Which type of tax generally puts a relatively heavier burden on the poorer sections of society compared to the rich?

Introduction / Context:
This question examines the distributional impact of different types of taxation. In public finance and Indian economy topics, students must understand how tax systems can be progressive, proportional or regressive. Knowing which tax burdens poor households more is important for debates on fairness, equity and inclusive growth.

Given Data / Assumptions:

• We are comparing the effect of direct taxes and indirect taxes.
• Poorer sections have lower income and spend a higher proportion of income on basic goods.
• Prices of essential goods include indirect taxes such as excise duty or goods and services tax.
• Richer groups can save more and spend proportionally less on basic consumption.

Concept / Approach:
Direct taxes, such as income tax, are usually designed to be progressive, meaning the tax rate increases with income. Indirect taxes, such as excise duties and goods and services tax, are levied on goods and services that everyone buys, regardless of income. Because poor families spend a large share of their income on consumption, the same tax on a basic good takes up a larger proportion of their income compared to a rich household, making indirect taxes relatively regressive and more burdensome for poorer sections.

Step-by-Step Solution:
1. Direct taxes are paid directly to the government on income, profits or wealth. 2. Indirect taxes are collected through sellers on goods and services, and are included in prices. 3. Poor households spend most of their income on consumption, especially necessities. 4. When indirect taxes raise the price of these goods, poor households lose a greater proportion of income. 5. Therefore, indirect taxes place a heavier relative burden on the poorer sections of society.

Verification / Alternative check:
If tax as a percentage of income is calculated for a poor and rich household buying the same taxed item, the percentage will be higher for the poor because their income is low. This basic numerical reasoning supports the theoretical idea that indirect taxes are regressive in nature unless specifically designed otherwise with exemptions or lower rates on basic goods.

Why Other Options Are Wrong:
Option A: Direct taxes can be progressive and often reduce inequality when well designed, so they do not automatically burden the poor more than the rich.
Option C: Both types of taxes do not have the same effect; there is clear theoretical and empirical support that indirect taxes are more regressive.
Option D: It is not correct to say none, because many studies show that indirect taxes carry a heavier burden for low income households.
Option E: Wealth and inheritance taxes mainly affect richer individuals who hold significant assets, so they do not burden the poor sections more.

Common Pitfalls:
Students sometimes assume that any tax is equally bad for everyone. Another common confusion is to think that because poor people pay little income tax, direct tax must hurt them more whenever they do pay. The key is to think in terms of percentage of income sacrificed, not simply the rupee amount. Also, do not confuse the idea of tax evasion by rich people with the theoretical burden structure of the tax system itself.

Final Answer:
Indirect tax