Question

Consider the following statements
1. Production Tax is Independent of goods produced
2. Product Tax is dependent on the goods produced
Which of the above are correct?

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. None of the above

Answer 1

The correct option is C Both 1 and 2

Production taxes or production subsidies are paid or received with relation to production and are independent of the volume of actual production. Some examples of production taxes are land revenues, stamps and registration fees and tax on profession.Product taxes are paid on the actual volume of production. It is paid per unit of product. For example, excise duty, service tax, sales tax etc.