Question

Which of the following best describes the principle of

Q: Answer-Which of the following best describes the principle of 'Ability to Pay' in taxation?

Explanation The Ability to Pay principle is a fundamental concept in taxation which states that taxes should be levied based on an individuals ability to bear the financial burden. This means higher-income earners should contribute more because they can afford to, ensuring fairness and equity in the tax system. It forms the basis of progressive taxation.

"Ability to Pay" in taxation?

A Tax should be levied equally on all individuals.

B Those who receive more government benefits should pay more tax.

C Tax burden should be shared equally, irrespective of income.

D Individuals should be taxed according to their capacity to bear the burden.

E Tax should be levied only on luxury goods.

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