Consider the following statements 1 A progressive income tax tends to reduce inequality of income in...........

Economic Affairs Tax System

Consider the following statements:

1.A progressive income tax tends to reduce inequality of income in the society

2.Fringe benefit tax is a form of Indirect tax

3.Narrow money does not include the Demand deposits with the banks

Which of these statements is/are correct?

1 only

2 and 3 only

1 and 3 only

All of the above

Only statement 1st is correct.

A progressive tax is a kind of tax in which the tax rate rises as income rises. To put it simply, the greater the income, the higher the tax rate. Progressive taxes, particularly direct income taxes, are a key channel for governments to reduce inequality in the short run. This has been highlighted by the latest World Bank Poverty and Shared Prosperity Report, which includes a detailed discussion on how taxes, transfers, and subsidies impact inequality across countries.
FBT is a tax on the benefits that an employer provides to its employees, such as health insurance, housing allowance, and company car. An employer has to pay Fringe Benefit Tax even if no Income-Tax is payable on the total income. It was set at 30 per cent of the cost of benefits the company paid and it was aimed to bring under the tax net those benefits that were previously out of it. This tax was paid in addition to income tax, irrespective of whether or not the company had income-tax liability. It is a form of direct tax.
Narrow money refers to a category of money supply that includes all the real money held by the central bank. It includes coins and currency, demand deposits, and other liquid assets.
In India, Narrow money is represented by M1. Even M0 is considered as narrow money by many countries but is classified as reserve money in India.
Narrow money is a subset of broad money that includes long-term deposits and other deposit-based accounts.