct taxes are those where the burden cannot be shifted to someone else - the person paying the tax bears the final burden. Income tax is a classic example of direct tax as it is levied directly on individuals and cannot be passed on. Entertainment tax and sales tax are indirect taxes - their burden can be shifted to consumers through higher prices.