alleryStart learning →Firms in India are taxed on which basis?
AProgressive by turnover
BRegressive by output
CFixed rupee amount
DProportional to profits
Answer & Solution
Correct answer: D. Proportional to profits
1. Individuals face progressive rates that rise with income.
2. Firms are treated differently.
3. They are taxed **proportionally**, at a set share of profits.
4. So doubling profits doubles the tax, while for an individual doubling income can push them into a higher rate band.
_Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.1.2 Classification of Receipts_
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