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Generate QuizWhich of the following is an example of a Direct Tax?
- Goods and Services Tax (GST)
- Customs Duty on imported electronics
- Corporation Tax on the net profits of a company
- Excise Duty on petrol and diesel
Answer: Corporation Tax on the net profits of a company
A direct tax is levied directly on the income or wealth of the person or entity that ultimately bears the burden of the tax; it cannot be passed on to someone else. Corporation tax is paid directly by the company out of its profits. GST, Customs, and Excise are indirect taxes, where the initial payer (the business) shifts the tax burden to the final consumer via higher prices.