Budgeting and Fiscal policy

Indian Economy (Easy)

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Consider the following statements about Tax buoyancy:

1. It refers to the changes in tax revenue vis-a-vis GDP growth.

2. Tax buoyancy in direct taxes has increased consistently since year 2015-16.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 and 2

Explanation:

Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue mobilization in response to growth in the Gross domestic product or National income. A tax is said to be buoyant if the taxrevenues increase more than proportionately in response to a rise in national income or output.

By: Atul Sambharia

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