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If the ratio of indirect taxes to subsidies is 3:5 and net indirect taxes are negative ₹80 crore then what are subsidies?

Answer and explanation

Correct answer: ₹200 crore

Use NIT = indirect taxes − subsidies. With the ratio 3:5, let taxes = 3x and subsidies = 5x. Then NIT = 3x − 5x = −2x. Since NIT is −₹80 crore, −2x = −80, giving x = ₹40 crore. Subsidies are therefore 5x = ₹200 crore, so option C is correct. The other choices do not preserve both the 3:5 ratio and the negative net amount.

Related tags

Negative Net Indirect TaxesIndirect TaxesSubsidiesRatioNational IncomeGdp And WelfareNational Income And Related AggregatesEconomics

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