Question

Which of the following is a direct tax?
$
  {\text{A}}{\text{. Exclusive}} \\
  {\text{B}}{\text{. Sales Tax}} \\
  {\text{C}}{\text{. Income Tax}} \\
  {\text{D}}{\text{. None of these}} \\
$

Answer 1

Hint: To determine the answer we read the definitions of each of the options and verify if they come under the category of direct tax.

Complete step-by-step answer:

Tax-exclusive- This refers to the amount of tax paid as a proportion of the pretax value of whatever is taxed; sales tax rates are typically expressed in tax-exclusive terms.

Sales tax- A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase.

Income tax- Income tax is a direct tax that a government levies on the income of its citizens.

Direct tax- A direct tax is a tax, which is levied on the income or profits of the person who pays it, rather than on goods or services. A direct tax is paid directly by an individual or organization to an imposing entity. A taxpayer, for example, pays direct taxes to the government for different purposes, including real property tax, personal property tax, income tax or taxes on assets.

Therefore, income tax is a direct tax.
Hence, option C is correct.

Note: In order to solve questions of this type the key is to understand the definition of a direct tax, and the others given in the options and then figure out what fits into the category of direct tax. That way we determine the answer.