Assertion & Reason

(A) : The impact and incidence of indirect tax lie on different persons. (R) : Indirect taxes can be avoided by not entering into those transactions, which call for such taxes.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) : Direct Taxes have limited reach. (B) : Direct taxes do not reach all the sections of the economy.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) : Profits of public sector undertakings is a revenue receipt. (R) : Revenue receipts are regular and recurring in nature.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) : Repayment of borrowings is a capital expenditure. (R) : Capital expenditure reduces a liability of the government.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) Fiscal Deficit indicates the total borrowing requirements of the government. (R) : Government mainly borrows from RBI to meet its fiscal deficit.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) Primary Deficit is the root cause of Fiscal Deficit. (R) : High Primary Deficit indicates that interest commitments (on earlier loans) have forced the government to borrow.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) Income tax is a direct tax. (R) : Impact and incidence of Income tax lies on the same person.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) Revenue deficit refers to excess of estimated revenue expenditure over estimated revenue receipts during the given fiscal year. (R) : A high revenue deficit gives a warning signal to the government to either curtail its expenditure or increase its revenue.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) : The extent of fiscal deficit is an indication of how far the government is spending beyond its means. (R) : A higher fiscal deficit creates burden on future generations.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.

(A) : Increase in Revenue Deficit does not always lead to a higher Fiscal Deficit. (R) : Fiscal Deficit is also influenced by capital expenditure and non-debt creating capital receipts of the government in addition to revenue receipts & expenditure.

• Both (A) and (R) are True & R is the correct explanation of (A)
• Both (A) and (R) are True but (R) is not the correct explanation.
• (A) is True but (R) is False
• (A) is False but (R) is True.