Question

Which of the following statements is correct regarding the collection of income and corporate tax in India?

• A. Both income and corporate tax are collected by the central government.
• B. Both income and corporate tax are collected by the state governments.
• C. Income tax is collected by the central government, while the corporate tax is collected by the state governments.
• D. Income tax is collected by the state governments, while the corporate tax is collected by the central government.

Answer 1

The correct option is A Both income and corporate tax are collected by the central government.

Income tax and corporate tax are direct taxes, as they are paid directly by the one on whom the tax is imposed. The Income Tax Act of 1961 empowers the central government to collect income and corporate taxes from the citizens and companies, respectively.