If the ratio of indirect taxes to subsidies is 5:2 and net indirect taxes are ₹150 crore then what are indirect taxes?
Answer and explanation
Correct answer: ₹250 crore
Net indirect taxes are defined as indirect taxes minus subsidies: NIT = IT − S. Let indirect taxes and subsidies be 5x and 2x respectively. Their difference is 3x = ₹150 crore, so x = ₹50 crore. Therefore, indirect taxes = 5x = 5 × 50 = ₹250 crore. Option C is correct. ₹100 crore represents neither the stated tax amount nor the required ratio, while ₹375 crore incorrectly treats the full ratio total as the tax.
Frequently asked questions
What is the correct answer to this question?
₹250 crore
Why is this the correct answer?
Net indirect taxes are defined as indirect taxes minus subsidies: NIT = IT − S. Let indirect taxes and subsidies be 5x and 2x respectively. Their difference is 3x = ₹150 crore, so x = ₹50 crore. Therefore, indirect taxes = 5x = 5 × 50 = ₹250 crore. Option C is correct. ₹100 crore represents neither the stated tax amount nor the required ratio, while ₹375 crore incorrectly treats the full ratio total as the tax.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
