If indirect taxes are ₹600 crore and subsidies are ₹200 crore, what will be the net indirect taxes?
Answer and explanation
Correct answer: ₹400 crore
Net indirect taxes are calculated as indirect taxes minus subsidies. Thus, net indirect taxes = ₹600 crore − ₹200 crore = ₹400 crore. Option B is correct. ₹600 crore is only the gross indirect-tax amount; subtracting the subsidy gives the net figure. Adding the two amounts would incorrectly treat subsidies as an additional tax burden, producing the distractor ₹800 crore.
Frequently asked questions
What is the correct answer to this question?
₹400 crore
Why is this the correct answer?
Net indirect taxes are calculated as indirect taxes minus subsidies. Thus, net indirect taxes = ₹600 crore − ₹200 crore = ₹400 crore. Option B is correct. ₹600 crore is only the gross indirect-tax amount; subtracting the subsidy gives the net figure. Adding the two amounts would incorrectly treat subsidies as an additional tax burden, producing the distractor ₹800 crore.
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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