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Taxation and Types of Taxes

Are the follo...

Question

Are the following a part of a country's 'net domestic product at market price'? Explain.
(i) Net indirect taxes
(ii) Net exports
(iii) Net factor income from abroad
(iv) Consumption of fixed capital.

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Solution

(i) Yes, net indirect taxes will be included because market price $=$ Factor cost $+$ Net indirect taxes.
(ii) Yes, net exports (a component of expenditure method) will be included as It includes goods an services produced within the domestic territory of a country.
(iii) No, it will not be included as $N D P_{M P}$ is confined to domestic product only
(iv) No, it will not be included because Net Domestic Product $=$ Gross Product $-$ Consumption of Fixed Capital.

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Particulars	Rs. in crores
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(v) Subsidies	$20$
(vi) Corporation tax	$120$
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(viii) Dividends	$80$
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(x) Social security contribution by employers	$200$
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(i)	Compensation of employees	700
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(iv)	Net exports	(-) 15
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(vi)	Net indirect taxes	60
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(viii)	Rent	200
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