Question

Which of the following contributes to the highest share of revenue earned by the Government of India?

• A. Income Tax
• B. Excise Duty
• C. Value Added Tax
• D. Corporate Tax

Hint:

Think about which tax on company profits outweighs personal income tax in central government collections.

Answer 1

The Correct Option is D

The correct answer is Corporate Tax.

Corporate tax is the tax charged on the profits earned by companies. Among all the taxes collected by the Union Government, it has stood as the single largest contributor to gross tax revenue for many years, including around 2010. This is because company profits, especially from large public and private firms, form a bigger taxable pool than what personal income tax collects from individual salaried and business taxpayers.

Income Tax, the tax on individual earnings, brings in a smaller amount than corporate tax. Excise Duty is an indirect tax charged on goods manufactured within the country, and its share of central revenue is also lower than corporate tax. Value Added Tax is not even a central government tax at all, it is levied and collected by state governments on the sale of goods inside that state, so it plays no role in Union government revenue.

Because of this, Corporate Tax, not Income Tax, Excise Duty or VAT, brings in the highest share of revenue for the Government of India.