Q. Which of the following pairs is/are correctly matched?
List A
List B
1. Direct Tax
Securities transaction Tax
2. Indirect Tax
Customs Duty
3. Ad Valorem
Property Tax
4. Specific Tax
Excise duty on Petrol
Select the correct answer using the codes given below:
A
1, 3 and 4 only
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B
1, 2 and 3 only
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C
2, 3 and 4 only
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D
1, 2 and 4 only
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Solution
The correct option is C 2, 3 and 4 only
Explanation:
STT is a tax levied on all transactions done on the stock exchanges. STT is applicable on the purchase or sale of equity shares, derivatives, equity-oriented funds, and equity-oriented Mutual Funds. It is a form of indirect tax. Pair 1 is incorrectly matched
Customs duty refers to the tax imposed on goods when they are transported across international borders. Therefore, it is the tax that is levied on the import and export of goods. It is a form of indirect tax. Pair 2 is correctly matched.
An ad valorem tax is a tax based on the assessed value of an item. That is tax is based on the value of the goods and services. Examples include the GST, property tax, etc. Pair 3 is correctly matched.
A specific tax is a fixed amount of tax based on the quantities of the particular goods sold. Therefore, a specific tax does not vary with the cost of the good and depends on the volume of the items purchased. Examples- Excise duty on petrol. Pair 4 is correctly matched.