Question

Net Indirect Taxes = Indirect taxes - Z?

• A. \( Z = \text{Direct Taxes} \)
• B. \( Z = \text{Factor} \)
• C. \( Z = \text{Corporation Tax} \)
• D. None of these

Hint:

Net Indirect Taxes are derived by subtracting direct taxes from indirect taxes.

Answer 1

The Correct Option is A

Step 1: Understanding net indirect taxes.
Net Indirect Taxes are calculated by subtracting direct taxes from indirect taxes. Indirect taxes are taxes such as VAT, sales tax, and excise duties, while direct taxes are income tax, corporate tax, etc. The term "Z" in the equation refers to direct taxes.

Step 2: Analyzing the options.
(A) \( Z = \text{Direct Taxes} \): Correct. Direct taxes are subtracted from indirect taxes to compute net indirect taxes.
(B) \( Z = \text{Factor} \): This is incorrect, as "factor" refers to the inputs used in production and is not related to taxes in this context.
(C) \( Z = \text{Corporation Tax} \): Corporation tax is a form of direct tax but does not specifically explain "Z" in the equation.
(D) None of these: This is incorrect, as option (A) is the correct answer.

Step 3: Conclusion.
The correct answer is (A) \( Z = \text{Direct Taxes} \), as the equation reflects the relationship between indirect taxes and direct taxes.