Which one of the following is the correct statement? Service Tax is a/an

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Q: 149 (IAS/2006)
Which one of the following is the correct statement? Service Tax is a/an

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,101,109,45,101,25,39

keywords: 

{'service tax': [1, 0, 2, 0], 'indirect tax': [0, 0, 1, 0], 'direct tax': [0, 0, 0, 1], 'statement government': [0, 0, 1, 0], 'state government': [0, 0, 1, 0], 'central government': [1, 0, 0, 1], 'correct statement': [0, 0, 5, 6]}

A Service Tax is, indeed, an indirect tax levied by the Central Government, which makes option 2 the correct answer. Let`s dissect each option for better understanding:

1) A Direct Tax levied by the Central Government: This is incorrect because a direct tax is one that the taxpayer is obligated to pay directly to the government and cannot be passed on to someone else. Examples include income tax and property tax.

2) An Indirect Tax levied by the Central Government: This is correct. An indirect tax is one that can be shifted from the person who pays it to others - it could be partially or completely shifted. Service Tax falls under this category as it is imposed on service providers but is typically shifted to the service recipient.

3) A Direct Tax levied by the State Government: This is incorrect as Service Tax is not a direct tax and not levied by state government.

4) An Indirect Tax levied by the State Government: This is incorrect because Service Tax is levied by the Central Government, not the state government.