Which tax is imposed on manufactured goods and is levied at the time of manufacture, rather than sale?

Appeared in: DSSSB - 29 August 2019 (Shift-1)

Explanation

Excise tax is an indirect tax levied on goods produced or manufactured within a country.
The key characteristic of excise tax is that it is imposed at the source of production (the 'factory gate'), not at the point of sale to the consumer.
This distinguishes it from sales taxes like VAT, which are applied at each transaction in the supply chain.

Option A: This tax applies to goods imported or exported across international borders, not on domestic manufacturing.
Option B: This is a direct tax on the income or profits of individuals and corporations, not a tax on goods.
Option C: Value Added Tax (VAT) is a consumption tax levied at each stage of the sale where value is added, not solely at the point of manufacture.

Clinical Relevance

Nursing practice connection: This is primarily an exam-oriented knowledge point with limited direct bedside application, so retain Types of Indirect and Direct Taxes as background academic context rather than a clinical decision trigger.
While not a clinical topic, understanding basic financial and civic concepts like taxation is part of the general knowledge/awareness section of many nursing entrance examinations.
This assesses the candidate's broader knowledge base, which is considered an attribute of a well-rounded professional.
What if the question asked about a tax on services instead of goods? The answer would likely be 'Service Tax' or, under the current regime in India, 'Goods and Services Tax (GST)', as it applies to both.

How to Approach the Question

First, identify the key phrases in the question: 'tax', 'manufactured goods', and 'time of manufacture'.
The phrase 'rather than sale' is a critical differentiator. This tells you to look for a tax based on production, not a transaction.
Next, mentally define each option: Custom duty (border tax), Income tax (earnings tax), VAT (sales/consumption tax), and Excise tax (manufacturing tax).
Compare the definition of each tax type with the question's specific requirements.
Conclude that Excise tax is the only option that directly matches the description of a tax levied at the point of manufacture.

Concept Tested & Keywords

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Practise the full DSSSB - 29 August 2019 (Shift-1)

Attempt every question from this paper in a timed mock, then review the full solution for each one.