ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Federal income taxes are collected by the federal government, while state income taxes are collected by the individual state(s) in which a taxpayer lives and earns income.

Detailed explanation-2: -Income Tax: This is the tax that is levied on the annual income or the profits which is directly paid to the government. Everyone who earns any kind of income is liable to pay income tax. For individuals below 60 years of age, the tax exemption limit is Rs. 2.5 lakh per annum.

Detailed explanation-3: -Taxes are used by the government for carrying out various welfare schemes including employment programmes. There are Lakhs of employees in various departments and the administrative cost has to be borne by the Government.

Detailed explanation-4: -A direct tax can be defined as a tax that is paid directly by an individual or organization to the imposing entity (generally government). Whereas, Indirect taxes are basically taxes that can be passed on to another entity or individual.

Detailed explanation-5: -individual income tax is the federal government’s biggest source of revenue. About 50 cents of every dollar the government collects come from this source.