Correct Option
Taxes are broadly classified into direct and indirect taxes. Direct taxes are levied directly on the income or wealth of individuals and corporations, where the burden cannot be shifted. Indirect taxes are levied on goods and services, and their burden can be shifted from the initial payer to the final consumer.
- Corporation Tax (1) is a direct tax imposed on the profits of companies.
- Customs Duty (2) is an indirect tax levied on goods imported into or exported from a country.
- Wealth Tax (3) was a direct tax imposed on the net wealth of individuals and Hindu Undivided Families (HUF). It has since been abolished in India.
- Excise Duty (4) was an indirect tax levied on the manufacture or production of goods within the country. While most excise duties have been subsumed under the Goods and Services Tax (GST), it continues to be levied on certain products like petroleum products and alcoholic liquor for human consumption.
Based on this classification, Customs Duty (2) and Excise Duty (4) are indirect taxes.
Incorrect Options
Options (a), (c), and (d) are incorrect as they either exclusively include direct taxes or combine direct and indirect taxes incorrectly.
- Option (a) includes only Corporation Tax, which is a direct tax.
- Option (c) includes Corporation Tax and Wealth Tax, both of which are direct taxes.
- Option (d) includes Customs Duty (indirect) and Wealth Tax (direct), thus not exclusively listing indirect taxes.