What does the term "cascading effect" in taxation refer to?

CA Foundation · Business Economics · MTP · April 2025
What does the term "cascading effect" in taxation refer to?
(A) A. Tax on tax, leading to increased costs
(B) B. Double taxation of the same income
(C) C. A uniform tax rate across all commodities
(D) D. A system where indirect taxes are completely avoided

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. Tax on tax, leading to increased costs

Topics: Public Finance

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