If indirect taxes are ₹500 crore and subsidies are ₹100 crore, what will be net indirect taxes?
Answer and explanation
Correct answer: ₹400 crore
Net indirect taxes are found by subtracting subsidies from indirect taxes: NIT = indirect taxes − subsidies = ₹500 crore − ₹100 crore = ₹400 crore. Therefore option B is correct. ₹500 crore is the gross indirect-tax amount, not the net amount. Adding the two figures would incorrectly treat a subsidy as an additional tax instead of an offset.
Frequently asked questions
What is the correct answer to this question?
₹400 crore
Why is this the correct answer?
Net indirect taxes are found by subtracting subsidies from indirect taxes: NIT = indirect taxes − subsidies = ₹500 crore − ₹100 crore = ₹400 crore. Therefore option B is correct. ₹500 crore is the gross indirect-tax amount, not the net amount. Adding the two figures would incorrectly treat a subsidy as an additional tax instead of an offset.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - Market price and factor cost.
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