Question

Direct tax is called direct because it is collected directly from?

• A. from producers on goods produced
• B. from sellers on goods sold
• C. from buyers of goods
• D. from income earners

Hint:

Income tax, wealth tax, and property tax are examples of direct taxes, where the taxpayer directly bears the burden of the tax.

Answer 1

The Correct Option is D

Step 1: Understanding Direct Taxes:
A direct tax is a tax that is directly levied on an individual or organization. It is collected directly from the taxpayer’s income or wealth.
Step 2: Analyzing Options:
- From producers on goods produced: This refers to taxes like sales tax, which is indirect and not directly levied on producers.
- From sellers on goods sold: Again, this is an indirect tax like VAT, not a direct tax.
- From buyers of goods: Taxes collected from buyers (like sales tax) are indirect taxes, as they are not levied directly on the buyer’s income or wealth.
- From income earners: Direct taxes like income tax are collected directly from individuals or corporations based on their income.
Step 3: Conclusion:
Direct taxes are collected from income earners, making option (D) the correct answer.