Economics · Indian Economy and Taxation
Which of the following accurately describes India's practical mixed system approach to balancing equity and simplicity in its taxation framework?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It relies exclusively on progressive indirect taxation to redistribute income while eliminating direct taxes to encourage entrepreneurship and savings.
- 2It employs a purely flat tax system across all direct and indirect taxes to ensure tax neutrality and prevent the distortion of economic decisions.
- 3It strictly applies proportional direct taxes to minimize compliance costs for higher-income groups while heavily relying on progressive indirect taxes for revenue generation.
- 4It utilizes progressive direct taxes, such as income tax, to achieve social equity, while implementing proportional indirect taxes to maintain administrative simplicity.✓
Correct answer
It utilizes progressive direct taxes, such as income tax, to achieve social equity, while implementing proportional indirect taxes to maintain administrative simplicity.
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