Question

Which of the following advantageous features is common in direct tax and indirect tax?

• A. Wide in scope
• B. Certainty
• C. Elasticity
• D. Convenient

Answer 1

The correct option is C

Elasticity

Direct taxes are elastic in nature as the government revenue can be increased by raising the tax rates in times of crisis. Indirect taxes can be made elastic and productive, particularly when they are imposed on essential goods such as edible oils whose demand is inelastic.